3 charged in Weld County (CO) mortgage fraud case

In the following press release the Weld County (CO) District Attorney’s office announced that a Weld County grand jury has indicted (click here for the indictment) three individuals who were allegedly involved in a [builders] mortgage fraud scheme that left many Greeley area families in foreclosure, reduced property values of neighboring homes, and defrauded lenders.

The year-long investigation by the Weld County District Attorney’s Office began with a tip from a local realtor and resulted in the first COCCA (Colorado Organized Crime Control Act) case filed by the Weld County District Attorney’s Office.

The three individuals charged are:

Mark Strodtman (pictured below) of Windsor, CO (DOB 6/16/1957) who is charged with Racketeering, Theft and Forgery.

Mark Strodtman

Nelson Feliciano of Brooklyn, NY (DOB 11/26/1971) who is charged with Theft and Forgery

Flora Carmona of Windsor, CO (DOB 4/17/1968) who is charged with Theft. Carmona was arrested on March 24, 2008 and posted $20,000 bond.

Court dates for all three individuals are yet to be set.


NC Attorney General takes action against Investment scheme

In the following press release North Carolina Attorney General Roy Cooper announced that a Fayetteville real estate investment scheme has been shut down after leaving dozens of unsuspecting consumers with loans they cannot afford and rental properties that are worth far less than what they paid for them.

“Consumers looking to invest in real estate got snared by a complicated scheme that left them with lots of debt and no profit,” Cooper said. “We’ve put a stop to the scheme so that no one else gets hurt.”

Under a consent judgment signed today by Wake County Superior Court Judge Paul Gessner, two of the companies and one of the individuals who ran the scheme are barred from the tricky practices they used to mislead people into investing in rental properties in the Fayetteville and Triangle areas. The court order applies to Maurice Jenkins, Lessane Properties, LLC, and Fayetteville’s Property Center and any of their agents and representatives. If Jenkins is found to have any financial assets, Cooper will pursue restitution for consumer victims.

The case against two other defendants, Holly Stevens and T he Eddie Peyton Group, remains pending. Cooper’s office believes they have ceased operating in North Carolina.

Cooper contends that Jenkins and the other defendants told consumers they could help them make a profit by purchasing houses and renting them out without having to pay any money down. Jenkins funded his scheme by misrepresenting the value of the properties he sold to consumers and by causing consumers to take out mortgages and lines of credit for more than the properties are worth.

Public records in Cumberland, Durham, Harnett, Robeson, Sampson, and Wake counties indicate that Jenkins and the other defendants have sold more than 120 homes since 2004. The defendants purchased most of these houses out of foreclosure for between $10,000 and $70,000 and then resold them as rental properties for between $30,000 and $150,000.

According to Cooper’s complaint, the defendants promised to manage the rental properties and cover consumers’ monthly mortgage payments, taxes, and insurance on the homes as well as to pay them $500 profit a month per house. However, the defendants did not charge enough rent to cover all of the promised payments. In some cases, houses were not rented at all or were too damaged to be inhabitable.

Jenkins told consumers that he would take care of getting loans for them to purchase the properties. According to consumers interviewed by Cooper’s Consumer Protection Division, Jenkins completed their loan applications, took them to meet with loan officers, and told them how much money to borrow. In loan applications he prepared and submitted, Jenkins inflated borrowers’ incomes, exaggerated what they were going to pay for the properties, and misrepresented at least one borrower’s employment status.

As alleged in the Attorney General’s complaint, in some cases the defendants told lenders that consumers already owned the homes and were applying to refinance so that the loan would be approved with less scrutiny from the bank. Jenkins and the other defendants would then keep the money borrowed by the consumers and fail to pay off the previous mortgages, leaving consumers stuck with two mortgages on a single property. Some consumers didn’t find out that Jenkins hadn’t paid off the previous loans until they started to get foreclosure notices.

“If you’re looking for a legitimate opportunity to invest in real estate, beware of deals that sound too good be true,” Cooper said. “There are no risk-free investments, and any one who tells you otherwise or guarantees you a profit is probably up to no good.”

Cooper offered consumers the following advice about real estate investment deals:

• Do your own research on the property and investment opportunity. Investing in real estate should not be an impulse decision. Don’t rely on the information that is provided to you by the developers or the people who are trying to get you to buy in to the investment.
• Get an independent appraisal to check the value of the property. Never rely on the appraisal of the developer or seller. Hire an independent appraiser, and be sure to check that he or she is a licensed appraiser in the state where the property is located.
• Consider having your own attorney review documents before you sign them to be sure that everything is accurate and above-board. Never sign a closing statement or loan papers that aren’t entirely accurate.

• If the opportunity sounds too good to be true, it probably is.


Virginia man sentenced in $3.7 million scheme

In the following press release Chuck Rosenberg, United States Attorney for the Eastern District of Virginia announced that John Andreas Tsiaoushis, 41, of Alexandria, Virginia, was sentenced today (9/5/08) on charges of mail fraud and false oaths in bankruptcy in connection with a mortgage refinancing scheme that took place from approximately December 2004 to November 2007.  United States District Judge Liam O’Grady sentenced Tsiaoushis to 70 months in federal prison, 3 years supervised release, and ordered him to pay $3,925,596 in restitution.  Chuck Rosenberg, United States Attorney for the Eastern District of Virginia; W. Clarkson McDow, Jr., United States Trustee; Joseph Persichini, Jr., Assistant Director in Charge, Federal Bureau of Investigation, Washington Field Office; Guy J. Cottrell, Postal Inspector in Charge, U.S. Postal Inspection Service, Washington Division; Jeffrey Irvine, Special Agent in Charge, U.S. Secret Service, Washington Field Office; and, Peter McClintock, Acting Inspector General, Small Business Administration, announced the sentencing.

Tsiaoushis admitted to operating a mortgage fraud scheme between approximately December 2004 and November 2007.  According to court documents, Tsiaoushis fraudulently attempted to obtain an estimated $4,372,981.13, and successfully obtained an estimated $3,697,161.13 through the scheme.  Court documents also indicate that, while the mortgage fraud was ongoing, Tsiaoushis engaged in a check kite scheme through which he obtained an estimated additional $163,546 by overdrawing his accounts with several Virginia banks.  To carry out the mortgage fraud, Tsiaoushis transferred or refinanced two Virginia residential properties, one located in Vienna, Virginia, and one located in Alexandria, Virginia, on six occasions.  In applying for loans, he provided the would-be lenders with false documentation, such as false loan-payoff statements purporting to be from current mortgagees, and false Certificates and Affidavits of Satisfaction purporting to be from prior mortgagees.  He then arranged for the loan proceeds to be misdirected to himself by causing the title companies closing the loans to send checks for the proceeds, which were ostensibly to be used to pay off pre-existing mortgages on the properties, to commercial mail drop boxes that had been opened by friends, associates, and family members.

Tsiaoushis, who had filed for bankruptcy with the United States Bankruptcy Court for the Eastern District of Virginia in October 2005, also admitted to giving false testimony in a hearing before that court about selling one of the residential properties involved in the mortgage fraud scheme.

Khalil Salim Arbid, an associate and former driver for Tsiaoushis, was sentenced on April 4, 2008, by United States District Judge James C. Cacheris to 16 months in federal prison, 3 years supervised release, and ordered to pay $650,613.61 in restitution for his role in the scheme.

The case was investigated by the Federal Bureau of Investigation, U.S. Postal Inspection Service, U.S. Secret Service, and Small Business Administration – Office of the Inspector General. Assistant United States Attorney Thomas H. McQuillan and Special Assistant United States Attorney Dennis J. Early of the Office of the United States Trustee prosecuted the case for the United States.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.


Three arrested in Monterey (CA) foreclosure scam

In the following press release Monterey County District Attorney Dean Flippo announced that on August 18, 2008 his Real Estate Prosecution Unit has filed multiple felony charges alleging that three suspects targeted and defrauded financially distressed homeowners through a Monterey County “foreclosure rescue” scam between February 10, 2008 and June 15, 2008.

The complaint charges Monterey County residents Maria de Lourdes Ponce and Fabian Olivarez Casillas and Santa Cruz County resident Melissa Garcia with criminal conspiracy. Ms. Ponce, who was arrested by Gonzales Police Department on August 15, faces 11 other felony counts, including residential burglary and elder abuse, 9 counts of grand theft, and 3 misdemeanor counts. The criminal complaint also asks for enhancements for sentencing if Defendants are proven to have taken in excess of $150,000 from the various victims. Ms. Ponce bail bonded to appear on August 26, 2008. Ms. Garcia is currently in custody in Santa Cruz County where she faces prosecution for forgery, elder abuse and multiple counts of felony grand theft in a similar foreclosure fraud scheme and a warrant has been issued for the arrest of Fabian Casillas.

According to the Monterey County complaint, the three suspects allegedly marketed themselves to homeowners as real estate “loan” professionals affiliated with Vista Funding & Associates, Inc. of Santa Cruz County. The suspects allegedly promised that they could negotiate with lenders to either lower monthly mortgage payments or refinance home mortgages and that such services required an advance fee of as much as $2800. Clients were assured that the advance fee was a “loan processing charge” and “fully refundable” if the loan negotiation failed. Between February 10, 2008 and June 15, 2008, the suspects allegedly met prospective clients at a Gonzales residence where clients provided them with their loan information, filled out loan applications and paid advance fees. The complaint alleges that the suspects told some clients to stop making their mortgage payments. When several clients asked for refunds, they were denied. In addition, the suspects allegedly failed to disclose that they were not licensed as real estate professionals and were not affiliated with Vista Funding.

The criminal investigation commenced on June 6, 2008 after the Gonzales Police Department received a report from an alleged victim of the foreclosure rescue scam. By July 17, 2008, the Gonzales Police Department had obtained statements from over 35 victims and additional witnesses and executed a search warrant on Maria de Lourdes Ponce’s home. The case was then referred to the District Attorney and the investigation continued until the recent filing.

With the surge in foreclosures around California, including parts of Monterey County, foreclosure-related fraud such as the one allegedly run by the three suspects, is expected to continue to pose serious threats to homeowners and consumers. Monterey County District Attorney Dean Flippo cautions Monterey County homeowners facing foreclosure or behind on their home payments to be extremely wary of persons or businesses posing as real estate or “foreclosure rescue” professionals. Homeowners should also be aware of the fact that foreclosure notices or home loan defaults are typically a matter of public record thereby enabling con artists to pose as real estate professionals and pitch foreclosure rescue schemes. California law prohibits the collection of advance fees by “foreclosure consultants” from any homeowner who has defaulted on a home loan and faces foreclosure.

To avoid becoming the victim of a real estate fraud scheme, the District Attorney urges homeowners and consumers to demand proof of a California real estate license and verify the license status with the California Department of Real Estate and obtain professional and client references before engaging the services of the professional.

Any persons having information about the suspects or the foreclosure rescue operation are asked to contact the Gonzales Police Department at 831-675-5010.


Prince George's County gets funding to fight mortgage fraud

In the following press release on September 9, 2008 the Maryland Governor’s Office for Crime Control and Prevention (GOCCP) for Maryland will present a check for a grant in the amount of $162,500 to the Office of the State’s Attorney (PGSAO) for Prince George’s County. The grant was part of a measure brought to the Maryland General Assembly by Delegate Doyle Niemann which passed and which Governor Martin O’Malley signed into law. GOCCP, the PGSAO and Delegate Niemann will hold a news conference in front of the Upper Marlboro Courthouse to unveil the grant and introduce the new staff that has been hired as a result of the funding.

From left to right: April N. Richardson, Sgt. Ted Jones, Del. Doyle L. Niemann, Isabel Mercedes Cumming and Albert L. Reed make up the mortgage foreclosure fraud division of the Prince George’s County State’s Attorney’s Office. Picture from the Maryland Daily Record

Mortgage Fraud continues to be a persistent problem in Maryland.

· Maryland is in the top 20 nationally when it comes to foreclosures.*

· Maryland ranks among the highest in mortgage fraud cases (tied for #3). **

· Prince George’s County has the highest number in the state in both instances. ***

To address these problems a full-time Assistant State’s Attorney has been hired to prosecute mortgage fraud cases. ASA April Richardson will be able to devote all of her time and energy to going after fraudulent mortgage lenders, foreclosure scammers and others that violate Maryland’s laws involving property, homes and real estate. In addition to the prosecutor, an investigator has been hired. Sergeant Ted Jones will be able to track down fraudsters through forensic accounting, active on location investigation and good old fashioned gumshoe detective work. Subpoenas and witness location will be a primary line of responsibility for this investigator among other duties.

“We must have extra resources to go after scammers in this economic downturn and housing crisis. We must be proactive about protecting the people of Prince George’s County against mortgage fraud. And, we must reassure the residents of the county that we will catch and prosecute any and all criminals taking advantage of people at risk of losing their homes. I want to thank Governor O’Malley for the foresight to provide state funds to combat this insipient and growing problem of mortgage fraud,” said State’s Attorney Ivey.

Mortgage Fraud Hotline Number in Maryland is 1-888-784-0136

* According to HUD economic data and Mortgage Asset Research Institute

** According to FBI FY 2008 1Q reporting data

*** According to Maryland DLLR housing report


Law firm office manager accused of theft of mortgage funds

In the following press release Monmouth County (NJ) Prosecutor Luis A. Valentin announced that on August 12, 2008, Kimberly M. Dehl, 32, of Toms River, N.J., was arrested and charged with second degree Theft by Deception. The arrest results from an investigation which was conducted by the Monmouth County Prosecutor’s Office following a referral from the New Jersey Office of Attorney Ethics.

Dehl was employed by the Law Firm of Bongiovanni and Pavliv, located in Howell, N.J., as the Office Manager from 1998 until 2008. During that period of time, Dehl’s duties and responsibilities included without limitation the performance of
Paralegal duties.

The investigation revealed that from January 2002 until November 2007, Dehl misappropriated approximately $255,390 in funds which were in the possession of the law firm by altering H.U.D. statements and making fictitious entries in them, and then subsequently dispersing the money into her own personal bank accounts. H.U.D. statements are documents prepared by law firms or closing agents that itemize all charges or closing costs for a real estate transaction. These closing costs include escrow deposits, commissions, loan fees, and insurance.

The investigation additionally revealed that Dehl utilized the stolen funds to pay personal expenses such as credit card payments, loans, cell phone bills, utility bills and her mortgage payments.

Monmouth County Prosecutor Luis A. Valentin stated, “Dehl engaged in a deliberate and carefully planned five year course of criminal conduct which resulted in a significant financial loss to her employer. She clearly misused her position of trust for personal gain.”

Bail was set by Superior Court Judge Bette E. Uhrmacher at $150,000. Dehl is being held at the Monmouth County Correctional Institution in lieu of bail.

Despite these charges, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt, following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and State law. The case is assigned to Assistant Prosecutor Thomas F. Fichter. Dehl is represented by Steven Nelson, Esquire, of Neptune Township, N.J.

Former title company employee sentenced for theft

In the following press release Monmouth County (NJ) Prosecutor Luis A. Valentin announced that on September 5, 2008, Jennifer L. Coneys, 35, of Brick, N.J., was sentenced to a three year New Jersey State Prison term for the third degree crime of Theft by Deception. This charge pertains to a theft she committed while employed at Liberty Title Company, of Wall Township, N.J. As part of her plea agreement, Coneys also entered into a civil judgment in favor of Liberty Title in the amount of $68,459.36. Coneys was sentenced by Monmouth County Superior Court Judge Francis P. De Stefano. Coneys pled guilty to the charge before Judge De Stefano on July 1, 2008.

Coneys was employed as an Office Manager and Closing Coordinator by Liberty Title since May 2005. An investigation conducted by the Monmouth County Prosecutor’s Office in cooperation with the Wall Township Police Department revealed that between February 2006 and December 2007, Coneys stole approximately $68,459.36 from Liberty Title by misdirecting disbursements from closings to pay her personal expenses, including car payments. The fraud was initially revealed during a random audit in December 2007. Liberty Title subsequently notified law enforcement authorities, and the ensuing investigation led to her being charged and arrested on one count of Theft by Deception on May 12, 2008.

Monmouth County Prosecutor Luis A. Valentin stated, “Coneys deliberately stole a substantial sum of money from the title company which employed her. The State Prison sentence which has been imposed will punish her for her criminal conduct and, hopefully, deter others from committing similar offenses.”

The case was prosecuted by Assistant Monmouth County Prosecutor Thomas F. Fichter. Coneys is represented by Richard M. Keil, Esquire, of Oakhurst, N.J.


HUD recommends action against lender

Following an audit of Henderson, NV based First Source Financial USA, HUD’s Inspector General’s office has recommended civil penalties be imposed on First Source for, amongst other things, “Originating and processing FHA loans with false information and known misrepresentations. Click here for the full report in PDF (4 pages)