In the following press release from July 11, 2008 Cuyahoga
County Prosecutor Bill Mason and the Ohio Attorney General Nancy H.
Rodgers announced the indictments of 10 individuals on 64 counts
involved in four cases of mortgage fraud. The investigations found more
than $1.7 million in fraudulent loans for eleven houses located in
Cuyahoga and Summit Counties.
The investigation was conducted by the Ohio Organized Crime Investigations Commission’s Cuyahoga County Mortgage Fraud Task Force, which is comprised of 15 federal, state, and local enforcement agencies.A collaborative effort among law enforcement agencies was responsible for forming the task force that is combating the rampant mortgage fraud happening in Cuyahoga County. Currently, the task force is investigating more than 1,000 mortgage fraud deals in Cuyahoga County.
Prosecutor Bill Mason said, “These thieves are ripping apart our community. This is the first of many indictments being initiated by the Task Force.”
Tekora Madden, 30, of Seven Hills, fraudulently purchased eight houses between August 2004 and January 2005: four in Cleveland, 2368 E. 59th St., 9421 Pratt Ave., 1119 E. 72nd St., 3751 E. 96th St.; one house in Seven Hills, 2350 Wynde Tree Lane; and 3 houses in Akron, 1274 Moore Rd., 206 Marcy Rd., and 178 Lake St. She fraudulently refinanced the Seven Hills house in 2006. She supplied false income documents from several bank accounts and false real estate asset values. Her scam, totaling $733,000 in fraudulent loans, entailed using loan monies and sale proceeds from one house to purchase another. All but the Seven Hills house fell into mortgage foreclosure. Two of the three houses in Akron have since been demolished. Leevern Coleman, 38, of University Heights, was indicted on nine (9) counts of Money Laundering and Receiving Stolen Property for accepting stolen funds from the E. 96th St. purchase and laundering it through his bank account. Madden was indicted on twenty-six (26) counts of theft-related offenses.
Jonas Allen, 38, of Twinsburg, and his sister Sonya Allen, 39, of Cleveland, fraudulently purchased a house located at 7206 Winchester, Solon, in February 2005 for $298,881.69. They supplied false income documents, including false down payment information, to qualify for a $232,000 loan. The house fell into mortgage foreclosure in 2005. Jonas then leased the house with an option to buy to a couple in March 2006. He kept the payments, totaling $16,000, instead of paying the mortgage. A month later, Jonas sold the house to a second victim. By obtaining power of attorney over the victim’s assets and to purchase the house, he falsified victim’s income and occupancy affidavit to qualify for a $313,000 loan. The house fell into foreclosure again in 2006 and was sold at a Sherriff’s sale in 2007. Jonas and Sonya Allen were indicted on nine (9) counts of theft-related offenses. Jonas was indicted on a tenth count of theft.
Kenneth Miller, 38, of Twinsburg, convinced a victim to
buy a house at 2257 North Taylor, Cleveland Heights, for $140,000 in
August 2006. Prior to the sale of the house, Ronald Hodges, 37, of
Cleveland, placed a $19,000 fake mechanics lien against the home, and
then returned $7,800 to the victim after the sale was completed. Hodges
fraudulently obtained a drivers license using another person’s name to
open up a bank account for his fake company, which he used to transfer
and steal $11,200 from the victim. Hodges was indicted on ten (10)
counts of theft-related offenses. Miller was indicted on one (1) count
of Acting as Loan Officer without License.
Brian Mathoslah, 46, of Strongsville, is a mortgage loan officer who owns Future Home Builders and Cornerstone Title. He purchased the lot at 14590 Pebblestone, Strongsville. He built a house and fraudulently sold it to Audrey Leonard, 43, of Georgia, and Carlton Hill, 45, of Strongsville, for $488,000. Hill did not qualify for the loan due to bad credit, so his sister, Audrey Leonard, submitted a fraudulent loan application for $456,000, which indicated a $32,000 down payment, with the assistance of Mathoslah, who was the loan officer in the deal. Mathoslah deceived the lender by making it appear that Leonard made the down payment on the house. Debora Lind, 44, of Lorain, falsified the appraisal by increasing the size of the house. Leonard falsified the owner occupancy affidavit but moved to Georgia. A deed later transferred ownership of the house to Hill. He moved in the house in August 2006, but did not register his occupancy with the Cleveland Water Department, thereby stealing approximately $2000 worth of water from the City over the last 23 months. The house fell into foreclosure and was sold in 2007. Mathoslah was indicted on eleven (11) counts of theft-related offenses. Leonard was indicted on seven (7) counts of theft-related offenses. Hill was indicted on one (1) count of Theft. Lind was indicted on two (2) counts of theft-related offenses.
Task force members are: Ohio Organized Crime
Investigations Commission, Cuyahoga County Prosecutor’s Office, Ohio
Bureau of Criminal Investigation and Identification, Cuyahoga County
Sheriff’s Office, Cleveland Heights Police Department, Solon Police
Department, Cleveland Police Dept, Pepper Pike Police Department, HUD,
Cuyahoga County Auditor, Cuyahoga County Treasurer, Department of
Commerce, U.S. Department of Financial Invest, F.B.I., U.S. Attorney’s
Office, and U.S. Postal Inspector. Strongsville and Seven Hills Police
Departments also worked on these investigations.
In the following press release the Los Angeles District Attorney’s Office announced that one of six defendants accused of defrauding the estate of a couple who died more than 20 years ago was sentenced late yesterday, the District Attorney’s Office announced.
Superior Court Judge Robert J. Perry sentenced lead conspirator Laron Lamont Heidelberg, 41, to seven years in state prison for his involvement in the real estate scam. The defendant was ordered to pay $420,000 in restitution.
Deputy District Attorney Walter H. Mueller of the Real Estate Fraud Section said Heidelberg and his crew attempted to dupe the victims’ estate out of two inheritance properties, one of which had been in the family for more than five decades.
Heidelberg was indicted in November 2007. Others named in the indictment included Joyce Williams, 55, Davaughn Mitchem, 26, Korey Duron Martin, 35, Paul Edward McGee, 55, and Adolphus Ray Harper, 28.
Prosecutors allege that the defendants successfully tapped into the accrued equity of each property by using fraudulent documents.
Heidelberg was convicted by a jury on July 30 of one count of grand theft, three counts of forgery and one count of obtaining money by false pretenses. The jury also found true aggravated white collar crime and excessive taking allegations.
The original property owners, Priestly and Pansy Young, both died in the 1980s. At the time of their deaths, both homes were paid off and their children subsequently inherited the properties. In January 2006, a relative found the properties listed for sale on the Multiple Listing Service (MLS) and alerted authorities.
Defendant Williams, who is in federal custody on fraud charges, faces one count of grand theft and two counts of forgery. Defendant Mitchem pleaded no contest to one count of forgery on July 21 and was sentenced to one year in county jail and three years probation.
Defendant Martin is in custody in the state of Georgia and awaiting extradition. He faces one count of grand theft, one count of forgery and one count of obtaining money by false pretenses. Defendant McGee was convicted on July 30 of one count of grand theft and one count of obtaining money by false pretenses. McGee received a sentence of three years probation.
Defendant Harper remains outstanding. A bench warrant has been issued for his arrest.
In November 2007, Ramirez, a licensed real estate agent, introduced himself to the elderly victim at her home in the City of Riverside and told her that he could lower her monthly mortgage payment. The victim agreed to refinance her home in
Riverside. During the refinance process, Ramirez submitted an additional loan application in the name of the victim for a home located at 1408 Estrellita Court, in Upland, California.
Countrywide Home Loans approved the loan for $413,250.00. The victim received a telephone call from Countrywide Home Loans to inquire about her $3,300.00 a month payment due for the Upland house and discovered that someone had used her confidential identity to fraudulently purchase the home in her name.
After a thorough criminal investigation Ramirez was identified as the primary suspect in this fraud for housing scheme. His bail was set at $413,250.00.
In the following press release the Securities and Exchange Commission today (9/3/2008) charged two Wall Street brokers with defrauding their customers when making more than $1 billion in unauthorized purchases of subprime-related auction rate securities. The SEC’s Division of Enforcement in 2007 formed a subprime working group, which is aggressively investigating possible fraud, market manipulation, and breaches of fiduciary duty that may have contributed to the recent turmoil in the credit markets.
The SEC alleges that Julian Tzolov (pictured below) and Eric Butler misled customers into believing that auction rate securities being purchased in their accounts were backed by federally guaranteed student loans and were a safe and liquid alternative to bank deposits or money market funds. Instead, the securities that Tzolov and Butler purchased for their customers were backed by subprime mortgages, collateralized debt obligations (CDOs), and other non-student loan collateral.
Picture Courtesy of Rueters
“As alleged in our complaint, these two brokers foisted more than $1 billion in subprime-related securities upon unsuspecting customers to illegally obtain higher commissions from their sales,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. “As always, if you commit fraud, you can expect to be held accountable by the SEC. The Enforcement Division’s vigilance extends throughout our financial markets, including the subprime lending and credit markets.”
Andrew M. Calamari, Associate Director of the SEC’s New York Regional Office, added, “This case demonstrates how the recent turmoil in the subprime market has affected even investors who had no intention of buying subprime securities.”
The SEC’s complaint, filed in federal court in Manhattan, alleges that Tzolov and Butler, while employed at Credit Suisse Securities (USA) LLC in New York, deceived foreign corporate customers in short-term cash management accounts by sending or directing their sales assistants to send e-mail confirmations in which the terms “St. Loan” or “Education” were added to the names of non-student loan securities purchased for the customers. Tzolov and Butler also routinely deleted references to “CDO” or “Mortgage” from the names of the securities in these e-mails. As a result, the complaint alleges that customers were stuck holding more than $800 million in illiquid securities after auctions for auction rate securities began to fail in August 2007. Those holdings have since significantly declined in value.
The Commission charges Tzolov and Butler with securities fraud in violation of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The Commission seeks permanent injunctive relief, disgorgement of ill-gotten gains, if any, plus prejudgment interest on a joint and several basis, and civil money penalties.
The Commission acknowledges assistance provided by the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation in this matter.The Commission’s investigation is continuing.
Various news sources are reporting that Federal authorities have announced that Julian Tzolov, who had been under house arrest awaiting a trial set for June 29 has disappeared. Prosecutors have notified a Brooklyn judge on Friday that he left home without permission on May 9, and hasn’t been heard from since.
Bloomberg.com is reporting that Tzolov has been arrested in Spain and that the US Attorney in Brooklyn has filed new charges against him. Nothing official yet available on DOJ or SEC sites.
Benton J. Campbell, United States Attorney for the Eastern District of New York, announced that a federal jury in Brooklyn returned verdicts today in which they found former Credit Suisse broker Eric Butler guilty of conspiracy and securities fraud after a three week trial. When sentenced by Senior United States District Judge Jack B. Weinstein, Butler will face a maximum sentence of 45 years’ imprisonment.
The evidence at trial established that Butler and Julian Tzolov, another former Credit Suisse Broker, defrauded their clients in order to obtain higher sales commissions.1 Butler and Tzolov sold auction rate securities (“ARS”) backed by mortgages to Credit Suisse clients who, in fact, had placed orders to buy ARS backed by government-guaranteed student loans. Butler and Tzolov told their clients that student loan-backed ARS were very low-risk investments guaranteed by the United States government and that the market for the securities was very liquid. As a result, a number of the companies agreed to invest money in these ARS. However, without the knowledge or consent of the companies, Butler and Tzolov began to use the companies’ funds to purchase riskier higher-yield, mortgage-backed collateralized debt obligations, or “CDOs,” which paid Butler and Tzolov higher commissions. CDOs are assetbacked products built from a portfolio of fixed-income assets, including mortgages, subprime mortgages, and second mortgages, many of which were not guaranteed by the government. Butler and Tzolov concealed their scheme by falsifying the names of the ARS the clients bought and otherwise misleading the clients into believing they had bought ARS backed by student loans. In approximately August 2007, the scheme was discovered when the market for the mortgage-backed CDOs purchased by the companies collapsed and various auctions for CDOARS began to fail. The resulting losses to investors totaled almost $1 billion.
“The defendant’s fraudulent misrepresentations saddled investors with unknown risks they did not bargain for,” stated United States Attorney Campbell. “This case shows that those who engage in such schemes will be held to account for their criminal activity.” Mr. Campbell expressed his grateful appreciation to the Federal Bureau of Investigation and the United States Securities & Exchange Commission for their assistance during the trial.
The government’s case was prosecuted by Assistant United States Attorneys Greg D. Andres, Daniel Spector, and John Nowak.
Name: ERIC BUTLER
On Friday January 22, 2009 United States District Judge Jack B. Weinstein sentenced Eric Butler, a former Credit Suisse broker, to five years’ imprisonment, three years of supervised release, $5 million fine, and forfeiture of $250,000 for securities fraud, conspiracy to commit securities fraud, and conspiracy to commit wire fraud. Butler was convicted following a three-week jury trial in August 2009.
Over next few days we will be adding some older news to the site to ensure our searchable database is up to date and that searches you may want to conduct are looking at all the relevant information. This will mean the input of case news from June and July 2008 which you will receive as links in the Daily email. We apologise if you are already aware of the information you receive.
In the following press release Missouri Attorney General Jay Nixon announced that he is taking legal action to stop those who are preying on Missouri homeowners left vulnerable to mortgage fraud because they are facing foreclosure or other financial difficulties.
On July 28, 2008 Nixon launched Operation Stealing Home by filing seven lawsuits in Buchanan, Greene, Henry, Jackson, St. Louis, and St. Charles counties. The suits are aimed at individuals and businesses Nixon said had defrauded consumers through refinancing, advance fee and foreclosure consulting scams. In several of the cases, the consumers lost their homes and ended up much worse financially than they were before. Victims of the scams live throughout Missouri and several other states.
“As more and more families are threatened with foreclosure on their homes during these tough economic times, unscrupulous people will try to take advantage of them under the guise of help,” Nixon said. “With these lawsuits, we are working to stop the empty promises made to and the exploitation of homeowners who already are in dire straits.”
Nixon said the lawsuits send a strong message that his office will not tolerate mortgage fraud in Missouri. The Attorney General’s actions were supported by advocates for Missouri seniors and consumers.
“Anyone taking advantage of needy Missourians, especially seniors, in this way needs to be stopped,” said Dorothy Knowles, President of the Missouri Alliance of Area Agencies on Aging. “I am encouraged that Attorney General Nixon is taking this legal action to protect homeowners who are already facing difficult and frightening circumstances.”
“In this economic climate, elderly Missouri homeowners need to have confidence in their financial advisors and lenders,” said John McDonald, AARP’s Missouri state director. “Our hope is that a crackdown like this one will send a message to others who would try to take advantage of seniors who desperately need help with their housing situation.”
Four of the defendants operate what Nixon termed “foreclosure rescue scams.” They search foreclosure listings in publications or online and approach the homeowners with promises to stop the foreclosures by paying off the lenders.
The companies then convince the homeowners to deed their property over and rent it back from the company so they can still live in the home, on the premise that the rent goes to make the mortgage payment, plus a modest profit for the company.
Unfortunately, the homeowners discover that the companies are not using their rent payments to make mortgage payments, causing the lenders to initiate foreclosure proceedings. The defendants present the homeowners the choice either leaving their homes or buying them back from the company. In one such case, a consumer was told she would be thrown out of her home unless she paid the company $230,000, the value of the home.
Nixon is alleging in his lawsuits that these defendants carried out this type of scheme:
- St. Anthony Avenue LC, based in St. Louis County. The lawsuit was filed in St. Louis County;
- Private Funding Solutions, based in St. Charles, and its president, Mike C. Rothweiler. The lawsuit was filed in St. Charles County;
- Brian J. Thompson, of Springfield, who does business as “All Decked Out”. The lawsuit was filed in Greene County; and
- Access Mortgage and Financial Corp., of Lansing, Mich., and its agents, David Snyder and Josh Nowell. The lawsuit was filed in Henry County.
Nixon also is suing several mortgage companies as part of Operation Stealing Home. The companies promised homeowners - and in one instance, small businesses - that their loans for re-financing would feature terms they could afford. The consumers often were facing skyrocketing house payments because of their adjustable rate mortgages, and wanted to obtain more favorable loans.
What the homeowners often discovered, however, was that the actual terms were far different - and much less favorable to the consumers - than what the mortgage companies had promised. Some homeowners found that they were charged much higher fees at closing than what had been promised. In another case, the company failed to credit loan payments from consumers in a timely fashion and then charged late fee and filed credit reports indicating the consumer was delinquent with payments. Another defendant charged advance fees of as much as $30,000 for loans that were never obtained.
Again, Nixon said, many consumers who had been experiencing financial difficulties before they did business with these companies found themselves worse off after their dealings with the defendants.
Nixon is suing the following mortgage brokers:
- Christopher E. Cosma, of St. Peters, and three companies for which he was an agent — America One Finance Inc., of Bellevue, Wash., Accredited Home Lenders, of San Diego, and Castle Point Mortgage Inc., of Elkridge, Md. The lawsuit was filed in St. Charles County;
- Fouquet Financial Services Inc., located in St. Joseph, and its president, Joseph M. Fouquet. The lawsuit was filed in Buchanan County; and
- Saxon Mortgage Services, of Austin, Texas. The lawsuit was filed in Jackson County.
Nixon is asking the courts to void the deeds the companies illegally obtained; to award restitution to consumers who suffered losses; to impose appropriate penalties; and to issue injunctions to prohibit the defendants from future violations of Missouri consumer protection laws.
Nixon said consumers - especially if they are already facing financial difficulties - should be extremely cautious when dealing with individuals or companies they are unfamiliar with in regard to home-financing issues:
- Beware of anyone who asks you for a deed to your home in exchange for fixing your mortgage problem;
- Be leery of any company that urges you to go ahead and sign confusing or unfavorable loan papers on the premise that you can always refinance later. This is a common tactic that usually traps consumers in undesirable loans which they cannot refinance;
- Remember that it is illegal to require you to pay a fee in advance in order to obtain a loan;
- Ask questions about any fees that appear in paperwork that you don’t understand or didn’t agree to pay;
- Take your time to read the fine print. Don’t let anyone pressure you into signing quickly; and
- If someone attempts to lure you into one of these scams, or if you have questions about certain practices, contact the Attorney General’s Office through its Web site, ago.mo.gov, or by calling the Consumer Protection Hotline toll-free at 1-800-392-8222.