Two men plead guilty in Greenville, SC flipping scheme

Court documents reveal that the US DOJ has charged James Byrd and Eric Byrd with Conspiracy to Commit Bank Fraud . The information was filed in the Greenville (SC) District Court on November 1, 2006.

The indictment alleges that both men were involved in the illegal flipping of properties in the Greenville area of South Carolina. As an example of the type of alleged fraud the information alleges that “on or about March 18, 2003, JAMES BYRD and ERIC BYRD purchased a property located at 101 Arlington Road, Greenville, South Carolina, for $18,000 and then JAMES BYRD and ERIC BYRD through a individual working on their behalf obtained a loan for the same property through the use of an inflated appraisal for approximately $125,000 thereby defrauding the lender.”

The properties mentioned in the information are;

101 Arlington Road , Greenville, SC
405 Houston Street , Greenville, SC.
45 Woodside Drive in Greenville, SC,
114 E. Morgan Street, Greenville, SC
110 E. Morgan Street, Greenville, SC
117 Asbury Street , Greenville , SC

The information reveals that the Byrd’s used a number of companies to further the scheme, they are listed below:
Ideal Mortgage
Legal Holdings
Next Generation, L.P.
Belgium Properties
Property Centre

Please click here to see a copy of the Information

On November 3rd 2006 both men entered Guilty Plea’s. The date of their sentencing hearing is not yet known.


Real estate attorney convicted in money laundering case

In the following press release The United States Attorney for the State of Washingon announced that on November 3, 3006 JOEL MANALANG, 37, a Seattle, Washington attorney was sentenced in U.S. District Court in Seattle to 18 months in prison, two years of supervised release and a $6,000 fine for Money Laundering. At sentencing, U.S. District Judge Ricardo Martinez said, “Warnings that were given were not heeded by Mr. Manalang. As a result of that error in judgment he will suffer quite a bit.”

MANALANG was a real estate attorney who operated an escrow business. Court papers allege that during 2003 and 2005, MANALANG received large quantities of cash from clients under circumstances indicating to MANALANG that the money was derived from drug trafficking. The money was received by MANALANG in shoe boxes and duffle bags. MANALANG thereafter engaged in financial transactions with these monies assisting drug traffickers in the acquisition of real estate. On one occasion, MANALANG stored several hundred thousand dollars cash in his residence, before returning it to others. MANALANG pleaded guilty on August 1, 2006 and acknowledged that he knew the funds were derived from criminal activity, and that his actions were intended to conceal the true nature of the funds and from whom they were obtained, and to evade currency reporting requirements imposed by law.

Click here to read the criminal information and plea agreement.

Writing to the court, Assistant United States Attorney Ron Friedman noted that MANALANG had been warned by law enforcement about laundering the proceeds of crime: “What makes his situation most difficult to understand is that law enforcement visited him during 2005, prior to his commission of this criminal conduct, and warned him regarding such activities. Those warnings were not heeded…” Friedman noted that MANALANG will now lose his career as an attorney and real estate broker.

MANALANG told Judge Martinez, “My desire to be successful and have my family and friends be proud of me led me to ignore warning signs.”

This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved. This case was investigated by U.S. Immigration and Customs Enforcement (ICE), and the Internal Revenue Service Criminal Investigations (IRS-CI). The case was prosecuted by Assistant United States Attorneys Ron Friedman and Susan Roe.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office at (206) 553-4110.

Springfield Gardens man convicted in real estate scam

queens da_badge.gifIn the following press release Queens District Attorney Richard A. Brown  announced on November 1, 2006 that a Queens contractor who defrauded nine individuals – including a teacher, a pharmaceutical sales representative and a medical doctor – out of more than $672,000 in savings through a real estate scheme has been sentenced to 2 ½ years to 7½ years in state prison. The money was for the purchase and renovation of HUD residential houses which, in fact, never took place. Click here to read the press release 

District Attorney Richard A. Brown said, “The defendant has admitted to having cheated honest, hardworking individuals out of, in some cases, their life savings by showing them U.S. Department of Housing and Urban Development properties in several Queens neighborhoods and falsely claiming to be able to purchase the properties for them. In furtherance of his scheme and to build trust with his victims, the defendant even showed some of them houses that he was in the process of renovating – yet failed to ever complete. As a result, the victims agreed to have the defendant undertake renovations on the various properties that they were shown and had agreed to buy. The end result was that instead of helping these individuals live the ‘American Dream’ by becoming homeowners, the defendant built them a ‘House of Cards’ that fell apart soon after the money was deposited in their account.”

The District Attorney identified the defendant as Dennis Barnaby, 55, of 141-24 181 Street in Springfield Gardens. Barnaby, the owner of East Coast Construction, which he operates out of his residence, pleaded guilty on September 12, 2006, to second-degree grand larceny before Acting Supreme Court Justice Joseph Grosso, who yesterday afternoon imposed a sentence of 2 ½ to 7 ½ years in prison. Barnaby had previously signed a confession of judgment for $641,000 to the victims. His wife, Pauline Davis, 50, who also participated in the scheme and was held in jail in lieu of bail since her arrest in May, pleaded guilty in September to first-degree scheme to defraud and was sentenced to time served.

According to the District Attorney, the investigation began in June 2004 when a 41-year-old Jamaica, Queens, woman contacted the District Attorney’s Economic Crimes Bureau and complained that she had been cheated by the defendant Barnaby in a real estate purchase. Thereafter, additional complainants came forward. The defendants were arrested on May 4, 2006.

District Attorney Brown said that, between February 15, 2002 and March 28, 2006, the defendants stole a total of $672,500 from nine individuals who had given the defendants large sums of money – ranging from $17,500 to $150,000 – with the understanding that the money would be used toward the purchase of eight single-family residences that were U.S. Housing and Urban Development properties. In one instance, the defendants sold the property to two different individuals.

According to District Attorney Brown, Barnaby, while doing renovations on houses in the Rosedale and Jamaica sections of Queens belonging to two of the victims, showed the properties to other victims and indicated that he would sell them the HUD-listed properties. In the case of the Jamaica property, the actual owner of the house, a medical doctor, had already given Barnaby $130,000 to renovate and expand his one-story residence into a two-story dwelling. However, the renovations were never completed.

The District Attorney said that in furtherance of their scheme, Davis, who, at the time, was employed at BISA Check Cashing, located at 61-20 Springfield Boulevard in Bayside, deposited checks for home renovations in the amounts of $130,000 and $84,000 at her place of employment, as well as at another check-cashing outlet in Springfield Gardens. The couple also deposited the monies received from their victims into Davis’s bank account and unlawfully retaining the proceeds.

The eight properties involved in the defendants’ scheme were:
223-02 114th Avenue in Queens Village (purportedly sold to two different individuals)
227-20 137th Street, Laurelton
227-20 Merrick Boulevard, Springfield Gardens;
118-61 Farmers Boulevard, St. Albans;
217-36 110th Avenue, Queens Village;
114-51 226th Street, Jamaica;
152-07 125th Avenue, South Ozone Park
193-06 99th Avenue, Hollis.
The residences are all listed as U.S. Housing and Urban Development properties

Click here to read the indictment

The investigation was conducted by Detective Richard A. Lewis of the District Attorney’s Detective Bureau under the supervision of Lieutenant Robert J. Burke and Sergeant John W. Kenna and the overall supervision of Chief Lawrence J. Festa and Deputy Chief Albert D. Velardi.

Assistant District Attorney Mariana Zelig of the District Attorney’s Economic Crimes Bureau, prosecuted the case under the supervision of Assistant District Attorneys Gregory C. Pavlides, Bureau Chief, and Christina Hanophy, Deputy Bureau Chief, and the overall supervision of Executive District Attorney for Investigations Peter A. Crusco and Deputy Executive Assistant District Attorney for Investigations Linda M. Cantoni.


FinCEN announces huge increase in mortgage fraud reporting

On Friday November 3, 2006 the Financial Crimes Enforcement Network (FinCEN) revealed that suspected mortgage loan fraud in the US has risen by 35 percent in the past year. FinCEN conducted an assessment, which was based on an analysis of Suspicious Activity Reports (SARs) regarding suspected mortgage loan fraud, to identify trends and patterns that may be useful to law enforcement, regulatory authorities, and financial institutions offering mortgage loan products.

FinCEN had noticed that SARs for mortgage fraud had risen by 1,411% by 2005. Many of the SARs reviewed included more than one characterization of suspicious activity in addition to mortgage fraud. “False statement” was the most reported activity in conjunction with mortgage loan fraud, while “identity theft” was the fastest growing secondary characterization reported. In total they found 82,851 SARs had been filed in the 10 year period April 1, 1996 to March 31, 2006.

FinCEN’s said its findings in the assessment are supported by the recent rise in the number of pending law enforcement cases involving mortgage loan fraud.

Click here to read the full report from FinCEN


Illinois Governor Blagojevich continues crackdown on unlicenced mortgage firms

In the following press release Illinois Governor Rod R. Blagojevich  announced on November 3, 2006 the results of the State’s increased crackdown on unlicensed mortgage loan originators. The latest inspections conducted by the Governor’s Mortgage Fraud Task Force (MFTF), found that six residential mortgage firms in the Chicago and East St. Louis regions used unlicensed loan originators to process more than 700 home loans. Today’s announcement brings the total of companies and individuals slated for discipline by the Illinois Department of Financial and Professional Regulations (IDFPR) to more than 45, since unannounced inspections across the state began last March.

“We have worked hard to protect families from fraud and abuse, and through these inspections across the state we’ve put mortgage companies on notice that we will not tolerate activities that could harm homeowners,” said Gov. Blagojevich.

The task force was established by Gov. Blagojevich to ensure that mortgage companies comply with the strict standards of conduct established for loan originators in the 2003 High Risk Home Loan Act.

One of the most important provisions of the law requires people who process mortgages to undergo training and background screening before being entrusted with borrowers’ financial and personal information. Loan originators must also pass a rigorous screening test to make sure they understand loan processing.

During the initial registration of loan originators, 29,000 people applied for registration. Forty percent of those applicants failed the Loan Originator Exam and almost 800 applicants were denied licenses after background checks were completed. There are approximately 16,000 registered loan originators in Illinois.

The MFTF has cracked down on unregistered loan originators in the State of Illinois. Most recently its efforts have been focused in the Chicago metropolitan area. In its summer sweep, the MFTF inspected mortgage licensees in the Metro East area. IDFPR has the authority to issue fines of $2,500 for the first unlicensed loan originator it finds at any licensed residential mortgage company, and $500 for each additional unregistered loan originator. Individuals working as loan originators without the proper registration are subject to fines of $950 and a permanent notation on their file should they decide to register in the future.

The MFTF found problems after inspections at the following licensees. These potential violations may result in disciplinary or other actions including revocation, suspension, fines or surrender of license:

Envision Mortgage Solutions , license number 6759105, located at 4731 Midlothian Turnpike, Suite 32, Crestwood, Neil Coleman 4731 Midlothian Turnpike, Suite 32 Crestwood, IL 60445has been licensed since September of 2003. A MFTF visit to this licensee found 28 Loan Originators who had produced over 500 loans without possessing the proper registration as required in the State of Illinois.

AM Mortgage , license number 6411, located at 6518 N. Lincoln Avenue, Lincolnwood, has been licensed since March of 2002. A MFTF visit found eight Loan Originators who had produced around 100 loans without possessing the proper registration, as required in the State of Illinois.

Express Funding, Inc. , license number 6759512, located at 937 N. Plum Grove Road #d Schaumburg , has been licensed since February of 2005. A MFTF visit discovered around 50 loans that had been originated by five Loan Originators, not possessing the proper registration as required in the State of Illinois.

Fidelity Mortgage Group , license number 6039, located at 13515 Barrett Parkway Drive, Suite150, Manchester , MO , has been licensed since February of 2001. A MFTF visit found the licensee had originated over 35 loans without employing a registered Loan Originator, as required in the State of Illinois.

Mainline Mortgage Group , license number 6759245, located at 3200 James Terrace, Alton , has been licensed since September of 2004. A MFTF visit to this licensee revealed over 25 loans originated without a registered Loan Originator with the State of Illinois. This visit prompted licensee to surrender the Mortgage Broker License.

Global Mortgage Company , license number 3209, located at 1857 E. 71st Street, Chicago , has been licensed since September of 1992. A MFTF visit found the licensee had no actively registered loan originators but originated over 25 loans.

Dennis Wooff
3200 James Terrace
Alton, IL 62002

The extra work done by the MFTF complements the regular examinations conducted by IDFPR as part of its regulatory responsibility to ensure that residential mortgage companies provide safe, effective services to the homebuyers and homeowners in Illinois.

“Illinois consumers have the right to know that when they do business with companies licensed by our state, they will receive the best possible service by ethical and appropriately trained professionals,” said Dean Martinez, Secretary, Financial and Professional Regulation. “We will use all the tools available to us to discipline companies which violate the laws and regulations designed to protect Illinois homebuyers.”


Castle Rock man given 48 year in prison for real estate investment scam

In the following press release Colorado Attorney General John Suthers and Securities Commissioner Fred Joseph announced today that Raymond Paul Morris, 49, of Castle Rock, Colorado, was sentenced in Douglas County District Court yesterday to 48 years in the Department of Corrections after pleading guilty to four counts of securities fraud and one count of theft, all Class 3 felonies. Morris was also ordered to pay $2 million in restitution to his victims. Morris was indicted by the Colorado State Grand Jury in November of 2005.

“This case should be a lesson for both criminals and investors,” said Suthers. “Criminals are on notice that we take these crimes very seriously and will seek long jail sentences for such scams. Potential investors are cautioned that they must do their homework before investing.” Suthers further added, “I want to commend the Douglas County Sheriff’s Office for their diligent work on this case over the past several years.”

Commissioner Joseph said, “The judge’s sentence in this case sends a clear message to all would-be con artists. Colorado is a bad place to cheat investors. Don’t do it here because you will be caught, prosecuted and sent to jail for a long time.”

According to the indictment, Morris employed several schemes to defraud his investors. Among those schemes, Morris promised lots in a parcel of land he did not yet own in an area he claimed to be developing for residential use, known as “Cherry Valley Land Development.” Morris failed to develop the land and investors never received title to the property for which they paid.

Another alleged scheme Morris used to defraud investors was convincing them to lend money to third parties, offering promissory notes secured with forged deeds of trust to the third parties’ homes. However, the third parties were never involved in the transaction and never received any of the money.

Morris also solicited and accepted investor money to trade in the foreign currency market promising substantial returns, but failed to disclose poor performance on prior returns. Morris further failed to inform the investors that some of the money would be used for personal purposes.

Click here to read the press release


Arizona AG accuses man of trying to steal homes

In the following press release Arizona Attorney General Terry Goddard  announced on October 26, 2006 that his office has filed a consumer and racketeering lawsuit against Gregory Allen Best of Phoenix for attempting to defraud several Phoenix residents out of their homes.

In 2003, Best began contacting residents of the South Country neighborhood, located south of the Salt River between 7th and 16th Streets, to discuss an area plan adopted by the Phoenix City Council that included the neighborhood. The plan, called the Rio Salado Beyond the Banks Area Plan, provides guidance on redevelopment for South Phoenix.

According to the complaint filed in Maricopa County Superior Court, Best told residents in the South Country neighborhood that Phoenix would most likely condemn their properties using eminent domain. He convinced more than three dozen neighbors to sign an “Exclusive Purchase Option Contract” with him to protect their property values. That contract provided Best with an option to purchase the properties for a stated price. Best assured the neighbors he would not exercise this option.

Contrary to Best’s assertions, the City of Phoenix did not have any plans to condemn the South Country properties. Nonetheless, Best began exercising his options to purchase properties, and in some cases filed lawsuits to enforce the contracts.

The complaint alleges that Best:
Misrepresented the City of Phoenix’s intentions regarding redevelopment plans.
Misrepresented his intentions about exercising his option to purchase when the neighbors signed contracts with him.
Engaged in acts constituting theft, and intentional or reckless false statements or publications concerning land for sale.

The Attorney General’s Office is asking the Maricopa County Superior Court to:
Require Best to return to all victims any money or property acquired through deceptive practices.
Require Best to pay damages to anyone harmed in this scheme.
Forfeit any property Best acquired from proceeds of this scheme.
Impose a $10,000 penalty for each violation of the Arizona Consumer Fraud Act.

Click here to read the press release


Three charged by Washington State AG

In the following press release Washington (WA) Attorney General Rob McKenna announced on October 20, 2006 that his office has filed first-degree theft charges and identity theft charges against three individuals accused of using falsely obtained social security numbers to get residential mortgage loans.

The Attorney General’s Criminal Division Financial Crimes Unit charged Pedro Juarez Romero with three counts of first-degree theft and one count of identity theft. Also charged in separate cases were Miguel Juarez Romero and Juana Vega Perez, husband and wife. Each were charged with one count of first-degree theft and one count of identity theft. All three individuals entered pleas of not guilty during their respective arraignments Oct. 19 in Snohomish County Superior Court.

Each charge carries a maximum penalty of 10 years in prison and a $20,000 fine. The charges were brought at the request of the Washington State Department of Financial Institutions.

The Attorney General’s Office alleges that Pedro Juarez Romero used a falsely obtained social security number to get two separate residential mortgages and a home equity line of credit. The social security number used by Pedro Juarez Romero was lawfully issued to a California resident.

The Attorney General’s Office further alleges that Miguel Juarez Romero and Juana Vega Perez each used falsely obtained social security numbers to get a residential mortgage loan on one occasion. The social security numbers used were lawfully issued to Washington and Idaho residents.  The trial is scheduled for Jan. 8, 2007.