AZ DFI Revokes Escrow Agent’s License and Removes Escrow Officer

In the following press release The Arizona Department of Financial Institutions (“DFI”) Superintendent Felecia Rotellini announced that DFI has revoked the license of an escrow agent involved in several fraudulent loan transactions. The Superintendent has also issued an order prohibiting a former employee and escrow officer from working within the financial services industry.

First Financial Title Agency of Arizona (“First Financial”) and its president, Tom Paschen, were fined $20,000.00 and $10,000.00, respectively, for knowing violations of the laws regulating escrow agents in Arizona. First Financial’s license was revoked because of its violations of statutes regulating escrow agents and because of its unsafe financial condition. In 2002 and 2003, First Financial’s former escrow officer, Victoria Cervantes, facilitated a series of fraudulent loan transactions for the benefit of real estate agents, Carmen Cantu and Betty Barbee.

DFI’s investigation focused on loan files in which Ms. Cervantes knowingly notarized false documents and signatures, used a family member as a fraudulent buyer in one transaction, caused the unauthorized disbursements of loan proceeds, and facilitated the closing of loans with straw or fraudulent buyers. After a multi-day administrative hearing, Administrative Law Judge Daniel Martin concluded that the evidence of Ms. Cervantes’ conduct, as an employee of First Financial, clearly proved that First Financial violated the statutes establishing its fiduciary duties to its customers and its responsibility to ensure proper accounting of escrow funds and to ensure against errors and fraud. Judge Martin also found that First Financial failed to maintain proper internal controls to operate its business in a lawful manner.

In addition to the imposition of a civil money penalty, First Financial was ordered to pay DFI’s remaining examination fees of $23,000.00. DFI’s extensive examination of First Financial commenced after receiving a complaint from a woman who lost her home through one of the fraudulent transactions and additional information from the Arizona Attorney General’s Office and the Arizona Department of Real Estate. The three agencies worked together to trace Ms. Cervantes’ activities, resulting in the administrative action against First Financial and the ultimate indictment and conviction of Ms. Cervantes, the real estate agents, and a loan officer.

In a separate administrative action brought by DFI, Ms. Cervantes, who is now a convicted felon, was removed from the escrow industry and the Superintendent’s final order prohibits her from working in the escrow business. By law, as a result of the final order against Ms. Cervantes, she may not be employed by any financial institution or enterprise regulated by DFI, without the Superintendent’s prior approval.

The Superintendent has the statutory authority to remove, suspend or prohibit a person from participating in the business of a regulated entity if found to be unfit, dishonest or convicted a crime involving fraud and deceit. “The statute is designed to weed out the worst actors and help our licensees police themselves through notice of the prior bad conduct,” says Superintendent Rotellini. “We expect our licensees to operate their businesses with sufficient quality controls to discourage and discover fraudulent conduct. We also know that it is difficult to detect fraud amongst employees and so we are doing everything we can to hold the individuals accountable as well.” Additional removal actions are planned and DFI is focusing more of its resources on the examination and investigation of mortgage fraud.


Woman charged with theft of realtor fees at closings

In the following press release Gwinnett County Police Dept announced that investigators with the Electronic Crimes and Financial Unit of the Gwinnett County Police Department arrested 39-year-old Vivian Min of Suwanee and charged her with two felony counts of Theft by Taking.


Min worked as a realtor for Bob Wood Realty from 2001- 2004. Min went to several closings for properties located in Gwinnett County and received a commission check for the sale of the properties. The check was supposed to be issued to Bob Wood Realty who would then pay Min her commission from the sale. Min instructed the closing attorney to issue the check to her company “Property Solutions” and deposited the funds directly into her account. The total loss suffered by Bob Wood Realty was $17,565.

Click here to see the original press release


Daily Updates - June 15, 2006

The following entries have been updated today. Click the link to read them:

Jim Pruett sentenced to 41 months


Man sought for mortgage fraud in Gwinnett County (GA)

In the following press release the Gwinnett County Police Dept announced that investigators with the Electronic Crimes and Financial Unit of the Gwinnett County Police Department have obtained two felony arrest warrants against 33-year-old Dennis Gutierrez (pictured below) of Hoschton Georgia.

In June 2005, Gutierrez told the victim that he would purchase three homes for her in Gwinnett County if she gave him $35,000.00. The victim gave him a check for the amount, which he cashed the day after receiving it. Gutierrez never purchased any properties for the victim. He is not a licensed real estate agent in Georgia and cannot buy, sell or broker any real estate transactions.


In March 2006, the offender agreed to sell property for the owner. The property is located at 2612 Halcyon Way, which is located in the Lawrenceville area of Gwinnett County. Gutierrez told the owner that he would purchase her home but she would need to give him$1000.00 in cash and a refrigerator in order to cover the mortgage payment for the next month until he was able to purchase the property. Gutierrez did not purchase the home but obtained renter for the property and charged the renter $1300.00 a month for rent. Gutierrez never purchased the home and never applied the $1000.00 given to him by the original owner to the mortgage. Since he was not the owner, he had no authority to lease the property. The original owner is currently going through the foreclosure/bankruptcy process.

There are several more active cases involving fraudulent activity by Gutierrez. Dennis Gutierrez has yet to be taken into custody. Anyone with information on is whereabouts is asked to call 911.

For a copy of the press release please click here


Two indicted for fraud in Ventura County

In the following press release Ventura County (CA) District Attorney Gregory D. Totten announced today that the Real Estate Fraud Prosecution Unit has filed an eight-count felony complaint against Manuel “Manny” John Perez, Jr. (DOB 5/7/72), and Michele Galindo (DOB 3/17/69) of Oxnard. The complaint charges Perez and Galindo with seven counts of grand theft, arising from their actions under the guise of Perez’s wholly-owned businesses, Casa Bonita Realty, Creative Mortgage Solutions and Elite Escrow, between May and September, 2005. Perez is charged with an additional count of forgery related to a quitclaim deed purportedly executed by his former wife. Perez’s bail was set by Ventura County Superior Court Judge Roland Purnell at $500,000. Galindo’s bail was also set at $500,000.

Perez, who is not a broker or agent licensed by the Department of Real Estate, allegedly operated his real estate sales, financing, and escrow businesses with Galindo employed as a real estate agent. They allegedly utilized a fraudulent “Rent-A-Credit” program to seek buyers for homes in which the buyers were supposedly helping others achieve home ownership. Galindo represented the buyers in real estate purchase transactions by submitting offers to purchase homes listed for sale. The employment, income, and intention of such buyers to occupy the homes was misrepresented to lenders so the buyers could qualify to purchase the homes. Rather, Perez allegedly continued to maintain control of the properties for leasing to prospective tenants, or his and Galindo’s own use. Moreover, the loan amounts utilized to purchase the homes were increased by several thousands of dollars above the actual contract sales price by use of inflated appraisals and phony sales contracts reflecting higher purchase prices. Once loan funding was secured, Perez and Galindo liquidated excess funds by dispersing checks to Perez from the Elite Escrow trust account. The total monetary loss to sellers, lenders, and others as reflected in the offenses charged to date is approximately 2.9 million dollars. The Real Estate Fraud Prosecution Unit continues to investigate additional irregular transactions handled by Perez and his businesses.

If convicted as charged, Perez could be sentenced to up to 18 years in state prison and if Galindo is convicted, she could be sentenced up to 17 years, 4 months in prison.


Man arrested in million dollar scam that targeted the elderly

The following report by Anu Prakash is reproduced from the website of WXYZ TV Channel 7 News in  Detroit, Michigan.

A mortgage scam has surfaced in the Detroit area that targets senior citizens. Wednesday, the Wayne County Prosecutor announced the arrest of a suspected scam artist accused of ripping off dozens of home owners. The suspected scam artist is Anthony James of Romulus, and investigators believe he may have obtained nearly a million dollars by scamming up to 40 homeowners in Oakland and Wayne counties.

James is currently facing charges in a case involving 84-year-old Shirley Schultz of Belleville. She saw a commercial on TV for a reverse mortgage, which allows senior home owners to convert equity in their home to cash. She talked with James over the phone, who ultimately had the closing company issue two checks at the closing. Prosecutor Kym Worthy said Ms. Schultz thought the loan amount was for $62,000, but James made it for almost $103,000, and pocketed the remaining money.

Prosecutor Worthy says everyone must be very careful when it comes to any kind of loan. “I think especially if you’re a senior, if someone comes and offers you something that either sounds, and this may have nothing to do with reverse mortgages, it sounds too good to be true, or something that you don’t know completely about, or it’s someone you don’t know, or even if it’s someone you do, and they want to get involved with large portions of your money, you really ought to be very circumspect. Financial predators are everywhere, and we are finding, within the walls of this office, that the elder abuse exploitation crimes are just much more than we even anticipated,” Prosecutor Worthy explained.

Thursday, James will be charged with uttering and publishing for cashing fraudulently that $42,000 check. Meanwhile, Ms. Schultz is said to be of sound mind, and she is working with investigators.

Click here for the Wayne County DA’s press release


Man indicted alleged fraud totalling $1.5 million

In the following press release from Philadelphia, PA United States Attorney Patrick L. Meehan, F.B.I. Acting Special Agent-In-Charge Brian W. Lynch, and I.R.S. Special Agent-In-Charge Peter Alvarado announced the filing of an indictment (click here to read it) charging CHRISTOPHER GALLAGHER with three counts of wire fraud and two counts of failing to file tax returns. These charges arise from a mortgage fraud scheme involving properties valued at more than $1.5 million.

“Many people lost their homes because of this scheme and many more are struggling to keep up with expensive mortgages they just can’t afford,” said Meehan. “Schemes like this often trigger an increase in foreclosures which can destabilize and eventually implode a community.”

Defendant CHRISTOPHER GALLAGHER was the manager and supervisor of a mortgage brokerage company located on 7th Street in downtown Allentown, Pennsylvania. Defendant GALLAGHER worked in close contact with Patrick Balf, who earlier has pled guilty to federal fraud charges. Balf worked as a real estate agent at The Real Estate Center. Defendant GALLAGHER employed Donald Stone, who also pled earlier to federal fraud charges. Stone it is charged handled various clerical duties at the Mortgage Access Center, as instructed by defendant GALLAGHER. The indictment alleges that defendant GALLAGHER intentionally targeted houses in a limited area of downtown Allentown, for potential buyers which were referred by Patrick Balf. These buyers were “subprime” borrowers. “Subprime” borrowers are individuals with damaged credit who are unable to obtain financing from banks and other finance companies at the lowest market rates, leaving them with few options in the mortgage lending market. The majority of the buyers involved in the scheme were Hispanic.

Defendant CHRISTOPHER GALLAGHER, together with Balf and Stone, falsified loan documents submitted to mortgage lending companies to make it appear that the buyers met underwriting criteria set by those companies. For example, the defendant falsified documents listing the employment history of buyers, verifying the income of buyers, and detailing the amount and origin of cash used to purchase the houses.

The result of the scheme was that the defendant made it appear that otherwise unqualified buyers were qualified for mortgage financing. The scheme lasted from 1998 through 2003 and involved several hundred transactions.

“They called it ‘creative financing’ but we call it fraud,” Meehan said. “These cases are about protecting our neighborhoods. If we can help to keep people in their homes, we can nurture the kind of cohesive neighborhoods that are the bedrock of safe, secure communities.”

If convicted, defendant CHRISTOPHER GALLAGHER faces a maximum possible sentence of 62 years imprisonment, 3 years supervised release, a $800,000 fine, and a $350 special assessment. Restitution may also be ordered against the defendant.

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. The case has been assigned to Assistant United States Attorneys Seth Weber and Michael S. Blume.


Daily Updates - June 14, 2006

The following entries have been updated today. Click the link for more detail.

CT Attorney pleads guilty to embezzlement

Two sentenced in mortgage fraud case