4:32PM

Pair Plead Not Guilty in Home Loan Scam

In a Press Release the US DOJ in Los Angeles announced that as the result of an investigation by the FBI two individuals operating real estate and escrow agencies in Downey and Seal Beach were arrested this morning for allegedly victimizing dozens of homeowners through misrepresentations and fraudulent transactions, and eventually robbing them of the equity in their homes.

Click here to see the District Court Docket (Indictment not yet available)

In an indictment filed yesterday in United States District Court in Los Angeles, Martha Rodriguez and Edward Seung Ok were charged with 10 counts of mail fraud by operating a foreclosure scheme that targeted commercial lenders and homeowners in the cities of Lakewood, Wilmington, Carson, West Covina, La Puente, El Monte, Wilmington, Downey, Los Angeles and Asuza. The scheme allegedly caused losses of at least $8 million.

According to the indictment, the defendants would locate homeowners whose loans were in default by scouring databases that list pending foreclosure sales. The defendants would then pay others to visit the identified homeowners and convince them they could avoid forfeiture of their homes. When homeowners expressed interest, Rodriguez and Ok would meet with them and tell the homeowners that they could stop the foreclosure of their homes. Rodriguez and Ok explained that they would provide short-term loans to cover their debts. The victims were told that their homes would eventually be refinanced by "co-signers" with good credit, and that would help the homeowner qualify for a new loan. The defendants promised the homeowners that their credit would be improved within a period of 6 to 12 months.

The indictment further alleges that homeowners were asked by the defendants to sign various documents including loan applications, trust and grant deeds, while being assured they would not lose title to their homes. The defendants promised the deed would either be held in escrow or that the title would be returned to them once their credit was fixed.

The defendants continued the scheme by applying for loans, in some cases using straw buyers, who never intended to reside in the home. The straw buyers were paid a fee of up to $5,000. The loan applications included information relating to their income, bank account and employment. In other cases, the defendants would submit applications using the information and forged signatures of past clients, without their knowledge. The defendants would instruct the banks to wire the loan proceeds directly to their escrow accounts, and only a small portion of the loan proceeds would go to the homeowner. The majority of the loan proceeds would go to Rodriguez and her family members, Ok, and other unindicted co-schemers, according to the indictment.

Rodriguez, 33, was taken into custody at her Downey residence this morning. Ok, 39, of Torrance, was arrested simultaneously at a probation office in Arcadia. Both are scheduled to make their initial appearances this afternoon in federal court in Los Angeles. If convicted on all counts of the indictment, Rodriguez and Ok each face a maximum possible penalty of 200 years in prison.

5:12PM

Lenders face 14 felony charges

In a Press Release (reproduced below) Stanislaus County (Modesto, California) Assistant District Attorney Carol Shipley announced today that charges were filed in the matter of People v. Lonnie Lamont Ashlock, Ronald B. Buhler and Wilma Sue Walls. The complaint alleges fourteen counts of Fraud perpetrated against seven separate victims.

Additionally, there is a separate count of possession of methamphetamine against Ashlock only.

The charges arise from several real estate transactions that occurred between January 2002 and June of 2005 in which the defendants would obtain the trust of an individual who was seeking a loan to avoid foreclosure–and who would end up signing over title to their home.

The defendants surrendered themselves to the jail on December 1st. They were released upon posting bail and will be arraigned on December 22, 2005.

More about this story can be read in the Modesto Bee article which is contained in the references below.

9:31PM

JURY CONVICTS LOAN OFFICER FOR ROLE IN MORTGAGE FRAUD SCHEME

United States Attorney Chuck Rosenberg announces the return of a jury’s verdict today convicting Cynthia Eneanya, 33 of Missouri City, of all 26 counts arising from a multi-million dollar mortgage fraud scheme. Eneanya faces a maximum of five years imprisonment for the wire fraud conspiracy conviction and twenty years for each count of conviction for wire fraud and conspiracy to launder funds and substantial fines, as well as an order to pay restitution to the victims of the fraud scheme. United States District Judge Nancy F. Atlas, who presided over trial that began on Monday, November 28, 2005, has set sentencing for February 24, 2006.

During the week-long trial, the United States presented evidence that showed the workings of a multi-million dollar mortgage fraud scheme executed in the Houston area between September 2003 and August 2004. The evidence proved the mortgage fraud scheme involved the securing of mortgages by the defendants in amounts greater than the amount the seller received in payment for the house. The buyers gave the difference between the sales price and the mortgage amount to the defendant brokers. Kolo allegedly brokered these real estate transactions through his company. Thereafter, the defendant buyers allegedly defaulted on the loans.

Michael McKelvey, Gerald Scott and Johnny Hill were the buyers of the houses allegedly brokered by Peter Gibson Kolo through AMH Enterprises, operated by Cynthia Eneanya, a licensed loan officer with the Texas Department of Savings and Mortgage Lending. Each buyer received $5,000 for each house they purchased during the scheme. Eneanya and Kolo through AMH Enterprises paid the monies to James Turner, a licensed realtor, who acted as a middleman in this scheme. The defendants obtained a mortgage to purchase a total of twelve houses, each with an estimated value of approximately $500,000 or more, by making false statements and concealing facts in their sworn mortgage applications, such as: falsely inflating their incomes; listing false employers; providing false references; falsely stating that their current residences were leased; falsely stating that they intended to live in the house of purchase after the sale was completed; and failing to disclose on their mortgage application their obligations to pay for other homes previously purchased in the scheme. Eneanya, as a licensed loan officer, completed the mortgage applications and submitted them to the mortgage companies for their consideration. She also worked as a mortgage broker and arranged the loans for the buyers in the scheme.

The evidence showed that during the course of the scheme, the defendants caused more than $6.9 million in wires to be sent to title companies to effect the closing on the homes. Losses to the lenders are over $2 million.

Eneanya is the fifth of six defendants indicted for their respective roles in the scheme to be convicted. Three of the defendants, Michael McKelvey, Gerald Scott, and Johnny Hill, have previously pleaded guilty to conspiracy to commit wire fraud. James Turner pleaded guilty to count two, which charges conspiracy to launder funds. They are also scheduled to be sentenced on various dates in February of 2006. The sixth and last defendant named in the indictment, Peter Gibson Kolo, remains a fugitive. A warrant remains outstanding for his arrest.

This case was investigated by special agents of the United States Secret Service and the Internal Revenue Service Criminal Investigations Division. It was prosecuted by Assistant United States Attorneys Jay Hileman and Hays Jenkins.

5:03PM

State agency investigates manufactured homes dealer

An investigation by The Sun News (Myrtle Beach On Line) has led to the state agency that regulates manufactured home dealers stating that they are investigating Beach Homes owner Randy Conner regarding allegations by two home buyers who say Conner included false information on their loan applications.

The whole Sun News story is reproduced below.

The state’s probe is the result of a six-month investigation of the Grand Strand’s manufactured home industry by The Sun News. The allegedly false information in the Beach Homes cases, which included nonexistent down payments, was used to help convince mortgage companies to give the buyers a loan for land-and-home packages Conner sold in 2004 in the Laurel Woods subdivision off S.C. 707 in the Burgess community. The buyers say they otherwise would not have qualified for the mortgages. Conner could not be reached for comment on the investigation. He previously has denied the allegations.

"I can confirm to you that we are looking into those allegations and it is being investigated," said David Bennett, administrator of the state’s Manufactured Housing Board.

The board, a division of the S.C. Department of Labor, Licensing and Regulation, oversees the state’s manufactured home industry. Bennett said he can’t discuss specifics of an ongoing investigation and doesn’t know how long the Beach Homes investigation will take. Depending on its findings, Bennett said, the board could exonerate Conner, fine him or permanently revoke his license to sell manufactured homes. Bennett said the board also could turn its findings over to state and federal law enforcement, including the FBI, for criminal prosecution.

"We’ve revoked several licenses since 2000 for fraud, and several of those people have since been indicted and gone to federal prison," Bennett said. "Anyone who provides false information to secure a mortgage is committing a serious offense."

Tom O’Neil, an FBI spokesman in Columbia, said Department of Justice policy prevents commenting on the potential existence of an investigation.
"We do have investigative jurisdiction over mortgage fraud, and we work those cases," O’Neil said. "But until an arrest is made, we don’t publicly comment on them."

Making false statements on a loan application violates federal bank fraud and mail fraud laws, which carry penalties of up to 20 years in prison and a $250,000 fine for each occurrence, according to Kevin McDonald, chief assistant U.S. attorney in Columbia.

In the cases under investigation, two Laurel Woods home buyers received deposits into their bank accounts from Conner, thus making it appear to mortgage companies that the buyers had enough money for down payments and other fees. Conner and Beach Homes reclaimed the money days later, after the deposits had been documented for the mortgage companies, by cashing checks the home buyers gave to Conner’s staff, according to bank records. The financial transactions - for $30,000 and $6,500 - helped Ed and Hanna Hudzik and Bill and Susan Watts qualify for mortgages in 2004, they say.

Both couples say they wouldn’t have qualified for the mortgages if the money hadn’t been deposited into their accounts. They say they no longer can afford their homes, and the Watts’ home is in foreclosure. The Hudziks say they have been interviewed by state officials conducting the Beach Homes investigation. The Wattses say they have not yet been contacted.

Bennett said his agency’s investigation won’t necessarily be limited to those two mortgages and could expand to include other loans involving Conner and Beach Homes. "We’ll go wherever the documentation and evidence leads us," Bennett said.

McDonald would not comment specifically about Beach Homes, but he called The Sun News’ investigation "enlightening." McDonald said he has prosecuted between 40 and 50 S.C. residents and business owners in recent years for mortgage-fraud schemes. "The whole point of these transactions is to make the [borrowers] appear more creditworthy than they are or appear to have more assets than they really do in order to induce mortgage companies to do the loan," McDonald said.

McDonald said the number of mortgage-fraud cases he’s seen has grown in recent years, in part because of the state’s booming manufactured home industry. Census figures show that South Carolina has the highest concentration of manufactured homes in the nation and Horry County has more manufactured homes - about 24,000 of them - than any other S.C. county. Laurel Woods, with 369 homesites, is perhaps this area’s most stark example of the pitfalls of a manufactured home industry that specializes in high-risk loans. At least 106 families have lost their homes to foreclosure in Laurel Woods since 1999 - the highest foreclosure rate for any Grand Strand neighborhood.

9:37PM

Man convicted for obtaining mortgages using false information

United States Attorney Mary Beth Buchanan announced today, November 28, 2005, that Jeffrey Martin, a resident of Pittsburgh, Pennsylvania, pleaded guilty in federal court to charges of Wire Fraud. Martin, age 39, of 7217 Thomas Boulevard, Pittsburgh, Pennsylvania, pleaded guilty to five counts before Chief United States District Judge Donetta Ambrose.

In connection with the guilty plea, Assistant United States Attorney Brendan T. Conway advised the court that Martin was in the business of purchasing properties, rehabilitating them, and then either selling them or renting them out. He applied for numerous loans using various properties as collateral, and in connection with those loans Martin provided false W-2s, false appraisals, false leases, and other fraudulent documents that over stated either the value of the property or Martin’s income.

Judge Ambrose scheduled sentencing for February 27, 2006. The law provides for a total sentence of twenty years in prison, a fine of $250,000, or both, for each count. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offenses and the criminal history, if any, of the defendant. The Federal Bureau of Investigation conducted the investigation that led to the prosecution of Martin.

4:56PM

Investigators Trying To Find Couple Accused In Mortgage Scheme

NBC 4 News in Columbus Ohio is reporting that investigators are trying to track down a former Delaware County couple accused of stealing millions from customers of their title company, NBC 4 reported on Friday. After a five-year investigation, Michael Wozniak and Gloria Long have been indicted on charges of theft, money laundering and engaging in a pattern of corrupt activity. They are believed to be in Florida.

Delaware County Prosecuting Attorney Dave Yost said the couple took customers’ escrow accounts and used the money on payroll, expensive cars and Christmas gifts.

"They’re in a special position of trust," Yost said. "They violated that trust for their own benefit. That makes it worse than the average run-of-the-mill theft." Yost said the investigation took so long because of the massive amount of paperwork involved.

More to follow when available.

9:45PM

Loan officer pleads guilty to mortgage fraud

United States Attorney Mary Beth Buchanan announced today, November 18, 2005, that Daniel M. Laffey, a resident of Pittsburgh, Allegheny County, Pennsylvania, pleaded guilty in federal court to a charge of bank fraud. Laffey, age 49, of 36418 Kemper Street, Pittsburgh, Pennsylvania, pled guilty to one count before United States District Judge Gary L. Lancaster.

In connection with the guilty plea, Assistant United States Attorney Dennis P. Kissane advised the court that Laffey, while employed as a loan officer at America’s Mortgage Outlet, Inc., Monroeville, Pennsylvania, participated with others in the submission of false and fraudulent mortgage loan applications and supporting documents to Flagstar Bank, a federally insured financial institution. Laffey acknowledged that between August 15, 2002 and March 28, 2003, he, with the assistance of others at America’s Mortgage Outlet, submitted applications for nine mortgage loans to Flagstar Bank which were funded by the bank, causing the bank to extend loans to borrowers who would not otherwise have qualified for the loans.

Judge Lancaster scheduled sentencing for February 17, 2006 at 9:30 a.m. The law provides for a total sentence of thirty years in prison, a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant. Pending sentencing, the court continued Laffey on bond. The Federal Bureau of Investigation, Pittsburgh Office, conducted the investigation that led to the prosecution of Laffey.

9:42PM

LOAN OFFICER PLEADS GUILTY IN MORTGAGE FRAUD SCHEME

United States Attorney Mary Beth Buchanan announced today, November 18, 2005, that Michael D. Altman, a resident of Pittsburgh, Allegheny County, Pennsylvania, pleaded guilty in federal court to a charge of bank fraud. Altman, age 42, of 355 Frazier Drive, Pittsburgh, Pennsylvania, pled guilty to one count before United States District Judge Gary L. Lancaster.

In connection with the guilty plea, Assistant United States Attorney Dennis P. Kissane advised the court that Altman, while employed as a loan officer at America’s Mortgage Outlet, Inc., Monroeville, Pennsylvania, participated with others in the submission of false and fraudulent mortgage loan applications and supporting documents to Flagstar Bank, a federally insured financial institution. Altman acknowledged that between August 16, 2002 and February 28, 2003, he, with the assistance of others at America’s Mortgage Outlet, submitted applications for nine mortgage loans to Flagstar Bank which were funded by the bank, causing the bank to extend loans to borrowers who would not otherwise have qualified for the loans.

Judge Lancaster scheduled sentencing for February 17, 2006 at 10:00 a.m. The law provides for a total sentence of thirty years in prison, a fine of $1,000,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.

Pending sentencing, the court continued Altman on bond. The Federal Bureau of Investigation, Pittsburgh Office, conducted the investigation that led to the prosecution of Altman.