6:58PM

Real Estate Appraiser sentenced to 30 months in prison 

US DOJ Press Release — May 11, 2004

Washington, D.C. - United States Attorney Roscoe C. Howard, Jr. announced that today United States District Judge Paul L. Friedman sentenced Watson T. Goffney, Jr., 58, of Arlington, Virginia, to 30 months of incarceration and three years of supervised release for his part in falsely appraising properties in a real estate/mortgage fraud conspiracy. Goffney pleaded guilty on April 19, 2002, to one count of conspiracy. Judge Friedman also ordered Goffney to pay restitution of $935,309 to the Department of Housing and Urban Development (HUD). In sentencing Goffney, Judge Friedman said, “without the appraiser’s false statement, the scheme would have been unlikely to succeed.”

According to the government’s evidence, at the time of this offense, Watson T. Goffney, Jr. was a licensed appraiser. In addition to his ability to appraise properties for conventional bank loans, since 1996, Goffney had a special certification which allowed him to appraise homes which were the subject of financing the government provided to lower/middle income families through HUD’s Federal Housing Administration (FHA). In order to be an HUD-approved appraiser, Goffney was required to take additional classes, pass examinations, and certify that he understood that FHA relied upon the truthfulness and the accuracy of his appraisals. For FHA mortgage loans, once a FHA-approved appraiser (like Goffney) assured FHA of the value of the property, and with a buyer qualifying for the loan, then FHA would insure the mortgage loan. If the buyer were to fail to pay the mortgage, FHA would reimburse the lender 100% of the value of the loan, as well as pay any costs incurred by the lender in the foreclosure process.

The co-conspirators bought distressed property and then sold it (often on the same day) for a significant profit. Generally, the property was in disrepair and the seller did little or no work on the property before he “flipped” it to a buyer for a much higher price, which was supported by Goffney’s fraudulently inflated appraisal. As part of the plea, Goffney admitted that he agreed with co-conspirators to lie about the condition of the properties and inflate the value. For instance, several of his appraisals for property in the District of Columbia stated that: “the property was recently renovated,” when it was not, or that “the house has under gone complete renovation” when no such work had been done at the time of the appraisal.

Goffney’s appraisals “supported” mortgages which were in an amount much higher than the property was actually worth. The buyers were usually not financially able to qualify for such a mortgage. The sellers and others would help the buyer get the loan by providing fictitious income records and undisclosed financial assistance. After settlement, the homes typically were not habitable, and many times the planned renovation was not completed. The unqualified buyer would be unable to pay the mortgage, and as a result, the mortgage would often go into default and the home into foreclosure. FHA, which insured the loan, would reimburse the lender for its losses, but upon reselling the property, would not be able to recoup the amount it paid to the lender to cover the defaulted loan. The property would sell for less than the outstanding loan partly because Goffney appraised the property for much more than the property was actually worth at the time of the initial sale (and thus the mortgage loan was more than the value of the property).

As part of its investigation, special agents with the Federal Bureau of Investigation (FBI) recorded conversations between a seller and Goffney. In one such conversation, the seller mentioned a particular property which he had sold and which Goffney had appraised. In this consentually recorded conversation, Goffney explained to the seller, “Alright, I have, uh, lied on my appraisal …Okay, in saying that the house was in average condition when it’s a shell.” Goffney admitted later in the conversation, “I have committed fraud.”

Goffney appraised approximately 36 properties which were bought and sold by one or more co-conspirators and for which the mortgages were insured by FHA. At the time of the plea agreement, twenty of the 36 FHA-insured mortgage loans had been foreclosed; HUD had acquired and resold 13 of these properties at the cost of the total loan and lender’s foreclosure expenses, with an actual loss (after resale) to the government of approximately $935,000.

10:11AM

Consumers warned about Homeowner Membership Promotions

AARP Elder Watch Fraud Alert – May 11, 2004

Attorney General Ken Salazar, District Attorney Sarah Law, Archuleta County Sheriff W.T. (Tom) Richards and Pagosa Springs Police Chief Donald Volger today issued a joint consumer alert advising consumers to be careful in assessing certain homeowner membership clubs being promoted in the Pagosa Springs area. Of specific concern are out-of-state programs advertised under a variety of different organizations, all of which appear to promote costly buyers’ club programs which advertise mortgage loan payoffs for homeowners. Read the full alert by clicking the link above.

11:09PM

Marion resident sentenced to 24 months in jail 

Chronicle-Tribune — May 5, 200

Marion resident Richard Pollett was sentenced Tuesday to 24 months in jail after pleading guilty to conspiracy to commit mail fraud and money laundering. Pollett, 47, also was ordered to pay $553,987.11 in restitution and, after serving his time in jail, will spend three years under supervised probation during which he will have to undergo drug testing, said Mark Massa, assistant U.S. attorney for the Southern District of Indiana

Pollett initially was charged with two counts of conspiracy to commit mail fraud and conspiracy to conduct financial transactions with proceeds of a specified unlawful activity under the federal money laundering statutes for his part in a mail fraud scam.

Court records state Pollett and Upland resident Richmond Bailey , 48, obtained a loan from First Bank, a Louisville, Ky., mortgage lender, between July 2001 and July 2002 by providing false loan applications and an appraisal that valued an Indianapolis home at $48,000 when its fair market value was only $14,000.

Pollett received a cashier’s check for $70,000 in loan closing proceeds and deposited it in a Marion bank account, court records show. Both Pollett and Bailey signed plea agreements, according to Susan W. Brooks, U.S. attorney for the Southern District of Indiana.

Bailey is charged with one count of conspiracy to commit wire fraud and a second count that is similar to a money laundering conspiracy charge. He will be sentenced at 10 a.m. June 22 in U.S. District Court in Indianapolis, Massa said.

The charges were part of an ongoing investigation into a scheme involving activities in Marion, Anderson, Indianapolis and other areas within the Southern District of Indiana.

Last year, Scott Fetting , 45, Indianapolis, was sentenced to 15 months in prison, and Chris Wine , 29, Marion, was sentenced to 24 months in prison by a U.S. district judge for their roles in the same mortgage scheme.

Massa expects more arrests to be made as investigations continue. “This office has prosecuted in excess of 40 people over the past months for various mortgage schemes,” Massa said. “His (Pollett’s) guilty plea and sentencing does not wrap things up. It does for him, but not for us.”

4:40PM

Leaders of ID Theft ring convicted

United States Attorney Jane J. Boyle announced that Michael Keith Tisdale, 38, of Southlake, Texas, and his brother, William Randolph Tisdale, 39, of Plano, Texas, were convicted today by a federal jury on charges they ran an elaborate identity theft scheme that victimized numerous people, both living and deceased. The jury deliberated just three hours today following the two-week long trial in Dallas federal court before the Honorable Jerry Buchmeyer, United States Senior District Judge.

Specifically, each defendant was convicted of one count of conspiracy to falsely represent a Social Security Number as their own, identity theft and bank fraud. In addition, Michael Tisdale was also convicted on two counts of bank fraud and William Tisdale was also convicted on one count of fraud in connection with an access device.

Michael Tisdale was employed for 13 years as a Farmers Insurance agent. William Tisdale owned and operated Pegasus Mortgage Company.

Evidence presented by the government showed that from June 2001 through July 2002, the Tisdale brothers and others operated a conspiracy to commit identity theft by obtaining personal identification information of both deceased and living victims and then recruiting other individuals to use and assume the identities of the deceased and living victims. The Tisdales would create and obtain counterfeit drivers’ licenses using the Tisdale’s photographs, or photographs of recruited individuals, combined with the personal identification information of the deceased and living victims, to obtain financing on several luxury automobiles, including Mercedes, Jaguar, Porsche and Corvette, other loans, luxury watches, and other things of value.

The government contended that Michael and William Tisdale controlled a home in Dallas which they used as a mail drop to receive correspondence involving loans and credit cards they had applied for by mail and over the internet. Eight co-defendants who were charged in a July 2003 indictment, have pled guilty to their involvement in the scheme and are awaiting sentencing.

The Tisdale brothers were arrested in July 2003. William Tisdale was arrested while fleeing from a stolen Porsche he was driving. At the time of his arrest, he was in possession of approximately 13 fake Texas drivers’ licenses and a significant quantity of credit card documentation related to the false identities. Michael Tisdale was arrested at a Bank One branch where he was attempting to acquire a $25,000 equity loan and a $75,000 car loan and had presented a false driver’s license and fraudulent gold American Express card for identification.

Both Michael and William Tisdale testified at length during the trial, however, in reaching their verdict, the jury demonstrated that they did not find their testimony to be credible.

Government prosecutors referred several times during trial to the “web of deceit” that the defendants wove. The government called almost 40 witnesses during the trial, including many of the victims. One witness, a victim of their scheme, Dallas Police Department Homicide Detective Howard Johnson, testified that in 2001, he received a letter from Beneficial Finance thanking him for his recent loan. After contacting Beneficial Finance to advise them that he had not applied for a loan, he realized that his identity had been stolen.

11:32PM

State revokes Bend-area mortgage broker?s license

Oregon DFCS Press Release - May 3, 2004

State officials have revoked the licenses of Bend-area mortgage broker Garrett John Sytsma and his company, All Seasons Mortgage Services, Inc. All Seasons Mortgage Services was headquartered at 1051 NE 4th Street in Bend. The company also had a branch office in La Pine.

In addition to revoking the mortgage banker/broker licenses, an order issued by the Department of Consumer and Business Services (DCBS) bars Mr. Sytsma from acting as a loan originator and imposes civil penalties against Mr. Sytsma and All Seasons Mortgage Services.

“Mr. Sytsma and his company have until May 10 to complete the mortgage loans that are currently in process, and they will not be allowed to take on new business,” said David Tatman, chief of enforcement for the DCBS Division of Finance and Corporate Securities.

The DCBS order dated April 29, 2004, stems from Mr. Sytsma’s failure to comply with the terms of an order he consented to in November 2003. The earlier order described numerous violations of Oregon laws governing mortgage lending services and suspended Mr. Sytsma’s license for five years. The November order also required Mr. Sytsma to transfer management control of All Seasons Mortgage Services to another company while his license was suspended and to pay a civil penalty of $50,000. $30,000 of that civil penalty was set aside as long as Mr. Sytsma and his company complied with Oregon law and the terms of the November 2003 order.

Subsequent examination by the Division of Finance & Corporate Securities found that Mr. Sytsma retained management control of All Seasons Mortgage Services and continued to function as a mortgage broker, in violation of the November order. Also, Mr. Sytsma failed to pay civil penalty payments required by the November order.

“We are here to ensure that consumers are protected and treated fairly,” said Floyd Lanter, administrator of the Division of Finance and Corporate Securities. “Mortgage lenders help complete some of the most complex and important financial transactions many consumers will ever face, so it’s critical that lenders abide by the laws and rules that govern their industry. We want them to know that definitive action will follow if they don’t.”

The new order requires Mr. Sytsma to pay the $12,000 balance owing on the earlier order and to pay a civil penalty of $5,000 for violating the earlier order. If Mr. Sytsma violates the new order, the Department of Consumer and Business Services may impose additional penalties of $45,000.

2:52PM

Christian leader charged in mortgage fraud related theft

City of Golden Police Dept News Release  – April 29, 2004

GOLDEN, Colo. - A man wanted in Golden for felony theft was arrested by the Jefferson County Sheriff’s Office at about 7:00 p.m. on April 29, 2004.  Deputies went to the Holiday Inn Express at 12683 W. Indore Place in Littleton after receiving a report of a suspicious male.  They contacted 46-year-old Martin A. Nalitz of Littleton and arrested him on a felony theft warrant the Golden Police Department had entered the previous day.  Nalitz was taken into custody by deputies without incident.

Nalitz is suspected of taking over $1 million from a Golden company and its owner between October 2002 and December 2003.  In what Golden Police Department Detective Sergeant Jon Watson calls “mortgage lending fraud,” Nalitz, through his company Merit Funding Group, L.L.C., is suspected of fabricating up to 15 mortgage transactions, for which he received funding from Easy Street Properties, of Golden.  For more than a year, Easy Street Porperties and its owner, Sam Kimbriel, received interest payments, as expected in this type of transaction.  Kimbriel became suspicious when the interest checks started to bounce.

Investigators with the Golden Police Department obtained a warrant for Nalitz’s arrest on April 28, 2004.  At the same time, they obtained search warrants for two offices he occupies in Arvada.  The offices were serached that same afternoon and evidence was collected.

After his arrest, Nalitz was booked at the Jefferson County Jail and is currently being held on a $1 million bond.

According to an article in the Washinton Times Nalitz, a An evangelical Christian leader, was once Colorado talk show (on the KNUS station) host (known as Marty Naltiz) and a state Christian Coalition organizer during the mid-1990s. Click the green link above to read the story.

10:58PM

Muncie (IN) residents sentenced in real estate fraud

Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that Cindy Hickey, 46, and Bruce McLaren, 53, of Delaware County, Indiana, were sentenced today by U.S. District Judge Sarah E. Barker following their guilty pleas to wire fraud. This case was the result of an investigation by the Federal Bureau of Investigation.

According to Assistant United States Attorney Winfield D. Ong, who prosecuted the case for the government, Judge Barker imposed a sentence of 10 months on each defendant, to be served as five months incarceration and five months home detention. The judge also ordered each to serve two years in supervised release and restitution in the amount of $314,660.

Their scheme involved approximately 25 properties and operated from1998 to July 2001. Cindy Hickey and Bruce McLaren bought very low cost residential property in Muncie and sold the property, usually within just three to four weeks, at fraudulently inflated prices to buyers who had little or no assets, and thus had little to lose by agreeing to buy the property. Hickey and McLaren provided mortgage lenders false information about the buyers’ assets in order to get the buyers to qualify for mortgages. Cindy Hickey, a licensed real estate agent and mortgage broker, principally found purchasers for the properties and concocted mortgage applications getting them qualified for mortgages. McLaren found and purchased the properties, and provided the down payments to the purchasers in the guise of second mortgages which were invariably forgiven, or never collected. Most of these properties went into foreclosure and the purchasers were evicted.

10:12PM

REGULATORS SEEK REVOCATION OF SOUTH FL MORTGAGE LENDER?S LICENSE

Florida DFS Media Release - April 27, 2004

FORT LAUDERDALE — State regulators announced today that they are seeking revocation of a South Florida mortgage lender’s license for predatory lending practices, including misrepresenting loan terms and fees. The lender, First Mortgage America, Inc ., provided loans to consumers through several of its branch offices, including Miami, Dania, West Palm Beach, Sarasota and Tampa.

The Office of Financial Regulation (OFR) filed an Administrative Complaint against First Mortgage America, Inc., d/b/a The Financial Group, Inc., on April 16, 2004. The Complaint seeks revocation of the firm’s mortgage lender’s license and other penalties. The Financial Group, Inc., is headquartered in Ft. Lauderdale.

State regulators initiated a statewide examination into the lender’s activities and its owner, Blair Wright, after receiving more than fifty consumer complaints alleging, in part, ” misleading advertisements, misrepresentation of loan terms and conditions and misrepresentation of fees.”
According to examiners, The Financial Group, Inc., engaged in frequent radio advertising of very low interest rates. Potential borrowers were led to believe that the low rates advertised on the radio were fixed rate mortgages, when in fact they were adjustable rate mortgages. The loans were structured such that the monthly payment may not be sufficient to cover the monthly principal and interest payment resulting in an increase rather than a decrease to their mortgage loan balance.

Examiners also determined that The Financial Group, Inc., failed to disclose or underestimated to potential borrowers the total costs to be incurred in obtaining their mortgage loan.