10:17AM

Eleven Defendants Charged By Feds in Illinois Real Estate Closing Scam

Eleven suspects have been arrested on charges such as wire fraud, mail fraud and money laundering after authorities uncovered an elaborate scheme which defrauded several banks and other lenders out of more than $9.6 million through a series of fraudulent real estate closings in Illinois. A federal grand jury returned a 37-count indictment against the defendants based on the inquiry conducted by the FBI, IRS and local police. According to the indictment, some of the defendants falsely posed as buyers and sellers of real estate that they had no actual interest in buying or selling.

While taking part in these closings, the defendants allegedly often provided false names and presented false identification documents, such as fake Illinois drivers’ licenses and ID cards. The defendants allegedly caused financing to be arranged for the purported buyers of the real estate. At each of the closings, one of the defendants provided to the title companies a fraudulent mortgage release, authorities allege. These bogus releases falsely represented that the banks and lenders who held the previous mortgages against the real estate had released their mortgages.

Acting in reliance on these mortgage releases, the title companies disbursed the loan funds to the defendants. The defendants laundered these fraudulently obtained loan proceeds in a variety of ways, such as having title companies issue checks to third parties and then depositing the checks into their back accounts. The fraudulent closings took place at branch offices of five different title companies located in Chicago, the Chicago suburbs and Crystal Lake.

The defendants were identified as:
Jan Rozycka, 42
Ignacy Kondrad, 48
Waldemar Wilkiewicz, 28
Michael Skatulski, 32
Magdalena Banasik, 53
Robert Karolkiewicz, 40
Zbigniew Recko, 35
Ioan Corsiuc, 63
Bozena Sauciuc, 43
Dorothy Kawa, 35
Julita Uramowska, 31

9:38AM

Former Anne Arundel accountant indicted for Tax, Mail and Bank frauds 

US DOJ Press Release - April 13, 2004

Baltimore , Maryland - Thomas M. DiBiagio, United States Attorney for the District of Maryland, announced today that a federal grand jury indicted Charles G. Fagan , age 62, of Annapolis, Maryland, for crimes allegedly committed from about 2000 to 2003 in connection with various schemes to defraud the Internal Revenue Service as well as several clients of his accounting practice.

The sixteen count indictment charges Fagan with making numerous false claims against the United States with respect to his own tax returns, which resulted in Fagan receiving tax refunds in excess of $130,000.

The indictment also alleges that after his CPA license was revoked in January 2002, Fagan continued to hold himself out to clients and the IRS as a certified public accountant. The indictment further alleges that Fagan, who owned and operated Fagan & Associates , an accounting firm with offices in several locations in Anne Arundel County, Maryland, devised several schemes to defraud various financial institutions and clients of his accounting practice.

Fagan is alleged to have falsified a power of attorney and sold property that belonged to a client. Fagan is charged with using the proceeds of the sale of that property, in excess of $150,000, for his own personal benefit.

Fagan is also alleged to have stolen approximately $80,000 from a client shortly after her death by diverting her tax refund to his relative’s bank account, and by falsifying documentation to the client’s trust company which suggested that she owed taxes to the IRS, causing the trust company to mail a check to Fagan. The indictment alleges that Fagan thereafter deposited the check into his own account for his personal benefit.

The indictment further alleges that Fagan committed bank fraud by stealing approximately $100,000.00 from the bank account of a former client. Finally, it is alleged that Fagan accepted money from a client to obtain a lien release for a Notice of Federal Tax Lien filed against the client. Fagan is charged with falsifying documentation to make it appear that he had performed this service when he had not.
9:49AM

Cease and desist order issued, builder took deposits and failed to build homes

Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division has issued a cease and desist order against a home builder who it alleges took deposits and payments from consumers but failed to build the homes. The Division has charged Jeffrey Bryant of Bethesda and Advanced Building Solutions, Inc. of Beltsville with entering into contracts with consumers to construct homes in Montgomery and Prince George’s County, accepting partial payment from those consumers, but not beginning construction or refunding the consumers’ monies.

The Division further alleged that Bryant and Advanced Building Solutions, Inc. violated the Maryland Custom Home Protection Act and the New Homes Deposits Act by failing to place deposits and payments into an escrow account or having a surety bond to cover the deposit and that they violated the Consumer Protection Act by failing to build the homes as promised. The charges also allege that Bryant entered into contracts to build homes using the name Precision Group, Inc., whose application to register as a home builder was denied by the Division’s Home Builder Registration Unit. Maryland law requires home builders to register with the Consumer Protection Division to build new homes in Maryland. Advanced Building Solutions’ registration expired September 1, 2003.

The Division’s ex parte order immediately bars Jeffrey Bryant and Advanced Building Solutions, Inc. from acting or offering to act as a home builder in the State of Maryland and requires Bryant and Advanced Building Solutions, Inc. to pay $71,956 in restitution to the four consumers identified in the Division’s statement of charges. The order further requires Bryant and Advanced to pay restitution to any other consumers who have been harmed by their unlawful practices.

11:22PM

ID theft leads to charges for six - Amerifunding scheme

American Databank — April 8, 2004

A grand jury has indicted six people in an alleged scheme to obtain more than $5.7 million in mortgages and multimillion-dollar lines of credit by falsifying documents and obtaining personal information from people who thought they were applying for jobs. According to indictments handed up Tuesday and made public Wednesday, members of the group provided false information on loan applications, faked employment verifications and doctored financial documents.

Read the history of this case so far (Court Docket) by cliicking here

They also used help-wanted advertisements to solicit personal information from people who thought they were applying for jobs with a Westminster mortgage brokerage, according to an arrest affidavit issued earlier. The use of help-wanted ads to collect information for identity theft is becoming more common. Last year, online job site Monster.com warned users that false job postings were being used to illegally collect personal information from job seekers. Experts in the field say job seekers are prime targets for identify theft because information on applications typically provides sensitive personal information.

The Denver Post talked to one woman who believed she was a target of the fraud in Westminster when she applied for a job with Amerifunding, a mortgage company owned by Gerald P. Small of Broomfield. Joan Germano of Arvada responded to a help-wanted ad she saw in The Post in February, after she was laid off from her job at a title company. The ad promised salaries of more than $100,000 for account representatives who applied in person at Amerifunding’s offices at 8700 Turnpike Drive in Westminster.

When Germano showed up at the offices, she was asked to fill out an application and provide copies of her driver’s license and Social Security card. She declined to provide her Social Security card but shared her license. “My gut told me not to give them my license, but I was pretty desperate. I let my desperation override my good judgment,” Germano said.

She never heard never heard back from Amerifunding but later received a call from a bank representative who wanted to know if she was happy with her loan. She was contacted by an investigator from the Internal Revenue Service shortly thereafter.

Small was arrested on a criminal complaint related to the scheme March 12. He was indicted Tuesday along with Kelli B. Small, 30, of Broomfield; Robert E. Bichon, 37, no address listed; Robert J. Sigg, 39, of Parker; Charles E. Winnett, 31, of Conifer; and Chad E. Heinrich, 32, of Broomfield.

Gerald Small is scheduled to appear in court today. Kelli Small, Winnett and Heinrich were tentatively scheduled to surrender to authorities today, Dorschner said. According to court documents, Kelli Small is also known as Kelli S. Burkhalter, and Gerald Small is also known as Gerald A. Spence and Kris Kaas.

12:05PM

Mortgage Broker License Revoked

Pennsylvania Dept of Banking Order - April 5, 2002,

The Pennsylvania Department of Banking issued a final order that, among other things, fined Richard B. Davis $32,000 for 16 violations of the Mortgage Bankers and Brokers Act and banned Mr. Davis from engaging in the first mortgage loan business in any way.

7:44PM

St. Louis loan officer sentenced to prison for role in fraud scheme

St Louis Business Journal - April 2, 2004

A St. Louis area mortgage loan officer has been sentenced to prison without parole for his role in a mortgage fraud scheme, the U.S. Attorney’s Office said Friday.

Edmond H. Kinghorn Sr ., 46, of St. Louis, received 13 months in prison without parole on one felony count of wire fraud. Kinghorn was a mortgage loan officer for Green Valley Mortgage in St. Louis County, and submitted loan applications to mortgage lending institutions that contained false information about the potential purchasers. He also submitted false lease agreements, settlement statements and altered bank statements.

10:06PM

Former Rolesville attorney indicted 

Debra A. Golden writes in the Wake Weekly that former attorney for the town of Rolesville was indicted last Tuesday for felony worthless check and for embezzlement of $199,000, said Wake County first assistant district attorney Howard Cummings. Jonathon Koffa, who practiced law in Zebulon and was a former manager for that town, was arrested in February on charges related to two separate incidents.

In the first, Zebulon police charged Koffa with felony worthless check involving an October house closing, and the State Bureau of Investigation charged him with embezzling more than $100,000 in another case. Koffa resigned his position with the town of Rolesville in November, telling officials he was heading to Liberia to assist the country’s interim government. Koffa surrendered to authorities in Raleigh Feb. 23 after warrants were issued for his arrest.

Cummings said Koffa, who was released from jail after paying a bail bondsman $15,000, is still under investigation. A court date will be set after the investigation is finalized.

Court records show that on July 15, 2004 Koffa was disbarred at a hearing of the United States District Court for the Middle District of North Carolina.
4:44PM

Construction company owner indicted in Housing Fraud

US DOJ Press Release — April 1, 2004

BIRMINGHAM, AL - United States Attorney Alice H. Martin of the Northern District of Alabama, Carmen S. Adams, Special Agent in Charge, Federal Bureau of Investigation, James D. Vickery, Special In Charge, Internal Revenue Service, and Kenneth Donohue, Inspector General, United States Department of Housing and Urban Development, Office of the Inspector General for Investigations, announce today that EUGENE MCREATH has been indicted by a federal grand jury for conspiracy to defraud the United States, making false statements to the United States Department of Housing and Urban Development, and tax evasion.

McREATH, 55, of Panama City, Florida, was charged in a sixteen-count indictment filed today in U. S. District Court in Birmingham. Count 1 of the Indictment charges that McReath conspired to defraud the United States. In Counts 2 -11, McReath is charged with submitting false documents and making false statements to the United States Department of Housing and Urban Development. Counts 11 - 16 charge McReath with tax evasion for the years 1997 - 2001.

Previously, in January 2004, the United States Attorney filed charges against four individuals who worked for McReath for their participation in this fraud scheme. In March 2004, charges were filed against the mortgage broker who participated in the conspiracy.

The indictment charges that McReath was the owner of Southern Construction and Investments, a Birmingham, Alabama, company in the business of buying, renovating, and selling houses for profit. McReath had agents who sold houses on behalf of Southern Construction. Many of the houses sold by agents of Southern Construction were financed with HUD loans. HUD did not insure home loans if the seller provided the down payment or if the buyer had an insufficient credit history.

To fulfill its advertised policy of selling houses for no down payment, Southern Construction would pay the down payment for the home buyers. Agents of Southern Construction would then cause gift letters and other documents to be submitted to HUD that falsely represented that the money used for the down payment came from a relative of the home buyer and not Southern Construction. Agents of Southern Construction also caused false non-traditional credit letters to be submitted to HUD that bolstered the credit histories of home buyers.

During the scheme, McReath withdrew his share of the profit from Southern Construction’s bank account without filing tax returns or paying income tax.

“During the course of the conspiracy, false documents were submitted to HUD in connection with more than 55 loans totaling approximately $3 million. These loans went into default, causing the United States to suffer a loss of approximately $1.5 million,” stated U.S. Attorney Alice H. Martin.