Entries in Michigan (68)

2:10PM

Michigan AG files criminal charges agains loan modification company

Michigan Attorney General Mike Cox today announced the filing of three criminal complaints and a total of 10 charges against illegal advanced fee “foreclosure rescue” operations accused of defrauding Michigan families of thousands of dollars.

Global Financial Consulting Services of Dearborn Heights, Advanced Mediation Services of Midland and James Klein of Midland are accused of illegally charging homeowners facing foreclosure upfront fees for mortgage modification assistance.  The defendants claimed they would help homeowners by working with their lenders in an attempt to modify the borrower’s mortgage.  After paying the upfront fee, borrowers found that the companies could not secure a modification and were subsequently unable to get their money back.  

“These companies took advantage of Michigan families trying to hold onto the American dream,” said Cox. 

Global Financial Consulting Services faces four criminal counts including two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and two counts of making misleading statements. 

Advanced Mediation Services and James Klein each face two counts of charging upfront fees before services were rendered, a violation of the Credit Services Protection Act, and one count of making misleading statements.  Each of the charges carries a penalty of up to 90 days in jail and/or a fine of $1,000 in addition to the requirement that the companies make full restitution to each of their victims

Cox urges any consumers who paid fees to Global Financial Consulting Services, Advanced Mediation, James Klein, or any other mortgage modification company for services that were not provided, to contact the Attorney General’s Consumer Protection Division at (877) 765-8388 or online at www.Michigan.gov/ag.   

Cox reminds homeowners they can find foreclosure information on his website at www.Michigan.gov/avoidforeclosure.  The website includes contact information for government agencies and debt counselors, and also offers tips for those facing foreclosure, including:

·     Homeowners are never required to pay to speak with their lender or servicer.

·     Homeowners do not need to pay for outside assistance.  Free assistance with foreclosure issues can be found by calling the Michigan State Housing Development Authority at (866) 946-7432.

·     If you do hire outside assistance, never pay up front for help with negotiating your loan or working with your servicer.

Attorney General Cox has made prosecuting mortgage fraud a priority for his office.  In 2008, Cox created a mortgage fraud unit, teaming with the Michigan State Police and other law enforcement agencies to tackle consumers’ complaints.  Cox’s office has charged 24 people or companies with a mortgage fraud-related offense in the last 12 months alone.  Cox’s office also conducted several mortgage foreclosure forums to help families stay in their homes during these difficult times.

In addition to today’s charges, Cox announced that he has partnered with the Federal Trade Commission and delivered Notices of Intended Action (NIAs) to 13 out-of-state companies accused of illegally demanding upfront fees from Michigan consumers for loan modification services. 

If the targeted companies fail to contact the Attorney General’s Office to create a plan to provide restitution to Michigan consumers, the Attorney General may file a civil suit against them in order to recover damages.

The companies receiving NIA warnings from Cox today include 1 Global Financial, Inc., of Fort Lauderdale, FL; 21st Century Legal Services and Fidelity National Legal Service, of Rancho Cucamonga, CA; Best Interest Rate Mortgage, of Westmont, NJ; Echo Loans & Financial Solutions, of Foothill Ranch, CA; Elect Group LLC, of Oakland Park, FL; Federal Home Savers, of Commack, NY; Fresh Start Home Modification, of Woodbury Heights, NJ; Hope N Housing, of Norwalk, VA; IMC Financial, of Clearwater, FL; Lifeguard Financial, of Fort Lauderdale, FL; National Modification Corp., of Hauppauge, NY; North American Relief, LLC, of Costa Mesa, CA; and Peoples First Financial Inc., of San Diego, CA.

A criminal charge is merely an accusation, and the defendant is presumed innocent until and unless proven guilty.

1:58PM

Michigan woman charged in "massive real estate Ponzi scheme"

Michigan Attorney General Mike Cox today announced the early morning arrest of a Grosse Ile woman accused of defrauding dozens of people in a massive real-estate Ponzi scheme. Rita Gosselin, 58, (pictured below) is charged with racketeering and multiple counts of obtaining money under false pretenses for orchestrating numerous fraudulent real estate investments and stealing hundreds of thousands of dollars from Michigan families.

“Taking advantage of Michigan families, especially in today’s economy, will not be tolerated,” said Cox. 

Rita Gosselin was arrested by investigators from the Attorney General’s office and the Southgate Police Department at her home early this morning.  She is charged with one count of continuing criminal enterprise (racketeering), a 20-year felony, and 3 counts of false pretenses over $20,000, each a 10-year felony.  Gosselin was arraigned this afternoon in the 33rd District Court in Woodhaven before Judge Michael McNally.  The court imposed a $300,000 cash bond and Gosselin is next due in court for a preliminary examination scheduled at 8:30 a.m. on December 15. 

Between April 2007 and September of 2008, Gosselin is accused of orchestrating a real-estate investment ponzi scheme in metro-Detroit.  Gosselin allegedly enticed investors with claims she was able to purchase foreclosed and distressed properties in bulk and renovate the homes to sell at a profit. Gosselin allegedly promised investors regular monthly payments.  As security for these investments, Gosselin allegedly provided investors with promissory notes. 

Few investors received any of the payments promised and all lost some, if not all the money they invested.  Gosselin’s scheme may have taken in as much as half a million dollars from as many as 20 victims. 

Attorney General Cox has made prosecuting mortgage and real-estate fraud a priority for his office. In 2008, Cox created a mortgage fraud unit and teamed up with the Michigan State Police and other law enforcement agencies to tackle the problem. Cox’s office has also held seven mortgage foreclosure forums to help families stay in their homes during these difficult times.

A criminal charge is merely an accusation and the defendant is presumed innocent unless proven guilty.

 

10:27AM

Woman charged with ID Theft and mortgage fraud

In the following press release Michigan Attorney General Mike Cox today announced that his office has filed charges against a Wyoming, MI woman accused of defrauding the Michigan State Housing Development Authority (MSHDA) by fraudulently obtaining a mortgage, defaulting on that mortgage and leaving taxpayers to pick up the tab.

Maria Antonia Franks Hernandez (pictured below) is accused of stealing her sister’s identity between December 2003 and February 2004 to fraudulently obtain an $83,000 mortgage through MSHDA.  She then defaulted on the mortgage, leaving taxpayers with a balance of more that $76,000.  Franks Hernandez’s sister resides in Mexico.


“Mortgage fraud is making it harder for people who play by the rules to achieve the American dream of home ownership,” said Cox.        

Franks Hernandez is charged with one count of false pretenses over $20,000, a 10-year felony, as well as one count of identity theft, a 5-year felony.  Franks Hernandez was arraigned Friday in the 61st District Court in Grand Rapids before Judge Donald Passenger.  The court imposed a $5,000 bond and Franks Hernandez is next due in court for a preliminary examination before Judge Jeanine LaVille on November 10. 

The charges are the result of a joint effort by the Michigan Attorney General’s office, the Michigan State Police and the U.S. Department of Housing and Urban Development.

Attorney General Cox has made prosecuting mortgage fraud a priority. In 2008, Cox created a mortgage fraud unit and teamed up with the Michigan State Police and other law enforcement agencies to tackle the problem. Cox’s office has also held mortgage foreclosure forums across the state to help families stay in their homes during these difficult times.

A criminal charge is merely an accusation and the Defendants are presumed innocent unless proven guilty.

10:35PM

Three charged in Detroit area builder bail out fraud allegations

In the following press release Terrence Berg United States Attorney for the Eastern District of Michigan announced that James Wiese, 38, of Birmingham, Ilir Dokaj, 33, and Tom Gjokaj, 52, both of Sterling Heights, were indicted today by a federal grand jury in Detroit for scheming to obtain $7,557,100 from federally insured banks through fraudulent mortgages on twelve Birmingham homes. Berg was joined in the announcement by Andrew C. Arena, FBI Special Agent in Charge.

The 2-count indictment charges that James Wiese, through his company Great Lakes Custom Builder, LLC, purchased twelve residential properties in Birmingham, Michigan in 2004 and 2005. Many of these property sites originally had smaller homes located on them, which had been demolished. Wiese built new houses on the twelve sites, expecting to make a profit when the new houses were sold.

James Wiese, Ilir Dokaj and Tom Gjokaj devised a scheme in which Gjokaj would be the straw buyer and purchase all twelve of the newly constructed Birmingham properties in three months: the first fraudulent loan closed on May 11, 2007, and the twelfth and final loan closed on August 13, 2007. Gjokaj paid Wiese’s asking price for all twelve properties, for a total purchase price of $8,313,000. To cause the lending institutions to believe that Gjokaj qualified to purchase the houses, the conspirators engaged in a variety of fraudulent conduct, including:

•Wiese supplied $815,815.86 toward the sales of his properties himself. He provided $346,700 to be used as the earnest money deposits for the sales, and an additional $469,115.86 to be used as the down payments and to cover closing costs. To prevent the lenders from knowing that the funds came from him and not from Tom Gjokaj, Wiese deposited the money and down payments into bank accounts controlled by Gjokaj, and also transferred other funds to bank accounts controlled by Ilir Dokaj; Dokaj then moved most of those funds into bank accounts controlled by Gjokaj.
•After funds from Wiese and Dokaj were in accounts he controlled, Gjokaj drafted official checks or wrote personal checks from those accounts, and used the checks as earnest money deposits and down payments.
•On the mortgage loan applications (1003s) for each of the properties, Gjokaj failed to disclose that Wiese, the builder and seller, was ultimately providing the funds for the earnest money and down payments. Instead, Gjokaj fraudulently represented that the earnest money and down payments were his own funds. Gjokaj also inflated his monthly earnings, failed to disclose all of his liabilities (including those related to the properties he had already purchased), and made other material misrepresentations.

At the closings on the sales of the properties, both James Wiese and Tom Gjokaj signed the HUD-1 Settlement Statements certifying that all payments associated with the transaction were included on the Settlement Statements; however, the Settlement Statements did not list the transfers of funds by Wiese to Gjokaj to cover the earnest money deposits and down payments. All of the mortgages went into immediate default.

United States Attorney Berg said, “The charges in this case demonstrate the dangers when the builder/property owner colludes with the purchaser in order to grease the skids of the financing process by furnishing the down-payment that purchaser should legitimately make and hide that fact from the lender. We will continue to target mortgage fraud because it harms both our financial institutions as well as the integrity of the market.”

An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

The case was investigated by special agents of the FBI. The case is being prosecuted by Assistant U.S. Attorney Cynthia Oberg.

11:45AM

Michigan couple found guilty in mortgage fraud case

In the following press release Donald A. Davis, United States Attorney for the Western District of Michigan announced that defendants Patricia L. VanderZwaag, 37, and Daniel Lee VanderZwaag, 36, of Holland, Michigan, were found guilty by a federal jury in Kalamazoo of one count each of mail fraud and wire fraud. Patricia L. VanderZwaag was also convicted on one count of financial institution fraud and one count of money laundering.

The defendants are the owners of Mad Jac Corporation, also known as B & J Towing. They provided false documentation and information to mortgage companies to obtain loan proceeds.[Editor note - they obtained two first liens on the same property - see below].

Defendant Patricia VanderZwaag also used false information and documentation, including the Social Security Number of another person, to obtain a mortgage loan from National City Bank. She then transferred $16,000 of one of the mortgage company loans to another bank to launder the funds.
__________________________________________________________________________________

Additional Materials

__________________________________________________________________________________

[Editor Note: The properties mentioned in the indictment are:

  1. 2121 Oak Hollow Drive, Jenison, MI - on which they obtained more or less simultaneous first liens from National City and Option One by provided false documents.
  2. 4233 Creekview Drive, Hudsonville. MI ].

Patricia VanderZwaag faces a maximum penalty of 30 years’ imprisonment and a fine of $1,000,000. Daniel Lee VanderZwaag faces a maximum penalty of 20 years’ imprisonment and a fine of $1,000,000. Immediately after the return of the guilty verdicts, the Hon. Paul L. Maloney, Chief U.S. District Court Judge, remanded both Vanderzwaags to the custody of the U.S. Marshal until sentencing. A date for the sentencing hearing has not yet been set.

U.S. Attorney Davis commended the Federal Bureau of Investigation for its work in the case. This case was prosecuted by Assistant U.S. Attorney Timothy P. VerHey.

10:37AM

Michigan man pleads guilty to a bankruptcy fraud used to try and prevent foreclosure

In the following press release Terrence Berg, United States Attorney for the Eastern District of Michigan announced that a 30 year-old former resident of Orchard Lake, Michigan pleaded guilty today to an Information charging him with having fraudulent bankruptcy petitions filed in order to defraud his mortgage lender and forestall foreclosure on his mortgage and take possession of his property, United States Attorney Terrence Berg announced today.

Pleading guilty before U.S. District Judge Bernard A. Friedman was James Whitaker, a former resident of Orchard Lake, Michigan.

In 2007, Mr. Whitaker’s mortgage holder, Deutsche Bank, began foreclosure proceedings on a $970,000 mortgage Whitaker had obtained on a residence he occupied located on [4904] Elmgate Drive in Orchard Lake. Mr. Whitaker, however, held title to the property in his sister-in-law’s name. When the bank began eviction proceedings in the 48th District Court in Bloomfield Hills, Michigan to take possession of the property, Whitaker had a bankruptcy petition preparer file several pro se bankruptcy petitions in his sister-in-law’s name in order to stay the eviction action in the State court. After each fraudulent petition was dismissed by the U.S. Bankruptcy, Whitaker would have another one filed. By doing this, Whitaker was able to delay his eviction from the home for over a year and a half during which time the value of the property substantially decreased. Because each of the four fraudulent bankruptcy petitions filed in his sister-in-law’s name had been abandoned, the U.S. Bankruptcy Court eventually issued an order to Whitaker’s sister-in-law to show cause why she shouldn’t be held in contempt. The sister-in-law failed to appear in bankruptcy court which eventually led to her arrest at her place of work. She was released when she convincingly explained to the bankruptcy judge that she didn’t reside at the Elmgate property and didn’t know anything about the fraudulent bankruptcy petitions being filed in her name.

U.S. Attorney Berg stated, “Mr. Whitaker’s filing of these fraudulent petitions in the U.S. Bankruptcy Court had serious personal consequences for his sister-in-law. He executed this scheme to mislead the State court system and his creditor. This office and federal law enforcement will continue to redress such abuse and deception.”

Mr. Whitaker is scheduled to be sentenced by Judge Friedman on November 17 at 11 a.m. The matter was referred by U.S. Bankruptcy Judge Thomas Tucker in Detroit and the investigation of this case was conducted by the Federal Bureau of Investigation.

3:49PM

Michigan AG charges 3 in another mortgage fraud scheme

In the following press release Michigan Attorney General Mike Cox today announced that three individuals have been charged in connection to a mortgage fraud ring operating in West Michigan. Grand Rapids resident Damon Clark (below right) and Ferndale resident Reginald Tardy, Jr. (below left) are in custody after being charged with eight counts of perpetrating mortgage fraud in connection to six Grand Rapids properties. Former Grand Rapids resident Brian VanFarowe was also charged but has fled the country.

“Mortgage fraud hurts all of us through declining home values and a damaged financial system,” said Cox. “But this case is especially disturbing because they targeted people who did not understand the process, creating a financial disaster while pocketing thousands for themselves.”
___________________________________________________________________________________
Additional Materials

___________________________________________________________________________________

During 2005, it is alleged that mortgage loan officers Tardy and Clark and real estate investor VanFarowe conducted a mortgage foreclosure scam that targeted the Hispanic community in Grand Rapids. The targeted buyers often spoke or wrote little English and had a limited understanding of the mortgage process.

Promising them a piece of the American dream, Tardy and Clark prepared loan documents for the buyers with falsified financial information to ensure a mortgage could be obtained. The pair of loan officers acquired generous assessments for VanFarowe’s properties and used the falsified loan applications to secure mortgages for the buyers which were higher than the actual property value.

At the closings, VanFarowe presented invoices alleging that legitimate services had been rendered by T.Dot Financial, a company owned by Tardy and Clark. These invoices were fraudulent because they were kick-backs to the loan officers for finding a buyer and getting the fraudulent loan application approved. Because VanFarowe did not object to the invoice, the mortgage company permitted payment from loan proceeds. As loan officers, Tardy and Clark had a duty under law to remain at “arms length” in arranging mortgage applications. They used the fraudulent invoices to hide the fact that they personally benefited from the inflated sale and fraudulent mortgage applications.

As a result of the scheme, the buyer ended up owning property with a mortgage greater than the actual value of the home, while Tardy, Clark and VanFarowe illegally walked away with thousands of dollars. The buyer, who’s loan application was based on false income information, did not have the financial means to pay the mortgage and ended up in foreclosure.

Editor Note:

The Affidavit for Warrant reveals that a single straw buyer bought the 6 properties from Advanced Realty Systems, a company owned by VanFarowe. Those properties are:
36 Eastern Ave, SE, Grand Rapids
910 Fountain St., NE, Grand Rapids
753 Liberty St. SW, Grand Rapids
646 Henry Ave, SE, Grand Rapids
720 Lynch St., SW, Grand Rapids
555 Dickinson St., SE, Grand Rapids. End]

Tardy, Clark, and VanFarowe are all charged with the following:

  • One count of racketeering, a 20 year felony.
  • One count of conspiracy to obtain a loan by false pretense, a 10 year felony.
  • Two counts of obtaining money by false pretense, more than $20,000, a 10 year felony.
  • Four counts of obtaining money by false pretense, less than $20,000, a five year felony.

Tardy and Clark were arraigned 64B District Court in Montcalm County. Bond for each defendant was set at $250,000, cash or surety. A pre-exam conference is scheduled for Tuesday, August 25, 2009.

The Attorney General’s office began investigating this scheme after receiving a referral from the Office of Financial and Insurance Regulation.

“I would like to thank the Office of Financial and Insurance Regulation as we continue working together to tackle mortgage fraud in the State of Michigan,” said Cox.

Attorney General Cox has made prosecuting mortgage fraud a priority for his office. In 2008, Cox created a mortgage fraud unit, teaming up with the Michigan State Police and other law enforcement agencies to tackle the problem. These defendants are the 21st person or company charged with a mortgage fraud-related offense by the Attorney General in the last 12 months. Cox’s office has also held several mortgage foreclosure forums to help families stay in their homes during these difficult times.

A criminal charge is merely an accusation and the Defendant is presumed innocent unless proven guilty.

9:27AM

Former Lansing, MI man arrested in Houston on mortgage fraud charges

In the following press release Michigan Attorney General Mike Cox today announced that his office, with the assistance of the Michigan State  Police, filed charges against former Lansing resident Jeffrey Barry (below) for conducting a mortgage fraud scheme involving five fraudulent mortgages worth nearly a half-million dollars. Barry, of Houston, Texas, is charged with five counts of obtaining mortgage proceeds under false pretenses. He was arrested today in Houston, and will be extradited to Michigan.

“Mortgage fraud is a serious threat to Michigan’s economy,” said Cox. “Crimes like these are a major contributor to the declining housing market that is ruining family finances.”
___________________________________________________________________________________

Additional Materials

___________________________________________________________________________________

It is alleged that Barry would approach a homeowner at risk of losing their home to foreclosure, operating as a “mortgage foreclosure rescue” agent. Barry would offer to buy the home and sell it back to the homeowner under a land contract, thereby saving their home from foreclosure. However, the defendant would ‘fake’ the down payment by giving the homeowner a check but demanding it be returned almost immediately for various reasons, making the down payment an illusion. By using the “down payment” as proof of his financial investment in the property, Barry would obtain a mortgage from a bank under false pretense.

The five mortgages in question, worth a combined $451,707, were obtained between January 2005 and May 2005. As a result, Barry is charged with five counts of false pretenses over $20,000. Each count is a 10-year felony.

While the properties are located in Jackson, Haslett, Eaton Rapids, Durand and Battle Creek, charges were filed in 65A District Court in St. Johns because closings for the sales took place in Clinton County.

The Attorney General’s office and the Michigan State Police began investigating Barry after receiving a referral from the Office of Financial and Insurance Regulation.

“I would like to thank the Michigan State Police and the Office of Financial and Insurance Regulation as we continue working together to tackle mortgage fraud in the State of Michigan,” said Cox.

Attorney General Cox has made prosecuting mortgage fraud a priority for his office. In 2008, Cox created a mortgage fraud unit, teaming up with the Michigan State Police and other law enforcement agencies to tackle the problem. Barry is the 18th person or company charged with a mortgage fraud-related offense by the Attorney General in the last 12 months. Cox’s office has also held several mortgage foreclosure forums to help families stay in their homes during these difficult times.

A criminal charge is merely an accusation and the Defendant is presumed innocent unless proven guilty.