In the following press release Pennsylvania Secretary of the Commonwealth Pedro A. Cortés announced that Natalie Rose Hurlburt and Kristopher M. Porter have agreed to serious disciplinary sanctions for their roles in an Erie home mortgage scam.
“Protecting the health, safety and welfare of Pennsylvania’s citizens is our priority in monitoring regulated professionals,” Cortés said. “Unfortunately, the damage caused by dishonest and misleading practices related to residential lending has spread throughout our economy and around the globe, affecting millions of innocent people – including many in Erie who lost their homes in the scheme supported by these appraisers’ actions. Wherever we uncover improper practices we are diligent in protecting the public interest. The current economic crisis has underscored the need for constant vigilance and strong regulations.”
Hurlburt and Porter agreed to sanctions as part of consent agreements with the State Board of Certified Real Estate Appraisers following an investigation of their business practices between 2003 and 2005. Porter was an employee of Hurlburt Appraisal Service in Vernon Township, Crawford County. The Board found that Hurlburt significantly violated the Pennsylvania Real Estate Appraisers Certification Act in at least eight appraisal assignments, and that Porter violated the act in at least three appraisals.
Hurlburt, of Meadville, Crawford County, agreed to permanently surrender her real estate appraisal certificate. Porter, of Edinboro, Erie County, agreed to be suspended from real estate appraising for a minimum of four months and to pay a civil penalty of $2,000, plus $1,000 for costs of the investigation.
Porter also must complete 105 hours of remedial professional education courses before his suspension may be lifted in favor of strict probationary terms that will not end until September 2011.
The appraisal assignments relate to home sales being investigated by the Federal Bureau of Investigation and the U.S. Attorney’s Office. The sales involved dilapidated homes with cosmetic repairs sold at artificially inflated prices to unsuspecting buyers. Hurlburt’s and Porter’s appraisals supported the inflated prices. The federal fraud investigation has led to multiple arrests and convictions, though Hurlburt and Porter have not been charged by federal officials.
By signing the consent agreements with the state, Hurlburt and Porter waived their rights to administrative hearings in the matter.
“We have reached a conclusion on these cases because of close cooperation between the Department of State, the FBI and the U.S. Attorney’s Office,” said Basil Merenda, commissioner of the Department’s Bureau of Professional and Occupational Affairs. “We will continue to work with federal and state agencies to protect the public welfare wherever and whenever possible.”
The Bureau of Professional and Occupational Affairs provides administrative and legal support to 27 professional and occupational licensing boards and commissions. Professions range from funeral directors and physicians to cosmetologists and accountants.
For more information, visit www.dos.state.pa.us click on “Professional Licensure.”
Entries in Appraiser and/or False Appraisal(s) (166)
In the following press release Pennsylvania Secretary of the Commonwealth Pedro A. Cortés announced that Natalie Rose Hurlburt and Kristopher M. Porter have agreed to serious disciplinary sanctions for their roles in an Erie home mortgage scam.
In the following press release New Jersey Attorney General Anne Milgram announced that she has filed a fraud law suit against Casey Properties, LLC which was filed in Superior Court in Passaic County, the state’s four-count complaint [2mb] charges Casey Properties, headquartered in Totowa, and defendants Martin and Seth Gendel with running a scheme that involved soliciting people to “invest” in urban properties from 2005 through mid-2008. Victims of the Gendels did not actually put up money, but rather agreed to have properties purchased in their names in return for a share of the income generated by sale of those properties.
The Gendels told victims, falsely, that they could not simply buy the properties themselves because New Jersey law limited the number of properties they could own. They assured victims Casey Properties would collect the rent, pay the mortgage and perform maintenance on houses purchased in their names. However, the houses were left to deteriorate, mortgage payments were not kept up and the properties ended up foreclosed on and abandoned. One victim, a retired school counselor living on a fixed income, was left with ruined credit and two abandoned properties -– one in Newark and one in Paterson — that were so damaged she was unable to sell them. Among other things, the defendants are accused of submitting phony mortgage applications to enable her to qualify for loans she would not have otherwise obtained, and of forging her signature on various documents.
The defendants include
Seth and Martin Grendal who ran Casey Properties and Lee Alan, LLC
Francis T. “Frank” Memmo, of Medford, a mortgage solicitor for 1st Metropolitan Mortgage
Kelly Kotzker, of Evesham, a loan processor for 1st Metropolitan Mortgage
Damien Figueroa of Oak Ridge, an attorney who acted as a closing agent for both Casey Properties and the Gendels’ victims
Edward Evans, of Fair Lawn, an attorney who also acted as a closing agent
Nicholas Manzi, of Totowa, an attorney who acted as a closing agent
Robert B. “Barry” McBriar, a real estate appraiser who surrendered his license in October 2008 in connection with the conduct charged in the lawsuit.
The Casey Properties lawsuit charges defendants with a “pattern of racketeering activity” as defined by the New Jersey civil RICO statute.
Included in the civil RICO count are such predicate acts as theft by deception, falsifying records and issuing false financial statements, as well as accepting commissions on phony mortgage loans, forging documents and collecting rent monies that were to go toward mortgage payments, but keeping the funds instead.
[Ed. note, the following properties are mentioned in the complaint:
335-337 S. 20th Street, Newark
33 North Bridge Street, Paterson
43 -45 Godwin Avenue, Paterson
205 South 11th Street, Newark
51 Victoria Avenue
429 4th Avenue, Newark
37 Princeton St., East Orange]
Other charges in the Casey Properties suit include violating the Consumer Fraud Act by making false promises and engaging in unconscionable commercial practices. The complaint also includes a charge of creating and maintaining a nuisance by operating a scheme that resulted in dozens of run-down and uninhabitable properties, including many damaged by fire and/or flooding.
Attorney General Anne Milgram announced that a father and son were indicted with their real estate firms for allegedly stealing approximately $4.5 million from mortgage lenders by providing false information in home loan applications.
According to Criminal Justice Director Deborah L. Gramiccioni, the state grand jury indictment charges Martin Gendel, 64, of Montville, Seth Gendel, 35, of Long Island, N.Y., and the real estate firms they owned and operated, Casey Properties LLC, Lee Alan LLP and Andrea Management LLC, all based in Totowa. Each defendant is charged with conspiracy, theft by deception and two counts of money laundering, all in the second degree. The charges stem from an investigation by the Division of Criminal Justice Major Crimes Bureau.
The indictment was returned on Tuesday (Dec. 15) but was sealed until today, when the Gendels were arrested on the charges by Division of Criminal Justice detectives, assisted by local authorities. Martin Gendel was arrested at home in Montville and is being held in the Morris County Jail. Seth Gendel was arrested at home on Long Island and is being held in New York State pending extradition to New Jersey.
Between December 2005 and September 2007, the defendants allegedly deceived seven mortgage lenders into providing approximately $4.5 million in loans for purchases of 14 homes. Six homes were in Paterson, six in Newark and two in East Orange.
“We charge that these defendants falsified applications so unqualified home buyers could obtain $4.5 million in loans,” said Attorney General Milgram. “As detailed in a civil fraud complaint we filed earlier this year, the loans drove a scheme in which the defendants recruited investors to buy overpriced urban properties, then diverted loan funds for their own enrichment, leaving behind run-down homes and investors facing foreclosure.”
It is alleged that the defendants submitted fabricated information about employment and earnings in loan applications and on HUD settlement forms so that buyers could obtain loans for which they were not qualified. In some instances, they included false information about rental agreements and income from the properties. Nine buyers purchased the 14 homes.
In addition, the defendants allegedly deceived lenders by representing that expenses listed on HUD forms and ultimately paid out were legitimate expenses for home repairs when, in fact, no repairs were authorized or made. Some of the applications were checked off as though the homes would be the primary residence of the buyer, when the defendants knew they were being purchased solely as rental investment properties. Other false information submitted with the applications included false savings account balances and false occupancy letters.
Deputy Attorney General Francine Ehrenberg presented the case to the state grand jury. The investigation was conducted and coordinated for the Division of Criminal Justice Major Crimes Bureau by Sgt. Robert Walker, Deputy Attorney General Ehrenberg and Supervising Deputy Attorney General Terrence Hull, who is Bureau Chief.
“The Division of Criminal Justice has stepped up its prosecutions of complex white collar crime cases, including mortgage fraud and money laundering cases,” said Director Gramiccioni. “In these troubled economic times, we must be vigilant to prevent dishonest operators from defrauding lenders, investors and homeowners.”
Since June 2008, the Attorney General’s Office has filed a total of 11 civil mortgage fraud lawsuits naming 102 individual and corporate defendants whose actions have affected more than 950 victims, as well as property worth more than $29.1 million. The Attorney General has obtained indictments or guilty pleas in eight criminal mortgage fraud cases involving a total of 15 defendants. These defendants have been charged with victimizing more than 60 individuals and banks in connection with loans worth more than $15 million. In addition, the Attorney General has filed notices of violation against nine New Jersey-based companies for offering mortgage loan modification services without a debt adjustment license. They were assessed $45,000 in civil penalties ($5,000 each) and directed to pay consumer restitution.
Second-degree crimes carry a maximum sentence of 10 years in state prison and a $150,000 fine. The second-degree money laundering charges carry an enhanced fine of $500,000 and a potential anti-money laundering penalty of $250,000. The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.
The indictment was handed up to Superior Court Judge Linda R. Feinberg in Mercer County, who assigned the case to Morris County, where the defendants will be arraigned at a later date on the charges.
The civil complaint filed by the Attorney General’s Office in March charges Martin Gendel, Seth Gendel, Casey Properties and Lee Alan LLP with violating New Jersey’s Civil Racketeer Influenced and Corrupt Organizations (RICO) statute. It charges the Gendels and six other defendants with using deception – and the credit information of their victims – to obtain fraudulent mortgage loans for the purchase of urban properties at grossly inflated prices. They convinced victims to buy homes in Newark, Paterson, Irvington and East Orange that were the subject of bogus appraisals, then profited by taking fees out at closing from the inflated equity.
The defendants told investors that Casey Properties would take care of all aspects of the sale and property management, including finding tenants, collecting rents, paying the mortgages and making needed repairs. However, Casey Properties never did maintain the homes or keep up the mortgage payments. In the end, victims had their credit ruined and were left responsible for dilapidated homes that had been foreclosed on and abandoned.
In the following press release Ohio Attorney General Richard Cordray announced that as part of a continuing series of actions to stop improper influencing of mortgage appraisers a settlement had been reached today with Frontier Appraisals, LLC (Frontier), a Denver-based company accused of trying to influence the independent appraisal of a residential property in Zanesville.
“Frontier had sent an appraisal request form to a licensed Central Ohio appraiser, listing a pre-printed loan amount and a pre-printed estimated value,” said Attorney General Cordray. “That indicates Frontier was trying to persuade the appraiser to make an appraisal for those amounts. We are committed to taking aggressive action to stop this and other types of real estate fraud.”
The Frontier settlement, filed in the Muskingum County Court of Common Pleas, resolves a December 2007 lawsuit that charged Frontier with violating Ohio’s Consumer Sales Practices Act. Frontier admitted to no wrongdoing in the settlement, but the court ordered it to pay a $5,000 civil penalty and prohibited it from indicating a loan amount or estimated value in future appraisal requests.
The Frontier case is the second of six undue influence lawsuits expected to conclude in the coming months. The first suit concluded in late January, when Franklin County Court of Common Pleas Judge Steven L. McIntosh issued a default judgment against All Line Appraisals, a Phoenix-based company accused of attempting to improperly influence the appraisal of a Columbus property.
Four additional undue influence lawsuits are pending. Those suits are:
- State v. Apex Mortgage (Belmont County, Case Number 07-CV-261)
- State v. CFIC Direct (Licking County, Case Number 2007-CV-2174)
- State v. First Ohio Banc & Lending (Belmont County, Case Number 07-CV-259)
- State v. Nations Lending Corp. (Cuyahoga County, Case Number CV-07-644350)
All six cases were referred to the Attorney General’s Office by the licensed Ohio appraisers who had received appraisal request forms containing estimated property values, loan amounts, or desired appraisal amounts.
“This is an example of how government and businesses can work together to stop mortgage fraud before it occurs,” said Cordray. “Cooperative efforts like these help us to identify possible violations of the law and make Ohio a safer place to do business.”
Attorney General Cordray acknowledged the work of his predecessors, Marc Dann and Nancy H. Rogers, in laying the groundwork for these efforts.
Consumers and businesses who suspect fraud are encouraged to contact Attorney General Cordray’s Office by calling 1-800-282-0515 or by visiting www.ohioattorneygeneral.gov.
In the following press release Delaware County (OH) Prosecuting Attorney Dave Yost announced that the first ring member charged for his connection in the multi-million dollar mortgage fraud scheme that operated in both Delaware and Franklin Counties today entered a plea of guilty, said.
Delaware County Prosecutor Dave Yost
Scott McCann, 46, of Upper Arlington, pled to eight felony charges including three counts engaging in a pattern of corrupt activity and five counts of money laundering. [Indictment 1.2mb]
“Crimes are crimes, whether committed in a board room, a title office or on the street,” Yost said. “Those who pillage the financial sector of our economy will be held accountable and brought to justice.”
In February 2008, a grand jury handed down identical 15-count indictments against McCann and alleged ring leader Gihan Zalat. Zalat 41, of Powell, is currently being held in the Delaware County jail awaiting her March 17 trial. McCann will testify against Zalat as part of his plea negotiation.
Scott McCann Gihan Zalat
McCann is scheduled to be sentenced April 13 at 1:30 p.m. before Common Pleas Judge W. Duncan Whitney.
Also indicted for their connection were Hany Bekhit, Moemen Ibrahim, Dijana Ibrahim, Alaa M. Abouelenein, Hany Ibrahim and Mohamed Mohamed. Arrest warrants have been issued for the remaining [defendants who] are currently being pursued.
Agencies with the Ohio Organized Crime Investigations Commission - which includes the Delaware
County Prosecutor’s Office, the Ohio Attorney General’s Office and Powell Police Department - had been investigating this criminal ring for over a year when they arrested Zalat, on Feb. 15, 2008.
“I praise the efforts of Assistant Prosecutor Bill Owen, investigator Mike Spiert and Powell Police
Detective Darren Smith for their tireless work on this complex case,” Yost said.
The scheme, operated under the assistance of unethical appraisers and brokers, involved homes that
were appraised at more than their factual value then sold for the above market price to ring members. The homes were financed through unsuspecting lending institutions, which provided those involved with a significant amount of money. Along with fraudulent appraisals, members also used falsified tax returns and loan documents to swindle the lending institutions out of millions of dollars. Six of the homes involved were in the Dublin and Powell area of Delaware County. Many of the houses involved were never occupied after sale and went into foreclosure.
In the following press release Delaware County Prosecutor Dave Yost announed that the woman who has been called the “queen” of mortgage fraud pled guilty today and sentenced to four years in prison for her part in a multi-million dollar mortgage fraud scheme that operated in both Delaware and Franklin Counties.
Gihan “Gigi” Zalat, 41, of Powell, plead guilty to eight felony charges including three counts engaging in a pattern of corrupt activity and five counts of money laundering. She faces deportation upon completion of her sentence.
“Our financial system is based on the idea of honest numbers,” Yost said. “When crooks like Zalat cook the numbers, the whole system can break down – and all of us become the victims.”
On Monday, ring member Scott McCann, 46, of Upper Arlington, also pled to eight felony charges of engaging in a pattern of corrupt activity and money laundering. McCann is scheduled to be sentenced April 13 at 1:30 p.m. before Common Pleas Judge W. Duncan Whitney.
Also indicted for their connection were Hany Bekhit, Moemen Ibrahim, Dijana Ibrahim, Alaa M. Abouelenein, Hany Ibrahim and Mohamed Mohamed. Arrest warrants have been issued for the remaining [defendants] and are currently being pursued.
The Columbus Dispatch reports that Scott McCann was sentenced to four years in prison for his role in a multimillion-dollar mortgage-fraud scheme blamed his actions on a gambling habit. Before McCann was sentenced yesterday in Delaware County Common Pleas Court, the former real-estate agent and mortgage broker told the judge he wished he could take back his actions.
McCann’s attorney said that a gambling addiction had clouded his client’s judgment. “The gambling, the thrill of it, the excitement of it led him to some poor decisions,” said Kelly Johnson, one of McCann’s attorneys.
Read the full article here.. [Ed note. we will bring the DA’s press release once received]
NBC4 News reports that Hany Bekhit, 36, was found and arrested in California on a warrant by the Delaware County sheriff’s office last week and that he was arraigned before Common Pleas Judge W. Duncan Whitney on Wednesday June 24, 2009.
A Delaware County grand jury in February 2008 returned an indictment charging Bekhit with five counts of money laundering, two counts of forgery and one count each of aggravated theft and receiving stolen property.
Bekhit pleaded not guilty to the indictment Wednesday and was given a $600,000 bond, according to Delaware County Prosecuting Attorney David Yost.
He was scheduled for jury trial Tuesday, Aug. 25, before Whitney.
In the following press release Cuyahoga County (OH) Prosecutor Bill Mason (pictured below) announced that a jury found an appraiser in a mortgage fraud case guilty of all nine counts of mortgage fraud offenses. This was the prosecutor’s office’s first case to go to trial against an appraiser. Appraisers have been charged in other cases but have entered pleas.
Prosecutor Mason said, “Successfully prosecuting an appraiser for fraudulently inflating the value of a home is an important step in our fight against mortgage fraud. The jury rejected this appraiser’s bogus defense—that appraisals of homes are primarily based on opinion. This sends a strong message that all parties in these mortgage fraud scams will be prosecuted for their crimes.”
After an eight day trial, which began on Wednesday, February 18th, the jury found appraiser, Lavon Ivy, her father, John Ivy, who did rehab work on the house and their rehab company, PTOT Enterprises, along with a mortgage broker, Phillip Stevens, and his company, M & S Investments, collectively guilty of all 23 of the mortgage fraud offenses pertaining to a house at 25349 Tyron Road in Oakwood Village, near Bedford, Ohio.
Picture kindly supplied by Cuyahoga County Prosecutors Office
Lavon Ivy was found guilty of Theft by Deception, Securing a Writing by Deception, Forgery, Communications Fraud, Receiving Stolen Property, and Falsification. She faces a maximum prison sentence of 26 1/2 years. John Ivy was found guilty of Forgery and Receiving Stolen Property, and he faces a maximum prison sentence of 4 1/2 years. Mortgage broker, Phillip Stevens, was found guilty of Theft by Deception, Securing a Writing by Deception, and Falsification, and he faces a maximum prison sentence of 10 1/2 years. Sentencing is scheduled for March 26 at 1pm in Judge Hollie Gallagher’s courtroom.
Appraiser Ivy, 38, of Orange Village, was the key defendant in this mortgage fraud scam that started with 7 other defendants. She acted as an appraiser and deal maker, and she fraudulently submitted an inflated appraisal of the property. An expert testified for the prosecutor’s office that Ivy’s appraisal of $165,000 was inflated by at least $30,000, that she failed to disclose known violations, and that she failed to disclose that she and her father and their rehab company got money at closing to repair the house. In her deal making role, Ivy was also found guilty of deceiving the lender to make a $132,000 loan by submitting false documents, including a bogus $165,000 purchase agreement, which was needed in order to match the bogus appraisal to obtain a larger loan for the buyer. The actual purchase price was $90,000 with the buyer to fix all of the housing violations.
Also, Lavon Ivy and her father, John Ivy, 70, of Orange Village, deceived Kenneth ONeal, 51, of Warrensville Heights. At the loan closing, they diverted money that was to be used to rehab this Oakwood house from ONeal to themselves. Although a victim of this deception, ONeal falsified his loan application when he relied on Lavon Ivy to take care of the financing documents. As a result, he accepted a plea because he signed a false application that contained an inflated income amount and an inflated bank balance of $42,000 to cover fake document of a $42,000 down payment. The mortgage broker, Phillip Stevens, 52, of Akron, and his company, M & S Investment, fraudulently processed the loan.
After ONeal signed the purchase agreement, he contacted Lavon Ivy, a licensed mortgage broker as well as a licensed appraiser, to close the deal. Lavon fraudulently substituted ONeal’s $90,000 purchase agreement for one with a purchase price of $165,000 to enable her to get a larger loan, a $132,000 loan from New Century Mortgage Company in Columbus, which is now out of business. In addition, she acted as the appraiser and submitted a false property appraisal, as well as assisted in submitting a false loan application and a fraudulent down payment scheme.
ONeal and the seller, Eugene Jones, 42, of Highland Hills, signed a closing document stating that he paid $42,000 to cover the difference between the false $165,000 purchase agreement and the $132,000 loan. But, this payment was never made because Lavon Ivy and Stevens, the mortgage broker, deceived the lender into believing the fake $42,000 down payment was made, when it was not. Like ONeal, Jones accepted a plea because of this falsification. Both ONeal and Jones testified against the defendants.
Finally, Lavon arranged for her father’s repair contracting company, PTOT Enterprise, of Pepper Pike, to receive $25,581.48 for rehab work on ONeal’s house that was never completed. ONeal has not been able to move into his house because existing code violations, which were supposed to be fixed by PTOT, were never rectified. ONeal contacted Beachwood Police Department, and a detective uncovered this series of scams during his investigation. The house fell into in foreclosure and ONeal lost the house.
Cuyahoga County Prosecutor Bill Mason announced that mortgage appraiser Lavon Ivy, a.k.a. Lavon Ruderson, was sentenced to three years in prison for mortgage fraud activity involving a false appraisal of a $165,000 house in Oakwood Village.
On February 27th 2009, a jury found Lavon Ivy guilty of Theft by Deception, Securing a Writing by Deception, Forgery, Communications Fraud, Receiving Stolen Property, and Falsification. She faced a maximum prison sentence of 26 1/2 years. She was ordered to pay the buyer of the house $21,081.48 in restitution.
Appraiser Ivy, 38, of Orange Village, was the key defendant in this mortgage fraud scam that started with 7 other defendants. She acted as an appraiser and deal-maker, and she fraudulently submitted an inflated appraisal of the property. An expert testified for the prosecutor’s office that Ivy’s appraisal of $165,000 was inflated by at least $30,000, that she failed to disclose known violations to the lender, and
that she failed to disclose that she and her father and their rehab company got money at closing to repair the house. In her deal-making role, Ivy was also found guilty of deceiving the lender to make a $132,000 loan by submitting false documents to match the bogus appraisal to obtain a larger loan for the buyer. The actual purchase price was $90,000 with the buyer to fix all of the housing violations.
Also, Lavon Ivy and her father, John Ivy, 70, of Orange Village, deceived the buyer, Kenneth ONeal, 51, of Warrensville Heights. At the loan closing, they diverted money that was to be used to rehab this Oakwood house from ONeal to themselves. John Ivy was convicted of Forgery and Receiving Stolen Property. He was sentenced to five years of community control sanctions and ordered to pay ONeal $21,081.48.
Although a victim of this deception, ONeal signed a fake loan application when he relied on Lavon Ivy to take care of the financing documents. As a result, he accepted a plea because his false application contained an inflated income amount and an inflated bank balance of $42,000 to cover a fake $42,000 down payment. The mortgage broker, Phillip Stevens, 52, of Akron, and his company, M & S Investment, fraudulently processed the loan. He was convicted by the jury of three felonies, Theft by Deception, Securing a Writing by Deception, and Falsification. He was sentenced to two years of community control sanctions, including 180 days of home confinement with a monitoring device, ordered never to work in the financial business again, and ordered to pay a $3,000 fine. His company is now out of business.
After ONeal signed the purchase agreement, he contacted Lavon Ivy, a licensed mortgage broker as well as a licensed appraiser, to close the deal. Lavon fraudulently obtained a $132,000 loan from New Century
Mortgage Company in Columbus, which is now out of business. In addition, she acted as the appraiser and submitted a false property appraisal, as well as assisted in submitting a false loan application and a fraudulent down payment scheme.
ONeal and the seller, Eugene Jones, 42, of Highland Hills, signed a closing document stating that he paid $42,000 to cover the difference between the false $165,000 purchase agreement and the $132,000 loan.
But, this payment was never made because Lavon Ivy and Stevens, the mortgage broker, deceived the lender into believing the fake $42,000 down payment was made, when it was not. Like ONeal, Jones accepted a plea because of this falsification. Both ONeal and Jones testified against the defendants.
Finally, Lavon arranged for her father’s repair contracting company, PTOT Enterprise, of Pepper Pike, to receive $25,581.48 for rehab work on ONeal’s house that was never completed. ONeal has not been able to move into his house because existing code violations, which were supposed to be fixed by PTOT, were never rectified. ONeal contacted Beachwood Police Department, and a detective uncovered this series of
scams during his investigation. The house fell into in foreclosure and ONeal lost the house.
In the following press release Acting United States Attorney Lawrence G. Brown announced today that a federal grand jury has returned an eight-count indictment charging Dennis Aaron Moore, 50, of Hillsborough, Calif., Veronika Wright, 33, of San Ramon, Calif., Mitchell Wright, 36, of San Ramon, Calif., Haiying Fan, 42, of Millbrae, Calif., and Gary Lorenzo George, 50, of Olivehurst, Calif., with various crimes in connection with their participation in a mortgage fraud scheme with respect to the purchase of a series of homes in South Lake Tahoe and Nevada City, Calif. Each defendant is charged with one count of conspiring to commit bank fraud and mail fraud; defendants Moore, Veronika Wright, Mitchell Wright, and Fan are further charged with two counts of bank fraud; and Moore, Veronika Wright and George are each charged with making false statements on loan applications. Moore and Fan are also charged with two counts of money laundering. The indictment alleges that the victim lending institutions suffered over $1,000,000 in losses as a result of the defendants’ conduct.
[Ed. note, the properties mentioned in the indictment are:
- 1035 Herbert Avenue, South Lake Tahoe, CA
- 3159 Pioneer Trail, South Lake Tahoe, CA
- 3762 Pioneer Trail, South Lake Tahoe, CA
- 14492 Deer Creek Lane, Nevada City, CA
- 2242 Inverness Drive, South Lake Tahoe, CA
Companies mentioned in the indictment are:
- F. Realty Extraordinary, Inc (Fan)
- Fidelity Capital Funding who were in San Ramon (V. Wright)
- Step One Tax Professionals (George) end]
This case is the product of a joint investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation.
“Aggressive pursuit of those who engaged in mortgage fraud during the boom and bust of the region’s housing market remains a top priority for federal law enforcement. These scams hurt not just the lending institutions, but area homeowners and taxpayers alike,” said acting U.S. Attorney Brown.
According to Assistant United States Attorney Sean C. Flynn, who is prosecuting the case, the indictment alleges that between June 2005 and April 2007, the defendants conspired to defraud Washington Mutual Bank, doing business as Long Beach Mortgage, Countrywide Bank, FSB, and other lenders through a “cash-back-to-buyer” mortgage fraud scheme. Moore purchased five separate properties in South Lake Tahoe and Nevada City, each of which was funded with large primary loans or first mortgages from various lending institutions. It is alleged that as part of each purchase agreement, Moore insisted that each seller agree that a substantial “commission” – sometimes in excess of 20 percent of the purchase price – be paid from the sale proceeds to Moore’s real estate agent, defendant Fan. In order to induce the seller to agree to such a commission, Moore often offered to purchase the properties at prices above the respective list prices.
Moore further collaborated with his mortgage broker, Veronika Wright, and his other co-conspirators to submit to the lending institutions home mortgage loan applications that contained various false statements with respect to Moore’s income, employment, liquid assets, and compliance with tax obligations. Mitchell Wright is alleged to have created a bogus Web site to substantiate Moore’s false employment claims, and George, a tax professional, created false letters to support Moore’s false financial claims. The banks relied on these false statements in disbursing funds pursuant to the loans. It is further alleged that once the funds were disbursed, Fan kicked back the majority of her “commission” to Moore, completing the cash-back-to-buyer mortgage fraud scheme.
The maximum statutory penalty on the conspiracy charge is five years in prison, while the bank fraud and false statement charges carry a 30-year maximum sentence. The maximum sentence that can be imposed with respect to the money laundering charges against Moore and Fan is 10 years in prison. However, the actual sentence will be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed at the discretion of the court.
The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
In the following press release Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois announced that six Chicago area defendants were indicted on federal charges for allegedly fraudulently obtaining more than $10 million in mortgage loan proceeds from various lenders by submitting false loan applications and supporting documents, federal law enforcement officials announced today. The defendants, who include loan officers, processors, a contractor and an unlicensed appraiser, were each charged with one or more counts of mail, wire or bank fraud in an eight-count indictment that was returned by a federal grand jury yesterday. As part of the alleged scheme, the indictment specifies eight residential properties – seven of them on the south side of Chicago – upon which mortgage loans were fraudulently obtained between 2002 and 2007.
[Ed. note - the Indictment lists the 8 properties as]
- 5628 S. Laflin Street, Chicago
- 5540 S. Wood Street, Chicago
- 5602 S. Paulina Street, Chicago
- 5718 S. Maplewood, Chicago
- 5603 S. Paulina Street, Chicago
- 1309 W. 59th Street, Chicago
- 3844 Rita Drive, Richton Park
- 7646 S. Vernon Avenue, Chicago
Two of the defendants, Deangelo McMahan [Ed. note in 2005 the Chicago Tribune reported that McMahan was a member of the Insane Mafia Vice Lords gang], 36, of Hazel Crest, and Fred Haywood, 37, of Chicago, both of whom were loan officers for various mortgage lenders, were initially indicted in December. Four new defendants are Rita McKenzie, 39, of Round Lake Beach, a loan processor; Steve Young, 51, of Flossmoor, a loan officer; Carl McMahan, 42, of Round Lake Beach, Deangelo McMahan’s brother who operated a purported home re-construction business; and Sumira Persaud, 32, of Blue Island, an unlicensed appraiser. Arrest warrants have been issued for McKenzie and Carl McMahan, while the others will be ordered to appear for arraignment at a later date in U.S. District Court, including Deangelo McMahan and Haywood, who were previously released on bond.”
According to the indictment, the defendants schemed to arrange for buyers with good credit, but insufficient income, to purchase homes by promising them money for acting as nominees, knowing that in most cases the buyers did not intend to occupy the homes as their primary residences or fulfill any long term payment obligations. The defendants and others caused false information to be included in mortgage loan applications regarding the applicant’s income, assets, employment, intention to occupy the home and the source of the down payment so the applicant would falsely appear to qualify for a loan. They also allegedly schemed to create false appraisals that did not reflect the fair market value of the properties and were designed to create excess value.
In some instances the defendants funneled excess cash they generated from inflated appraisals on the properties to sham businesses they had created, while other times they flipped the properties from one sale to another to make a profit, the charges allege.
The indictment also seeks forfeiture of $2,383,020, which reflects the loss suffered by various mortgage companies that were victims of the alleged fraud scheme.
The charges were announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent-in-Charge of the Chicago Field Office of the Federal Bureau of Investigation; and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The government is being represented by Assistant U.S. Attorney Jason Yonan.
Each count of mail and wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, while bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine. The Court, however, would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
In the following press release [pages 4 & 5] Mary Beth Buchanan, the United States Attorney for the Western District of Pennsylvania announced that a grand jury had indicted four people in connection with a widespread mortgage fraud scheme. The four were named as:
- Robert Danenberg, age 54, 2754 Beechwood Blvd., Pittsburgh, PA 15217
- Robert Jones, age 53, 1322 Samantha Way, Irwin, Pennsylvania 15642
- Debra Phillips, age 50, 1211 Clover Circle Court, Pittsburgh, Pennsylvania 15227. Phillps entered a guilty plea on March 20, 2009. [Press Release]
- Craig Tengowski, age 35, of 2223 Delaware Avenue, Pittsburgh, Pennsylvania 15218. Tengowski entered a guilty plea on March 20, 2009. [Press Release]
The grand jury returned a two-count indictment charging Danenberg with two counts of Wire Fraud Conspiracy and one count of Money Laundering Conspiracy. According to the indictment, Danenberg participated in two different mortgage fraud conspiracies. In the first conspiracy, it is alleged that Danenberg, acting as the closing attorney, caused fraudulent form HUD-1’s to be prepared and submitted to the lending institutions that inaccurately represented how funds were to be paid and distributed at the closing; that prior to actual closings, he caused lender funds to be distributed other members of the conspiracy to fund down payments by the borrowers; and that he participated in closings in which he then knew that the funds from the closings were distributed in a manner contrary to the representations made to the lender about how the funds would be distributed. It is further alleged that Danenberg caused the submission of form HUD-1’s to lenders after the closings that falsely represented how the funds at the closings were actually distributed and received.
In the second mortgage fraud conspiracy, the grand jury alleged that another member of the conspiracy assisted individuals in submitting loan applications that contained misrepresentations related to the financial condition of the borrowers and falsely stated that the borrowers were not borrowing money to make the down payment. It is alleged that Danenberg submitted false documents in connection with the loan closings representing that the borrowers had made a down payment from their own funds on the properties that they were purchasing when they had not, and that the documents further failed to disclose secondary financing associated with the borrowers.
In a separate but related indictment, the grand jury charged Robert Jones with one count of Wire Fraud Conspiracy and one count of Money Laundering Conspiracy. According to the indictment, Jones recruited buyers to purchase properties at fraudulently elevated prices from other members of the conspiracy. Those buyers then, through other members of the conspiracy, submitted fraudulent loan applications on behalf of the purchasers that falsely reported their income and assets that were supported by false documents, including verifications of employment, verifications of deposit, appraisals, pay stubs, and W-2s.
The indictment further alleges that Jones and other members of the conspiracy used the money obtained in the Wire Fraud scheme to further promote the scheme by engaging in financial transactions, including but not limited to the following:
a. Depositing money into borrowers’ bank accounts to make it falsely appear that they had sufficient money to qualify for the loan and make a down payment
b. Providing illegally obtained funds at real estate closings that were falsely represented to the lenders as the purchasers’ own funds that they were using for the down payments
c. Using the illegally obtained funds to pay Jones and other members of the conspiracy and purchasers of properties.
In a another separate but related Information filed by the U.S. Attorney, Debra Phillips, who operated Equitable Lending, a mortgage broker business, was charged with one count of Wire Fraud Conspiracy. The Information alleges that Phillips assisted buyers in the submission of fraudulent loan applications that contained misrepresentations related to the financial condition of the buyers and about whether the buyers were borrowing money to make the down payment. The Information also alleges that Phillips submitted false documents in connection with the loan closings representing that the buyers had made a down payment on the properties that they were purchasing, when in fact they had not.
In a separate but related Information filed by the U.S. Attorney, Craig Tengowski, who is a real estate appraiser, is charged with one count Wire Fraud Conspiracy. According to the Information, Tengowski prepared and submitted appraisals for properties that were to serve as collateral for the loans that overstated the actual true market values of the properties.
All of these cases are related to an investigation in which thirteen other individuals, including Kelly Fields, Jason Jester, Kevin Kaminski, Randy Caretta, and others, were charged in connection with a Mortgage Fraud scheme. All but one of the thirteen other individuals have pled guilty. The remaining person charged, Wayne Fumea, is awaiting trial.
The only person already sentenced in connection with the case, Kelly Fields, was sentenced to a period of incarceration of 100 months.
The two lead investigators in this case, Benjamin Full and Keith Heckman, both Special Agents with the United States Secret Service, were honored today by the Mortgage Fraud Task Force for their extraordinary work on these cases and others.
Acting United States Attorney Robert S. Cessar announced today, January 8, 2010, that Robert Danenberg, a resident of Pittsburgh, Pennsylvania, pleaded guilty in federal court to a charge of Wire Fraud Conspiracy in connection with a mortgage fraud scheme. Danenberg, age 45, pleaded guilty to one count before United States District Judge Donetta Ambrose.
In connection with the guilty plea, Assistant United States Attorney Brendan T. Conway advised the court that Danenberg is an attorney who specialized in closing real estate transactions. He participated in a mortgage fraud conspiracy in which a co-conspirator recruited buyers to purchase properties at fraudulently elevated prices and financed through fraudulently obtained loans.