7:25PM

Loan Officer convicted in scam that targeted Latino's

Ventura County District Attorney Press Release - January 26, 2005

 

District Attorney Gregory D. Totten announced today that the Consumer and Environmental Protection Unit filed a 27-count felony complaint against Edgar Mauricio Berrazueta aka Edgar Mauricio Berrazueta Gonzalez (DOB 10/8/61), an Ecuadorian national residing in Camarillo, charging him with grand theft, forgery, manufacture of false identification documents, attempting to dissuade witnesses, and special allegations under the aggravated white-collar crime statute, and excessive-takings enhancements. Ventura County Superior Court Judge Kevin McGee issued a temporary restraining order freezing Berrazueta’s assets and properties so that they may be used to pay criminal fines and restitution to victims upon Berrazueta’s conviction.

 

Berrazueta is employed as an assistant loan officer by Pacific First Bancorp in Oxnard, specializing in sub-prime home loans. Berrazueta allegedly promised homeowners lower monthly payments on their home loans if they refinanced through his company. Instead, the homeowners received worse loans than they already had, and loans with higher payments, for which Berrazueta and his company received thousands of dollars in commission fees. Berrazueta misrepresented and failed to disclose the true interest rates, fees, penalties, payment amounts and costs to refinance these home loans. The homeowners were not aware of the terms of their new loans because all of the documentation was in English and the homeowners read and speak only Spanish.

 

When Berrazueta later became aware that some of his customers were cooperating with the District Attorney’s  investigation, he went to their homes or place of work and pressured them not to pursue charges against him.

 

Some of the loans arranged by Berrazueta were supposed to be “cash-out” refinances. However, Berrazueta concealed this fact from the homeowners, intercepted their cash-out checks, and deposited them (in amounts up to $15,000) into his own bank accounts by forging their signatures on the checks.

 

During the execution of a search warrant at Berrazueta’s residence, several fraudulently manufactured social security cards were obtained. Berrazueta admitted to manufacturing these cards to enable him and others to misrepresent their status as United States citizens to their employers.

8:24PM

CA State Bar seeks to have Oakland attorney disbarred

A story in Law.com states that State Bar prosecutors are seeking to have a former San Francisco deputy district attorney, Githaiga Ramsey . It is alleged that Ramsey bilked former professional basketball player Jason Caffey out of more than $2.2 million. Ramsey is further charged with defrauding Caffey in Oakland and Atlanta real estate transactions.

Oakland , CA based Ramsey, and is now in private practice, denies all the charges. A 2003 Civil suit bought by Caffey was settled to the mutual satisfaction of both parties. You can read the original complaint by clicking here.

Read the full Law.com story by Mike McKee here

7:39PM

Mortgage company owner charged with soliciting the killing of witnesses

An article in the Seattle Times describes how a man who was assisting police in the investigation of his mothers efforts to arrange the killing of witnesses, was fatally shot by his girlfriend on Friday night (21, Jan 2005).

Nicholas Coan was acting as a police informant against his mother who is awaiting trial in an ID Theft case. His mother, Elizabeth Coan ran a mortgage company in Kirkland and had been indicted on a charge that she obtained a Mercedes using the ID of an elderly customer of the mortgage company.

Elizabeth Coan was arrested on Sunday 23, Jan 2005 and charged with solicitation of first-degree murder, first-degree assault and solicitation of malicious placement of an explosive. According to King County prosecutors, Elizabeth Coan had asked Nicholas Coan to arrange the killing or intimidation of five witnesses in her pending identity-theft case, including the car bombing of a former employee, Tim Kelly.

The killing of Nicholas Coan is apparently unrelated to his mothers charges. More detail will appear here when it is available.

Read the full story in the Seattle Times by clicking here

7:14PM

3 police officers amongst 10 people accused of mortgage fraud

Susan W. Brooks, United States Attorney for the Southern District of Indiana, announced that the following individuals have been charged by a federal grand jury sitting in Indianapolis in a 66-page, 101-count indictment for conspiracy, wire fraud and money laundering following a two-year joint investigation by agents of the FBI, Internal Revenue Service and United States Postal Inspection Service working as part of the Mortgage Fraud Task Force organized in 2002 by the United States Attorney’s Office:

KENNETH MCKINNEY, 38, Indianapolis; PAMELA MARTINEZ, 35, Minneapolis, MN; JOSEPH BRITTON, 45, Indianapolis; MARK SPECKMAN, 46, Indianapolis; VALERIE MCNAIR, 43, Marion, Ind.; PATRICIA WILCOX-MCCLUNG, 37, Kokomo, Ind.; MICHAEL C. SMITH, 44, Indianapolis; JAMES MCCLUNG, 34, Indianapolis; ROBERT CARTER, 34, Marion, Ind.; DARRAL STANLEY, 40, Marion, Ind.

Click here to read the 66 page indictment. Please note that this a a 2mb PDF and may take time to download.

The indictment is similar to several such cases brought by the United States Attorney over the past three years, alleging a conspiracy to defraud lending institutions by “flipping” residential properties. The indictment alleges the purchase of inexpensive homes in Marion, Fairmount and Indianapolis, followed by fraudulent appraisals and loan applications designed to convince banks to lend far more money than the houses were worth for subsequent purchases, and a pocketing of the excess loan proceeds. Borrowers in the scheme would then quickly default on the mortgages and the bank would be left with virtually worthless collateral. First Bank, Inc., of Louisville, Kentucky, which million dollars in the scheme MCKINNEY and MARTINEZ are real estate brokers operating American Savings Mortgage (ASM).

The indictment alleges that ASM transmitted fraudulent documents to lenders. WILCOX-MCCLUNG and MCNAIR operated V.P. Development in Marion and recruited buyer/borrowers to the scheme; BRITTON and SPECKMAN are Indianapolis real estate investors operating Aspen Group, Home Source Investment and Pacific Group, LLC. The indictment alleges they would purchase broken-down homes at fair market value and resell them after inflated appraisals, sharing in the proceeds of the illegally obtained loans. SMITH is a licensed real estate appraiser who is alleged to have provided fraudulent appraisals that were critical to the scheme; MCCLUNG and CARTER were buyer/borrowers who purchased the properties and received cash back after the closings from the excess loan proceeds.

MCCLUNG is alleged to have executed 13 such purchases on the same day in 2002. SMITH and MCCLUNG are police officers for the city of Indianapolis; CARTER is a police officer for the city of Marion.

Further articles in the Indianapolis Star and Marion Chronicle Tribune report that three police officers where amongst 10 people indicted today in Indiana.

It is alleged that they were involved in a scheme to buy broken down homes and then resell them after inflating their value. The scheme, called ‘flipping” has caused the First Bank of Louisville, KY several millions of dollars. First Bank has since been taken over by Central Bancshares, the take over caused by losses in other mortgage fraud cases. Read that story here.

The indictment contains 101 counts and is the result of an investigation by the IRS, FBI and Postal Inspection Services.

The officers named are: James McClung and Michael Charles Smith both described as members of the Indianapolis Police Department and Robert Carter of the Marion Police Department.

5:42PM

Erpenbeck bankers get years in prison 

Cincinnati Enquirer - January 25, 2005   and Click here to read the original indictment

COVINGTON - A federal judge this afternoon sentenced John Finnan and Marc Menne, former Northern Kentucky bankers whose careers were extinguished almost three years ago by their ties to the Erpenbeck mortgage fraud, to 63 months and 54 months respectively for their roles in the scandal.

The top two officers of the defunct Peoples Bank of Northern Kentucky pleaded guilty in June to three felonies each in the course of keeping afloat the bank’s troubled biggest customer, the Erpenbeck Co. The builder collapsed in April 2002 in a $34 million fraud that victimized home buyers, subcontractors and almost three dozen other banks.

At the time of their pleas, Finnan and Menne faced the possibility of spending nine to 11 years in prison, according to federal sentencing guidelines. But last year’s U.S. Supreme Court ruling that those guidelines were too rigid has given judges more leeway, leaving it unclear how U.S. District Judge William O. Bertelsman would dispose of the ex-bankers.

After a check-kiting scheme by the Erpenbeck Co. led to overdrawn accounts at Peoples in 2001, Finnan and Menne lent Erpenbeck $2.1 million without telling the bank’s board of directors. The overdrafts continued, and the bankers made three loans totaling $3.8 million to Tony Erpenbeck, the father of company president Bill Erpenbeck. Then they induced two dozen smaller banks in Kentucky and Indiana to join in lending Erpenbeck $29.5 million without disclosing Erpenbeck’s deteriorating financial condition.

In another break from normal banking relationships, Finnan and Menne ran a separate company, JAMS Properties, that bought 25 Erpenbeck model homes at cost. To finance the purchases, JAMS borrowed money from three small banks in Corbin, Ky., and Eaton, Ohio - often reporting inflated purchase prices to receive more than 100 percent of the true cost. JAMS then split the extra money with Bill Erpenbeck.

Three Erpenbeck family members and one associate stand convicted on charges connected to the bank fraud or its aftermath. No other individuals, beside Finnan and Menne, have been charged. The others now in jail include:

Bill Erpenbeck - Former president and co-owner of the Erpenbeck Co. Pleaded guilty to bank fraud and witness tampering. Now serving 30 years at a low-security federal prison in Coleman, Fla.

Lori Erpenbeck - Former Erpenbeck Co. accounting department employee and Bill’s only sister. Pleaded guilty to bank fraud and helped the FBI catch Bill and Tony in the act of witness tampering. Sentenced to a year and a day; now serving her sentence in Nashville.

Tony Erpenbeck - Bill and Lori’s father and retired homebuilder. Pleaded guilty to witness tampering. Serving a sentence of five years, 10 months in a federal prison in Lexington.

• Michelle Marksberry - The Erpenbeck Co.’s lead agent for home-sale closings. Pleaded guilty to bank fraud. Serving a two year sentence at the Lexington prison.

An Article by Patrick Crowley

5:14PM

Mortgage email spammers convicted

The BBC in London reported the prosecution of two email spammers who sent out 100,000’s of emails every month advertising, amongst others cheap mortgage rates. Jurors in Virginia recommended that the man, Jeremy Jaynes, serve nine years in prison and that his sister, Jessica DeGroot, be fined $7,500.

Jaynes is said to have amassed a fortune of $24m from his sales.

Read the full article here

8:50PM

Seven arrested in HUD and Section 8 fund thefts

US DOJ Press Release - January 25, 2005

Marcos Daniel Jiménez, United States Attorney for the Southern District of Florida; and Kenneth M. Donohue, Inspector General, Department of Housing and Urban Development (HUD), Office of Inspector General, announced today the arrests of seven (7) defendants on federal housing fraud charges and the unsealing of the Indictments charging each of the defendants.

Arrested today were defendants, Amy Willis, Missia Lee, Ronald Amira, Rhonda Sims, Sandra Love, Kandis Roberts, and Lakeisha Veargis. The defendants are separately charged in Indictments pending in the Southern District of Florida, in Miami, Florida, with multiple counts of theft of federal subsidized housing funds and providing false statements to the government, in violation of Title 18, United States Code, Section 641, and Title 18, United States Code, Section 1001, respectively. These cases are part of a nationwide effort to combat fraud and corruption in the federal Section 8 subsidized housing program. Collectively, the defendants, all participants in the Section 8 subsidized housing program, are alleged to have defrauded HUD of over $139,000 in Section 8 housing subsidy payments.

Read the full press release by clicking the link above.

12:14PM

Former North American Mortgage Co employee guilty in HUD fraud

According to court records, case reference 2:04cr565-0, Sandra Ruiz a former loan officer was found guilty by a Central District of California (LA) jury of Conspiracy and two counts of Making False Statements to HUD.

Prieston Group employee Jim Griswold was a prosecution witness in this case. Jim, also a former North American Mortgage Co employee, had interviewed Ruiz as part of an internal enquiry by North American Mortgage Co.

Ruiz is due to be sentenced on April 18, 2005.