Brokerage company owner pleads guilty in flipping scheme

US DOJ Press Release - January 21, 2005

BALTIMORE , Maryland - Allen F. Loucks, United States Attorney for the District of Maryland, announced that Pantelis I. “Pete” Karsos, age 45, of Towson, Maryland, pleaded guilty today to mail fraud before United States District Judge Andre Davis. Karsos is the owner of Nations Mortgage in Towson and admitted to brokering loans for investors in a mortgage fraud scheme involving “flipped” properties in Baltimore City. Sentencing is set for March 25, 2005.

According to the statement of facts presented to the court, Karsos incorporated a company called “Knoll Housing” and recruited investors. From approximately April, 1998 to December, 1999, Knoll Housing purchased properties in Baltimore City for a low price and then “flipped” the properties to an investor/borrower for an inflated price. One of Karsos’ co-conspirators, Anthony J. DiChiara , 41, of Westminster, Maryland, who was a licensed appraiser in Maryland, provided inflated appraisals and Karsos, as Nations Mortgage, brokered the mortgage without disclosing to the lender the inflated value of the house, or that “Knoll Housing” was owned by Karsos.

Settlements were handled by attorney Nicholas Pisotlas and Barbara Prichard and their title company, All County Title. Losses to lenders through the Knoll Housing scheme exceed $700,000.

DiChiara, who pleaded guilty to mail fraud on October 21, 2004, was sentenced earlier today by Judge Davis to one year in prison, followed by two years of supervised release. Pistolas and Prichard both pleaded guilty to fraud charges on December 3, 2003 and December 18, 2003, respectively.

Valley real estate agent pleads guilty to fraud

The Arizona Republic - January 21, 2005

According to an Pat Flannery in the Arizona Republic a Valley real estate agent specializing in low-cost home sales agreed Thursday to plead guilty to fraud and theft charges stemming from a real estate scam in which investors reportedly lost $1.4 million.

Harold “Hal” Fields, 57, who was once the Valley’s top seller of Department of Housing and Urban Development homes, has long been the subject of scrutiny by state and federal regulators. He was temporarily suspended in 1996 from participating in HUD home sales and other federal housing transactions because of “irregularities” in his practices. Though his privileges later were restored, he continued to be the source of complaints about his bidding practices.

The state Department of Real Estate praised the prosecution as a warning to unscrupulous operators. Working with Assistant Arizona Attorney General E.G. Noyes, investigators from HUD’s Office of Inspector General and the state Real Estate Department pieced together a case alleging that Fields took money from more than 20 people who expected profitable investments in low-cost HUD homes.

Read the full article here

"Fannie Mae knew of Ginnie Mae probe"

CNN Money - January 19, 2005

According to an article at CNN Money.com Fannie Mae (FNM) officials were warned in late 1998 that a Fannie-approved lender the company suspected of fraud was trying to pass off problematic loans to Ginnie Mae, according to a letter the company recently sent to House lawmakers.

Fannie Mae, eager in late 1998 to unload a batch of fraudulent loans it purchased from First Beneficial Mortgage Co., knowingly allowed the North Carolina lender to resell the bogus notes to Ginnie Mae, formerly the Government Mortgage National Association, according to federal law-enforcement officials. Fannie recently agreed to forfeit $7.5 million in “tainted” funds from First Beneficial to the federal government, which lost more than $30 million money in what federal prosecutors consider one of the largest mortgage schemes ever. Loans guaranteed by Ginnie Mae, formerly the Government National Mortgage Association, are backed by the full faith and credit of the U.S. government.

Read the full CNN article here

Former ANC Commissioner indicted for operating Real Estate Ponzi scheme

Extract from US DOJ Press Release – January 18, 2005

Washington, D.C. - United States Attorney Kenneth L. Wainstein and Thomas P. Brady, Inspector in Charge of the U.S. Postal Inspection Service, announced that Robert L. Hall, Jr., 31, of the 200 block of Parker Street, NE, Washington, D.C., was indicted today by a federal grand jury for wire fraud, mail fraud, securities fraud, and first degree fraud in connection with his alleged operation of a Ponzi scheme which defrauded dozens of innocent investors of over $700,000 over the course of several years. Hall, who served as the Ward 6C chairman of the Advisory Neighborhood Commission until September 2004, is scheduled to be arraigned on January 25, 2005. The case has been assigned to the Honorable Henry Kennedy, Jr. Hall faces up to 50 years in prison and a $500,000 fine under the statute and a likely term of incarceration of between 97 and 121 months if convicted of the charges.

According to the grand jury indictment, Hall owned and operated a company known as First United Financial Group (FUFG). FUFG’s offices were located at 240 Parker Street, NE, in the District of Columbia. FUFG’s stated business objective was to solicit money from individuals in order to invest that money in certain District of Columbia real estate ventures and promise these individuals a specific rate of monetary return. Hall’s title was the Chief Executive Officer (CEO) and Managing Member of FUFG. As such, Hall had absolute authority over all FUFG bank accounts and business transactions.

As part of his job activities, Hall would directly solicit investors and make representations concerning guaranteed return of investor principal and promised rate of return. In his capacity as CEO and owner of FUFG, Hall had access to and signatory authority over all FUFG bank accounts and would make withdrawals and transfers on behalf of FUFG. Hall also delegated these activities to subordinates at FUFG.
In part the indictment alleges that the scheme operated as follows:

Hall purposely misled FUFG investors by telling them that their funds would be used to invest in a real estate venture called “The Trinidad Project,” which Hall promoted as an authentic urban redevelopment project in the Trinidad area of Northeast Washington, D.C. In truth and in fact, FUFG never invested in the Trinidad Project or in any other real estate venture.

Relying on the false representations made by Hall, FUFG clients would enter into these agreements with FUFG and would provide thousands of dollars to FUFG under the belief that it would be invested in real estate or other legitimate business ventures and that their principal was guaranteed.

As a result of Hall’s false representations, FUFG clients suffered an actual loss of approximately $747,169. In addition to the wire fraud, mail fraud, securities fraud, and fraud counts, the indictment also sets forth a forfeiture allegation in this amount.

Maryland Man Convicted In Mortgage Scheme

ABC7 News  - (Associated Press Story) - January 18, 2005
US DOJ Press Release - January 18, 2005

Washington (AP) - A Maryland developer has been convicted of running a fraudulent real estate scheme. Wilbert Brodie of Mount Rainier was found guilty Tuesday of conspiracy and wire fraud in connection with a mortgage fraud operation in the Washington area. Federal prosecutors say that over a 19-month period ending in July of 1997, Brodie obtained more than $850,000 from mortgage companiesBrodie bought nine distressed properties in the Washington area and used inflated appraisals and other bogus tactics to get overvalued loans. Then he spent the money and defaulted on the loans. Under federal sentencing guidelines, Brodie is likely to face about two years in federal prison when he’s sentenced in April.

Update on August 9, 2005 by The Editor - Ian Shuter - DMS

ABC 7 News reports that Wibert Brodie has been sentenced to four years and nine months in prison after being convicted of running a fraudulent real estate scheme. He’s also been ordered to pay more than $355,000 in restitution.

Local builder gets 15 years for theft, forgery

The Benton Courier – January 15, 2005

Paul Robertson, a Benton builder, has been convicted of felony charges of theft of property and multiple counts of forgery. Robertson, 31, was sentenced to 15 years in the Arkansas Department of Correction. In summer 2004, Robertson received a sentence in federal court of 53 months for making false statements on loan applications to federally insured banks. He recently completed serving a year in the Arkansas Department of Community Corrections for violating his Saline County probation on a felony hot-check conviction.

According to Herzfeld, Robertson, who owned and operated a Benton business called PAR Homes, engaged in multiple fraudulent plots involving home loans and home construction.

“His main scheme was using Appraisal software to defraud lending institutions to grant home mortgages on empty lots,” Herzfeld said.

“He would electronically paste a picture of a home on a vacant lot to get a loan. He preyed on folks wanting their own home who didn’t have great credit and mortgage companies who didn’t ask enough questions before sending hundreds of thousands of dollars in the mail.”

He added: “I’ve known the defendant and his family since I was in third grade. We were childhood friends. But the kid I was friends with grew up to be a completely different person who thought it was OK to lie and to steal. He took the American dream of home ownership and twisted it into a nightmare for dozens of people in our community.”

Read the full story by Jillian McGehee Fry here

Ring leader of mortgage fraud scheme sentenced

USDOJ Press Release – January 14, 2005

DENVER – William J. Leone, Acting United States Attorney for the District of Colorado, announced that RODERICK WESSON, age 42, of Denver, Colorado, was sentenced to 14 months in federal prison by Senior U.S. District Court Judge Richard P. Matsch for conspiracy to defraud the United States for his role in implementing a scheme in which certain mortgage lenders, real estate agents, and borrowers lied to the government in order to finance the purchase of homes. WESSON was also ordered to pay $142,434 in restitution joint and several with some of the other defendants.

WESSON and twenty seven others were indicted by a federal grand jury in Denver on February 24, 2004, charged with conspiracy to defraud the United States and making false statements to the Executive Branch – namely the U.S. Department of Housing and Urban Development (HUD). Of the twenty eight people indicted, including WESSON , four defendants who were involved as lenders or real estate agents pled guilty to felony conspiracy charges, and nineteen defendants, all of whom were borrowers, pled guilty to misdemeanor false statements in a HUD transaction.

One other defendant borrower was convicted by a jury of felony charges of making false statements to the Executive Branch. Charges against four other defendants were dismissed. The borrower-defendants received probationary sentences for their crimes. Some were ordered to pay restitution ranging from $914 to $37,977 to HUD for defaulting on their home loans.

According to WESSON’s plea agreement, WESSON , and co-defendant WARREN WILLIAMS , age 46, of Aurora, Colorado, and others were engaged in a conspiracy to aid potential home buyers by falsifying information in loan applications submitted to mortgage companies and to HUD for the purpose of obtaining mortgage loans and FHA/HUD mortgage insurance. The defendants falsified social security numbers, verifications of employment, and prepared and submitted false income information, including false W2’s and pay stubs, in order to obtain the mortgage loans. They also prepared false credit reports, and created other false documents in furtherance of the scheme. WESSON and co-defendant WILLIAMS would then receive a fee of $500 to $1,000, often times in the form of a “kickback” following the completion of the loan. WILLIAMS was sentenced by Judge Matsch to serve 18 months in federal prison and ordered to pay restitution in the amount of $142,434 with WESSON to HUD.

The false mortgage applications made it appear that the borrowers were financially qualified for a mortgage. In some cases, the borrow ultimately defaulted on the mortgage, requiring the FHA/HUD mortgage insurance to compensate the lender for the loss.

The others who were indicted in connection with this matter are:
Floyd Benjamin; Nina Marie Cameron; Linda Carnagie; Linda Edwards; Keith Griffin; Janice Fisher; Toni Fisher; Lynn Jones; Tracey Joyner; Curtis Lee; Lasonji Linnear; Lorene Livingston; Janice Marshall; Terie Mure; Toni Myles; Suzanne Nangah; Sallena Nichols; Michelle Palmer; Paulmiko Parker; Mariea Powell; Anthony Rice; Deneen Stone; Lewey Thomas; Vaughn Thomas; Ekan Udom; Marshon Williams; Warren Williams.

Update on February 6, 2009 by The Editor - Ian Shuter - DMS

In the following press release Acting U.S. Attorney David M. Gaouette of the District of Colorado announced that Linda Edwards, age 55, of Centennial, Colorado, was sentenced this morning by U.S. District Court Judge Marcia S. Krieger to serve 41 months (3 ½ years) in federal prison for wire fraud, false statements, and false use of a Social Security number. AUSA Gaouette was joined in the announcement by Special Agent in Charge of IRS Criminal Investigation Christopher M. Sigerson, and Special Agent in Charge of the Office of Inspector General for Housing and Urban Development (HUD) Phyllis Robinson.

Following the prison term, Edwards was ordered to spend 3 years on supervised release. She was also ordered to pay restitution totaling $646,521.87, forfeit $139,854.96, which represents the proceeds of her illegal activities, and pay a $1,300 special assessment to a victims of crime fund. Judge Krieger ordered Edwards to report to a facility designated by the U.S. Bureau of Prisons on or before March 9, 2009.

Linda Edwards was indicted by a federal grand jury in Denver on February 17, 2005. She was found guilty following a jury trial on July 25, 2008. She was sentenced today, February 6, 2009.

According to the indictment, as well as evidence presented during her trial, Linda Edwards worked as a real estate agent doing business as “Affable Realty,” which was located in Aurora, Colorado. She used her business to further her mortgage fraud.

Starting in March 1999 through July 2004, Edwards, aided and abetted by others, devised a scheme to defraud and to obtain money and property by means of fraudulent representations and promises from mortgage companies that funded federally insured loans. As part of the scheme, Edwards and others working with her would locate buyers who desired to purchase a residence but were unable to qualify for a mortgage using the buyers’ accurate credit history, income and employment, and/or other financial information.

The defendant and others working with her would assist the buyers who could not qualify for an FHA-insured mortgage legitimately by one or more of the following means: (i) obtaining a false Social Security number (“SSN”) for the buyer, which would conceal the buyer’s unfavorable credit history; (ii) creating false W-2s or other income documents, which would inflate or wholly create income that would purportedly be available for the buyer to make mortgage payments; (iii) creating false verifications of rent (“VOR”) or employment (“VOE”) to support false information about the buyer; (iv) creating false alternate credit letters, which would create an appearance that the buyer had a history of paying debts timely; and (v) creating false “gift letters,” which falsely stated that the buyer had an appropriate source of funds for the down payment, and/or other false financial information.

“Mortgage fraud has weakened the stability of the housing market,” said Acting U.S. Attorney David Gaouette. “During these difficult economic times, the citizens of Colorado and the nation must have confidence in the financial marketplace. Those who perpetrate this crime must be held accountable.”

“It’s pretty simple, she assisted in implementing a complex mortgage fraud scheme and now she is going to prison,” said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “IRS Criminal Investigation is committed to identifying and pursuing individuals who through callous greed have contributed to the decline of our economy.”

“The new Housing Bill rewrote the law on FHA fraud and now carries penalties of 30 years and $1 million in fines,” said Phyllis Robinson, Special Agent in Charge of the HUD Office of Inspector General. “The HUD Office of Inspector General, working with U.S. Attorneys across the country, will use these penalties to bring individuals like Linda Edwards, who are eating away at the economic heart of this country, to justice. We will use whatever means necessary – both Civil and Criminal – to isolate and punish mortgage companies’ leadership and personnel who are corroding the soundness of HUD’s FHA program.”
This case was investigated by the HUD Office of the Inspector General, and the Internal Revenue Service Criminal Investigation Division.

The case was prosecuted by Assistant U.S. Attorneys Patricia Davies and Matthew Kirsch.

Update on July 16, 2009 by The Editor - Ian Shuter - DMS

Linda Carnagie, age 61, of Bennett, Colorado, was sentenced yesterday by U.S. District Court Judge Marcia S. Krieger to serve 41 months (over 3 years) in federal prison for conspiracy to defraud the United States, conspiracy to commit money laundering, wire fraud, and false statements, Acting U.S. Attorney David Gaouette, IRS Criminal Investigation Special Agent in Charge Christopher Sigerson, and Housing and Urban Development (HUD) Inspector General Kenneth Donohue announced. Following the prison term, Carnagie was ordered to spend 3 years on supervised release. Judge Krieger also ordered Carnagie to pay restitution totaling $206,693, forfeit $41,205, which represents the proceeds of her illegal activities, and pay a $2,100 special assessment to a victims of crime fund. Judge Krieger ordered Carnagie to report to a facility designated by the U.S. Bureau of Prisons by August 31, 2009.

Full press release

Man indicted in drugs related Real Estate money laundering

Muskogee Phoenix - January 14, 2005

Markus Ramon Walker of Muskogee is named in a 14-count federal grand jury indictment issued Thursday alleging a conspiracy to launder money and possess and distribute hundreds of grams of cocaine in the Muskogee area. The indictment includes allegations dating from Aug. 17, 2001, through October 2004 and involve numerous purchases or sales of cocaine at Walker’s Muskogee home and at a Muskogee nightclub at 320 Hill St.

He is accused of causing a mortgage on the home in another person’s name and then putting it to his mother’s name, the government alleges.

Read the full story by Donna Hales here