San Jose man pleads guilty in attempt to buy $760,000 home by fraud

In the following press release the Santa Clara County (CA) District Attorney annouced that at arraignment this week, 42-year old Lawrence Maschino pleaded guilty to charges including writing checks with insufficient funds, using a victim’s personal information without authorization, and grand theft of personal property over $400. In addition, Mr. Maschino has three prior felony convictions for similar offenses.

In pleading guilty, Mr. Maschino agreed to a four year prison term. The charges were the result of the San Jose Police Department’s Fraud Unit receiving a tip from a real estate agent. Mr. Maschino attempted to purchase a home worth $760,000. The agent suspected Mr. Maschino was a con artist. When SJPD figured out he had absconded from his parole, they swiftly arrested him. During his arrest, they found in his possession numerous pieces of evidence resulting in an investigation for the above charges. Mr. Maschino wrote a series of bad checks, worth thousands of dollars starting in February 2009 that continued through June 2009. The total loss as a result of the bad checks was more than $17,000.00. He also used the personal information of several victims, including doctors and elders, without authorization.

Mr. Maschino will be sentenced on December 11, 2009, at 9:00am in Dept. 24 of the Hall of Justice.

7 indicted in N. California - accused in 100+ property mortgage fraud

Oakland, CA - Press Release

A federal grand jury has returned a 53 count indictment charging seven individuals with conspiracy to commit wire fraud, wire fraud, and money laundering for their roles in a mortgage fraud scheme that involved more than 100 properties in Northern California, United States Attorney Joseph P. Russoniello, Special Agent in Charge, IRS Criminal Investigation, Scott O’Briant, and Special Agent in Charge, FBI, Stephanie Douglas, announced.

The indictment, which was unsealed yesterday, charges Amy Schloemann, aka Amy Kinney; Karim Akil, aka Scott Kinney, aka Scott Kenney; Wonda Louise Kidd; Michelle McGuire; Kaska Clay, aka Mark Lane, aka Michael Lewis; James Ross; and Darnell Thomas.

According to the indictment, from October 2004 through July 2007, the defendants participated in a conspiracy to defraud involving more than 100 properties that provided profits in the millions to members of the conspiracy through the fraudulent purchase of real estate and the laundering of profits.

The indictment alleges that in furtherance of the conspiracy, the defendants and their associates recruited and controlled individuals in key positions, including straw buyers, real estate appraisers, notaries and escrow agents. The defendants encouraged straw buyers and others to purchase homes throughout Northern California by falsely promising: to pay them large sums of money and at times paying them large sums of money, that the real estate transactions were legal, that the buyers would not be responsible for the mortgage payments, and that the mortgage payments would be taken over by another person shortly after the purchase of the property.

The indictment states that the defendants directed straw buyers to sign mortgage loan applications that contained false information and false supporting documentation, and paid the straw buyers thousands of dollars in exchange for allowing the defendants to purchase property in their names. The defendants are also alleged to have hired notary publics who were willing to notarize documents by falsely attesting to having witnessed signatures on loan documents when in fact the documents were not signed in the presence of the notaries. 

According to the indictment, the defendants increased their profits on the purchase of properties by submitting documents to lenders, including purchase and sale agreements that falsely inflated the purchase prices of the properties, thereby causing the lenders to unwittingly provide loans in amounts that exceeded the true purchase prices and values of the properties. Once the properties were purchased, the defendants disbursed funds from the escrow accounts into bank accounts held by the defendants. The defendants also regularly failed to make the mortgage payments on the purchased properties, causing lenders to foreclose on the properties which resulted in financial losses to the lenders and damaged the credit ratings of the buyers. 

Amy Schloemann, aka Amy Kinney, was a licensed realtor and president of Hiddenbrooke Mortgage in Vallejo, Calif.  She completed and caused others to complete false loan application for straw buyers and fictitious buyers. She also acted as a real estate broker for both straw buyers and fictitious buyers. 

Karim Akil, aka Scott Kinney, aka Scott Kenny, was the president of Marsh Group Corporation in Oakland, Calif. He was the husband of Schloemann. Akil employed and paid co-conspirators to recruit individuals to act as straw buyers of real estate. 

Schloemann and Akil held signature authority on business checking accounts in the names of Hiddenbrooke Mortgage Group, Marsh Group, the Brooke Property Management Company and Sanford and Son MTG. Schloemann and Akil used these accounts to launder the profits of the fraudulent scheme, to make deposit payments on real property purchases in the names of straw and fictitious buyers and to make payments to co-conspirators. 

Michelle McGuire worked as a personal assistant for Akil. She was responsible for assisting in the completion of loan applications for straw buyers and fictitious buyers and submitting these loan applications and supporting documentation to lenders. She was paid hundreds of thousands of dollars for her involvement in the fraud scheme.

Wonda Louise Kidd was a manager and escrow officer of Financial Title Company in Castro Valley, Calif. Kidd was the escrow officer on more than 100 properties involved in this scheme, disbursing profits to Schloemann and Akil through wire transfers and checks to their various accounts. 

James Ross and Darnell Thomas worked with Akil to recruit straw buyers to purchase real property. Thomas also falsified information on a loan application submitted to a lender for a property he purchased. They were each paid hundreds of thousands of dollars for their involvement. 

Kashka Clay aka Mark Lane aka Michael Lewis was a real estate agent who purchased two properties using the alias, Mark Lane. Clay also authorized the use of his telephone number to falsely represent to lenders that Clay’s number belonged to a certified public account. 

Schloemann and McGuire were arrested on Nov. 2, 2009 and made their initial appearance in federal court in Oakland on that date. They are currently out on bond. Kidd, Clay and Ross were arraigned today in Oakland federal court and were released on $100,000 bond. Thomas is scheduled to be arraigned tomorrow.  Akil, who is presently serving a sentence in state custody, is scheduled to appear on Nov. 19, 2009 for arraignment. The case is assigned to District Judge Phyllis Hamilton.  The defendants are scheduled to make their initial appearance before Judge Hamilton on Nov. 25, 2009 at 1:30 p.m.

The charges of conspiracy to commit wire fraud and wire fraud each carry a maximum penalty of 20 years in prison and a $250,000 fine. The charge of money laundering carries a maximum prison sentence of 10 years and a fine of $250,000 or twice the amount of the criminally derived property involved in the transaction.

However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. ’ 3553. 

Stephen G. Corrigan is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kathleen Turner. The prosecution is the result of an investigation by the FBI and IRS-Criminal Investigation with the assistance of the Alameda County District Attorney’s Office.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Schloemann, Akil, Kidd, McGuire, Clay, Ross and Thomas must be presumed innocent unless and until proven guilty.

Three plead guilty in Builder Bail-Out / Kickback /ID Theft scheme

In the following press release the United States Attorney’s Office for the Central District of California announced that the former director of sales for a Colorado real estate company that built luxury homes throughout the state agreed in court papers filed today to plead guilty to a federal conspiracy charge, admitting that he and other company officials participated in a $16 million “builder bailout” scheme in which buyers of $1 million-plus homes were paid kickbacks if they purchased homes from the company.

Benjamin Serrano, 47, who until recently lived in Parker, Colorado, was charged in a criminal information filed this morning. In a related plea agreement also filed this morning in United States District Court, Serrano agreed to plead guilty to one count of conspiracy.

In the court documents, Serrano admits his role in a scheme to bring needed revenue to his company and admits working with Kristin A. Clark, a licensed real estate agent in Los Angeles, and Bradley Bishop, a former loan officer at Washington Mutual Bank and, later, Bank of America. Both Clarke and Bishop previously pleaded guilty to bank fraud charges.

In his plea agreement, Serrano admits to participating in a conspiracy with Clark and Bishop, as well as others at the company, to defraud Bank of America, Wells Fargo Bank, Washington Mutual Bank and other federally insured financial institutions. In the scheme, people associated with the company agreed to pay illegal kickbacks to individuals who agreed to buy homes in one of the company’s five developments.

To conceal the illegal kickbacks from the banks, Serrano and others would record bogus second deeds of trust on the company’s properties, according to papers filed in court. The second deeds of trust were recorded in favor of shell corporations controlled by the company for an amount equal to the kickback. Once someone agreed to buy a home, Bishop would tell Clark what information needed to be listed on the buyer’s loan application in order for him or her to qualify for a home loan at Bank of America, and Clark would use that information to obtain the bogus documentation required by the bank. When the properties were sold and loans funded, the banks would use part of the loan proceeds to pay off the bogus second deeds of trust recorded against the property. That money, which was paid to the company’s shell corporations, was then used to pay the kickbacks to the buyers. The kickbacks typically ranged between 20 percent and 23 percent of the homes’ sales price, which all sold for more than $1 million. 

In one instance discussed in Serrano’s plea agreement, a buyer agreed to purchase a home in Parker, Colorado for $1,277,500. In exchange, the company agreed to pay the buyer a kickback of approximately $269,000 out of the loan proceeds. Serrano and others at the company agreed to this sale knowing that the buyer had used a false identity to obtain a home loan from Wells Fargo. In fact, Serrano admitted in the plea agreement, he paid for the buyer to fly to Los Angeles to obtain a better fake identification. FBI agents in Colorado followed up on this sale and discovered that the buyer later defaulted on the loan and the property was sold for $533,000, resulting in a loss of $694,500 to the bank.

Special Agents with the FBI in Los Angeles first began investigating Clark, Bishop, Serrano and others involved in the scheme in April 2008 after a woman contacted Bank of America to report that her identity had been stolen and used to apply for a $1 million home loan for property in Colorado. Bishop and Clark later pleaded guilty to their involvement in the conspiracy and agreed to cooperate with the government in its on-going investigation into Serrano and others at the company. Bishop and Clarke each pleaded guilty earlier this year pursuant to plea agreements that have been partially unsealed. According to Bishop’s plea agreement, between January 2008 and April 2008 – a time when the real estate market was in sharp decline – he processed 11 fraudulent loans worth $12,571,366 that were used to buy properties built by Serrano’s former company. According to Clark’s plea agreement, she prepared the fraudulent loan applications and submitted fictitious tax returns, W-2s and payroll stubs in support of the fraudulent loans. Clark further admitted that she used her two real estate companies, K&K Investments and Cardinal and Gold Investments, to secretly funnel kickbacks to the buyers.

Serrano agreed to plead guilty to one count of conspiracy, which carries a statutory maximum penalty of five years in federal prison. Serrano is scheduled to make his initial court appearance in United States District Court on December 14.

Clark pleaded guilty in January to 13 counts of bank fraud, which each carry a statutory maximum penalty of 30 years in federal prison. Bishop pleaded guilty in September to 11 counts of bank fraud. Clark and Bishop pleaded guilty before United States District Judge Christina A. Snyder.

The cases against Serrano, Clark and Bishop are part of an ongoing investigation being conducted by the Federal Bureau of Investigation’s Los Angeles and Colorado Field Offices.

Former Missouri resident pleads guilty to obtaining mortgage using mothers ID

In the following press release Michael W. Reap, Acting United States Attorney for the Eastern District of Missouri announced that Susan Feaman, formerly of Perryville, Missouri, has pleaded guilty to charges of interstate transportation of stolen property and identity theft.

On March 6, 2006, a detective from the Perryville, Missouri, Police Department obtained a search warrant for the residence of Susan Feaman in Perryville. The warrant was based upon Feaman’s criminal conduct in using forged prescriptions to obtain controlled substance prescription drugs.  In executing the search warrant, officers seized materials relating to the forged prescription conduct, as well as materials reflecting Feaman’s use of her mother’s name and social security number. Her mother has lived in another state for many years.  In the time frame from October 1, 2005, to December 31, 2005, Feaman used the the name, social security number and credit worthiness of her mother to obtain a loan in the amount of  $145,000, to purchase the residence in Perryville, Missouri.  In addition to the residential loan, Feaman used her mother’s identification information to obtain credit cards and to make credit transactions with approximately twenty-five companies.  She made $271,000 in fraudulent credit purchases and other transactions in 2005 and 2006. 

As part of the investigation in this case, Feaman was prosecuted in Perry County on felony charges relating to the forged prescriptions.  She plead guilty and was sentenced to four years in the Missouri Department of Corrections.  She served that sentence and was paroled.

From April 1, 2009, through April 12, 2009, Feaman stole a series of Steuben Crystal glass figurines from the Sallie Home store in Ladue, Missouri, which she took to her home in Ellis Grove IL.  She sold some of the items on E-Bay and kept some others. The figurines had a value of $15,120.

SUSAN FEAMAN, presently residing in Ellis Grove, Illinois, pleaded guilty to one felony count of interstate transportation of stolen property and one felony count of identity theft.  She appeared before United States District Judge Donald J. Stohr.

She now faces a maximum penalty of ten years in prison and/or fines up to $250,000 for interstate transportation of stolen property and 15 years in prison and/or fines up to $250,000 for identity theft.  Sentencing has been set for February 5, 2010.

Reap commended the work performed on the case by the United States Secret Service, United States Postal Inspection Service, the Perryville and Ladue Police Departments and Assistant United States Attorney James E. Crowe, Jr., who is handling the case for the U.S. Attorney’s Office.

Dixie County (FL) Zoning & Building Inspector sentenced in fraud and bribery schemes

In the following press release Thomas F. Kirwin, United States Attorney for the Northern District of Florida, today announced the November 9, 2009 sentencing of former Dixie County Building and Zoning Inspector, Willie “Billy” Keen, Jr. (60) to 78 months in prison for federal program fraud, conspiracy, bribery, and making false statements.

Keen was convicted of federal program fraud following a two-day trial in March of this year in the United States District Court in Gainesville. The evidence at trial showed that between March and October 2003, Keen, who was then employed as the building and zoning inspector for Dixie County, fraudulently applied for Community Development Block Grant and State Housing Initiative Program funds to renovate his personal home. Because Keen did not financially qualify for these funds and was otherwise prohibited from receiving the funds as a result of his position, Keen applied for the funds in his girlfriend’s name, falsely representing that she was the owner of his home. During the course of 2003, Keen fraudulently obtained approximately $32,000 in grant funds, which he used to renovate his house. Testimony at trial established that after Keen learned he was being investigated, he removed documents from the county clerk’s official files and substituted a deed that purported to convey his house to his girlfriend. The deed conflicted with records previously produced to the FBI by the clerk of court.

In a separate case, Keen, and two Dixie County Commissioners, John Driggers and Alton Land, were charged with conspiring to accept bribes, accepting bribes, and lying to federal agents. Keen, Driggers, and Land were convicted of these charges at the conclusion of a four-day trial in United States District Court in Gainesville in August of this year. Evidence introduced at this trial included video and audio recordings of defendants meeting with an undercover FBI agent and accepting cash payments for influence before the Dixie County Board of County Commissioners. Evidence at trial also showed that defendants offered their approval for developments within Dixie County in exchange for money and other inducements, and that they attempted to influence other members of the Board to approve these developments.

In addition to the 78- month sentence of imprisonment, the Court ordered the forfeiture of Keen’s house in Old Town, Florida and ordered him to pay $32,010 in restitution.

Sentencing of Keen’s co-defendants, Driggers and Land, in the bribery case is set for January 4, 2010 before the Honorable Chief United States District Judge Stephan P. Mickle.

United States Attorney Kirwin commended the diligent efforts of the Federal Bureau of Investigation whose investigation led to the conviction and sentence in these cases. The cases were prosecuted by Assistant United States Attorney Gregory P. McMahon.

Two sentenced in DC area straw buyer flipping scheme

Robin Lewis-Ivy, a licensed real estate agent in Maryland, was sentenced today for her role in an extensive mortgage fraud scheme involving properties in the District of Columbia and Maryland, announced Acting U.S. Attorney Channing D. Phillips, Special Agent in Charge Ava A. Cooper-Davis of the Washington Field Division, Drug Enforcement Administration (DEA), Special Agent in Charge Phillip Durham, Washington Field Division, Bureau of Alcohol, Tobacco and Firearms (ATF), and Robert L. Hylton, Chief of Police of the Prince George’s County Police Department.

Lewis-Ivy, 48, of Laurel, Maryland, was sentenced in U.S. District Court of the District of Columbia before the Honorable Judge Reggie B. Walton. Judge Walton, after crediting Lewis-Ivy for her cooperation in other matters, sentenced Lewis-Ivy to five years of probation, including one year of home detention and 200 hours of community service. He also ordered her to forfeit to the government $289,700, in which the money will be used to provide restitution to the victims of these crimes.

Lewis-Ivy Information    Douglas Information

According to the government’s evidence at the time of her guilty plea, beginning as early as 2005, Lewis-Ivy conspired with several people to purchase homes in the District of Columbia and Maryland through various acts of fraud. Using her status as a licensed real estate agent, Lewis-Ivy searched real estate databases and identified listings of properties for her coconspirators to purchase. She also drove around Washington, D.C. with her co-conspirators in an effort to locate properties that the co-conspirators could obtain after defrauding mortgage lenders.

Further, Lewis-Ivy and her co-conspirators knowingly used straw purchasers, that is, purchasers in name only, who were mere fronts for members of the conspiracy, to act as if they were legitimate purchasers of these homes. On at least one occasion, Lewis-Ivy helped to prepare a HUD-1 and related paperwork for a loan on a property knowing that the property was going to be purchased by a straw purchaser.

To help the co-conspirators obtain the loans for the homes, Lewis-Ivy and her coconspirators created or had created certain fraudulent documents that would make it appear that the prospective purchasers of the homes had businesses and incomes, when in truth they did not.

When no documents were needed to apply for the loans, such as in the case of so-called “no document” or “stated income” loans, Lewis-Ivy and her co-conspirators placed false information on loan applications for her clients. After these loan applications were completed, Lewis-Ivy sent the applications, or caused the applications to be sent by facsimile from Maryland to lending institutions in California and Washington State. Lewis-Ivy’s purpose in participating in the fraud was to enrich herself and her co-conspirators.

As part of their scheme, Corey M. Douglas, one of Lewis-Ivy’s co-conspirators, opened accounts in the names of fictitious businesses so that he could receive money from the scheme. Lewis-Ivy advised Douglas on how to register these fictitious businesses. Lewis-Ivy obtained real estate sales commissions for these home sales, or money as “repair costs.” Lewis-Ivy helped Douglas receive invented fees at the time of closing on these properties, such as finder’s fees or consulting fees. These payments to Douglas were often wired into Douglas’ fictitious business accounts, such as a SunTrust account in the name C&M Capital.

Also as part of the scheme, Lewis-Ivy attempted to locate and identify properties that she and her co-conspirators could claim as “undervalued” properties, so that they could later secure loans in amounts that exceeded the value of the properties. Lewis-Ivy and her co-conspirators worked with others who were mortgage brokers and could help change the apparent value of properties so that it would appear that a larger mortgage loan amount was justified in order to buy the property.

On December 17, 2007, co-conspirator Douglas pled guilty to a two-count information, count one charging a conspiracy to distribute narcotics and count two charging a conspiracy to commit wire fraud. On May 4, 2009, Judge Walton sentenced Douglas to 156 months on each count, to run concurrently, three years of supervised release, and forfeiture of $800,000.

In announcing today’s sentencing, Acting U.S. Attorney Phillips, Special Agent in Charge Cooper-Davis, Special Agent in Charge Durham, and Chief Hylton praised the hard work of the investigative agents involved in this matter, especially the involved DEA Special Agents, ATF Special Agent Aaron Ybarra, and Prince George’s County Detective Matt Albertson. They also acknowledged the efforts of former Criminal Investigator Diane Eickman, Paralegal Specialists Mary Treanor, as well as former Assistant U.S. Attorney Elisabeth Poteat, who handled the prosecution of Lewis-Ivy and Douglas, and Assistant U.S. Attorney Daniel Butler, who handled the sentencing of Lewis-Ivy.

Maryland man sentenced to 41 months in flipping scheme

In the following press release Channing D. Phillips, Acting United States Attorney for the District of Columbia announced that a Maryland man, Mark D. Blunt, was sentenced today to 41 months in prison on charges of conspiracy to defraud banks and mortgage lenders. The U.S. Attorney was joined by  Joseph Persichini, Jr., Assistant Director in Charge of the FBI’s Washington Field Office in making the announcement.

Blunt, 44, most recently of Lanham, Maryland, entered his guilty plea on August 3, 2009. He was sentenced in the U.S. District Court for the District of Columbia before the Honorable Judge Reggie B. Walton. In addition to his incarceration time, Blunt was ordered to pay $1,904,012.80 in restitution.

Criminal Information

According to the government’s sentencing memorandum, Mark Blunt stole over $1 million by orchestrating a series of sales of residential real estate in the District of Columbia. He targeted houses in poor condition, and recruited straw purchasers to fraudulently obtain bank loans which they were not capable of repaying, and which were greatly in excess of the true value of the properties. Because the straw purchasers did not make the monthly payments, the mortgages would fall into default; however, before final foreclosure the defendant would resell the properties to other straw buyers for an ever-increasing price, siphoning off additional loan money, and thus profiting from the churning of successive real estate sales.

The government noted that Blunt was the mastermind of the scheme. He arranged for the sales transactions and recruited the buyers, whose loan applications contained false statements in order to justify the millions of dollars of mortgages in their names. Each loan application greatly exaggerated the true salary and assets of the buyer; indeed, several loan applications falsely listed the straw buyers as being employed by the defendant’s own company purportedly earning six-figure salaries when, in truth, the buyers earned a fraction of the listed salary and did not work for the defendant’s company. Each of the homes went into foreclosure or were sold at a “short sale” for less than the unpaid principal balance. The current amount of unpaid loans on these properties exceed the resell price or estimated value by almost $2 million.

In announcing the sentence, Acting U.S. Attorney Phillips and Assistant Director in Charge Persichini praised the FBI Special Agent handling the case. In addition, they commended Paralegal Specialists Diane Hayes and Maggie McCabe, and Assistant U.S. Attorney Virginia Cheatham, who prosecuted the case.

Former NJ attorney charged in another closing fraud allegation

In the following press release Bergen County (NJ) Prosecutor John L. Molinelli announced the arrest of Michael P. Rumore, [pictured below] 328 Travers Place, Lyndhurst, New Jersey 07071, on November 6, 2009.

The charges are the result of an investigation by members of the Bergen County Prosecutor’s Office White Collar Crime Unit, under the direction of Chief Steven Cucciniello.

[Editor note: Rumore pleaded guilty in January 2009 to similar charges brought by the New Jersey Attorney General. Read more..]

Members of the Bergen County Prosecutor’s Office White Collar Crime Unit received information from the victim that Mr. Rumore had handled a real estate closing, while in his capacity as an attorney, on June 28, 2007. Mr. Rumore had presented an altered HUD-1 Statement to the victim, who was the seller of the real estate in this transaction. Mr. Rumore had altered the selling price of the home to reflect an amount which was much greater than the contracted price and had also listed several contractors who allegedly had done work for the seller and were owed money. This HUD-1 Statement reflected an amount, which was much lower than the amount of funds that the seller should have received. Mr. Rumore presented a much different HUD-1 Statement to the mortgage company, which indicated a higher amount of money due to the seller and did not list the previous contractors. Mr. Rumore took the additional proceeds from this transaction and used the funds, which were in excess of $75,000.00, for his personal use.

Michael P. Rumore was charged with violation of 2C:20-4(a) Theft By Deception, a crime of the second degree and 2C:20-9 Theft by Failing to Make Proper Disposition of Property Acquired, a crime of the second degree.

Prosecutor Molinelli states that the defendant is presumed innocent until proven guilty beyond a reasonable doubt.