Angelo Alleca, 46, Buffalo, New York, and Mark Morrow, 54, Cincinnati, Ohio, were arraigned on charges of orchestrating a multi-million dollar investment fraud scheme.  The Defendants marketed several funds that were supposed to invest in certain assets/investments, such as hedge funds managed by a professional money manager of mortgage debt.  According to the new indictment, they instead used the money to pay redemptions to earlier investors, to acquire and operate several businesses, and to pay personal expenses.

According to U.S. Attorney John Horn, the indictment, and other information presented in court: From on or about 2004 until 2012,  Alleca acted as the President and Chief Operating Officer of Summit Wealth Management, an investment adviser headquartered in Atlanta, Georgia. During that time, Alleca started several funds and falsely misrepresented that money would be invested in hedge funds and debt securities and managed by professional investment managers. Continue Reading…

Thomas Franklin Tarbutton, 56, Newport Beach, California, a hard money lender, was convicted by a jury of embezzling over $3 million from investors in a Ponzi real estate-mortgage investment fraud scheme.

Between 2004 and 2010, Tarbutton operated Villa Capital Inc. as a “hard money” lender who solicited money from private investors for borrowers looking for funds from non-bank lenders. The defendant defrauded eleven people in a Ponzi real estate mortgage investment fraud scheme. Continue Reading…

Randy Poulson, 44, Woolwich Township, New Jersey, was sentenced to 72 months in prison for scamming distressed homeowners into giving him their houses and then soliciting fake real estate investments from private investors – secured by those same properties – that netted him more than $3 million in illicit profits.  Poulson previously pleaded guilty before U.S. District Judge Renée Marie Bumb to Count One of an indictment charging him with mail fraud.

According to documents filed in this case and statements made in court:

Poulson owned and operated Equity Capital Investments, LLC and Poulson Russo LLC and was the former president of the South Jersey Real Estate Investors Association. Paulson gave speeches, seminars, monthly dinners and various private tutorial sessions, purporting to teach real estate investing tips to individuals who paid fees to attend. Continue Reading…

Aria Maleki, 33, of Santa Ana, California; Mehdi Moarefian, a.k.a. “Michael Miller,” 36, of Irvine, California; Kowit Yuktanon, a.k.a. “Eric Cannon,” 31, of Huntington Beach, California; Cuong Huy King, a.k.a. “James Nolan” and “Jimmy, 32, of Westminster, California; Daniel Shiau, a.k.a. “Scott Decker,” 30, of Irvine, California; Serj Geuttsoyan, a.k.a. “Anthony Kirk,” 33, of Santa Ana, California; Michelle Lefaoseu, a.k.a. “Michelle Bennett,” 41, of Huntington Beach, California; were charged in a 14 count-indictment with conspiracy and fraud offenses stemming from an alleged scheme to defraud homeowners across the United States who were seeking mortgage loan modifications

Law enforcement seized approximately $350,000 from various bank accounts, approximately $362,000 from a Bitcoin account, a $100,000 cashier’s check, and a 2013 Ferrari 458 Italia.  Continue Reading…

Michael David Scott, former real estate broker, 51, of Mansfield, Massachusetts, pleaded guilty to one count of wire fraud in connection a scheme to defraud a couple of the deposit they paid to purchase three properties in Randolph, Roxbury and Jamaica Plain, Massachusetts.

From February 2011 to October 2013, Scott fraudulently persuaded a couple to sign three Purchase & Sale Agreements to buy properties in Randolph, Roxbury and Jamaica Plain.  The couple deposited $199,000 with Scott under the false promise that their funds would be held in escrow.  However, Scott immediately spent the funds for his own use.   Furthermore, Scott knew that the first property was taken off the market by the sellers, that the bank holding the mortgage had refused to approve the sale of the second property, and that he had sold the third property to someone else.  Scott never informed the couple about the status of the properties, and when they tried to get a refund of their deposits, he falsely assured them their deals were still pending and refused to return their deposits.      Continue Reading…

The United States Court of Appeals for the First Circuit in Boston, Massachusetts affirmed Michael Prieto‘s New Hampshire conviction and 72 month sentence for committing mail fraud by organizing and managing a fraudulent mortgage rescue scheme.  Prieto’s crime grew out of the mortgage crisis in the mid and late 2000s and involved defrauding distressed homeowners out of their properties and then obtaining money by lying on subsequent mortgage applications to strip equity from these properties.

On appeal, the First Circuit rejected Prieto’s argument that the government improperly charged him with a single, overarching fraud count.  The Court concluded that the government’s single charge against Prieto was appropriate because the charge reflected the “multi-faceted [and] complex scheme” that Prieto devised.  The Court also denied Prieto’s claim that the government had not presented sufficient evidence of Prieto’s intent to commit fraud.   In this regard, the Court concluded that “there was ample support to find that Prieto was both the conductor and a musician in an orchestrated fraud that worked for a while only because it was fraud.”  Finally, the Court determined that there was sufficient evidence that the lies Prieto placed in mortgage applications were important to the bank’s decision to issue loans.  As the Court noted, lies about a mortgage applicant’s stated income and the planned use for the property (i.e., primary residence vs. investment property) are important pieces of information to a bank because they have a natural tendency to influence a bank’s loan decision.   Continue Reading…

Martin Calzada, 28, Los Angeles, California was indicted by a federal grand jury with conspiracy to commit mail fraud and mail fraud, in connection with a scheme to defraud homeowners facing foreclosure. Calzada entered a plea of not guilty at his arraignment.

According to court documents, between August 2010 and October 2011, Calzada, and other employees of Star Reliable Mortgage, which had offices in Bakersfield, Visalia, and Salinas, California, targeted distressed homeowners with a fraudulent “loan elimination” scheme. Star Reliable charged clients an upfront fee — ranging from $2,500 to $4,500 — as well as monthly fees, based on false promises that the clients could own their homes “free and clear” as a result of Star Reliable’s services. In furtherance of the scheme, Calzada and other employees filed at county recorders’ offices fraudulent documents on behalf of the homeowner-clients that purported to replace the legitimate property trustees with fictitious trusts affiliated with Calzada and Star Reliable, all in an effort to “cloud title” and halt or stall the foreclosure process. Additionally, Calzada, and other employees working at his direction, told clients to stop paying their mortgages. They also falsely represented that each client had one million dollars in a U.S. government account that could be used to pay off a homeowner’s mortgage. Continue Reading…

Michael Barnett, real estate developer, pled guilty to conspiring to defraud lenders and make false statements to HUD in connection with his development of Vineyard Commons, a luxury residential complex in Ulster County, New York.

According to Barnett’s admissions in court during his plea allocution and the allegations made in the Superseding Indictment:

Barnett, who was the developer of Vineyard Commons, sought kickbacks and investments from subcontractors and vendors on the project and made false statements to the project’s lender so that he could draw down on the project’s line of credit. Barnett arranged with two executives of a vendor who provided rough carpentry and lumber supplies on the project (the “Lumber Company”) to have the Lumber Company pay Barnett a kickback in exchange for Barnett’s award to the Lumber Company of the Vineyard Commons contract, as well as future business on other developments Barnett was planning. To raise funds for the kickback, Barnett and the two Lumber Company executives agreed that the Lumber Company would inflate its bid for labor and materials by approximately $865,000. Continue Reading…

Men who used cheap Detroit homes and ‘straw buyers’ in $10 million scheme get prison

Seven men have been sentenced to prison terms ranging from one day to 33 months in a mortgage fraud scheme that authorities said cost banks $10 million.

The scheme took advantage of people with low incomes, but good credit, who were led to believe they were investing in low-cost Detroit homes, according to prosecutors.

U.S. District Judge Bernard Friedman this week sentenced five men to prison and ordered restitution payments. Two others were sentenced in 2014 and 2015.

Federal agents arrested the seven men, Joey Murad, Jeffrey Najor, Peter Allen, Jason Najor, Suhail Hallak, Wasseem Shamoun and Al Karana, in July 2013.

Diane Cobb, 58, Ada, Ohio, was sentenced to 41 months in prison  for her role in a Ponzi scheme.  The sentencing follows a guilty plea in which Cobb admitted to running a fraudulent scheme with co-defendant Paul Sloane Davis through which they profited by more than a million dollars.

Cobb was charged by indictment on October 31, 2013, for her part in the scheme.  According to the indictment, Davis and Cobb operated a financial services company in Marin County known as DM Financial.  Davis and Cobb, through DM Financial, allegely offered investors the opportunity to fund purported “bridge loans” to borrowers who, according to Davis and Cobb, needed short-term financing for residential real estate transactions.  Cobb was charged with providing investors with, among other things, the identity of the purported borrower, a promissory note reflecting the amount and terms of the loan, and a deed of trust securing the loan to the borrower’s real property.  Based upon these documents and other representations made by Davis and Cobb, the investors believed the defendants were directing the funds into secured loans with borrowers.  Continue Reading…