George Cavallo, 47, Kirkland, Washington, his wife, Paula Hornberger, 41, Kirkland, Washington, and Joel Streinz, 54, Nokomis, Florida, a former police officer, were sentenced by U.S. District Court Judge Elizabeth A. Kovachevich to federal prison terms for their roles in a Sarasota, Florida-area mortgage fraud scheme.
Judge Kovachevich sentenced Cavallo, Hornberger, and Streinz, on Friday, October 26, 2012, for their participation in a large-scale conspiracy to commit wire fraud and to make false statements on loan applications that were submitted to FDIC-insured financial institutions and mortgage lenders. The three individuals were convicted earlier in 2012 following a three-month jury trial.
Streinz, who took out more than $6.2 million in fraudulent loans, was sentenced to five years in federal prison. He was also ordered to pay $1,072,676.31 in restitution.
Cavallo and Hornberger, who collectively took out more than $8.3 million in fraudulent loans, were sentenced to 10 years in federal prison, and 12 months and one day, respectively. They were ordered to pay $13,228,861.74 in restitution.
Evidence presented at trial revealed that Cavallo, Hornberger and Streinz conspired with each other, and with numerous other individuals, to purchase residential property in the Sarasota area by making false statements on loan applications submitted to various FDIC-insured banks and mortgage lenders. The false statements made and caused to be made, pertained to, among other things, the property’s actual purchase/sale price; the purchaser/borrower’s intended use of the property; the purchaser/borrower’s employment, income, assets and liabilities; and the amount and source of the equity contributed to the purchase by the purchaser/borrower.
The idea behind the scam was to fraudulently obtain the maximum loan possible on each property, and then to sell that property within a few years after it had appreciated without risking much, if any, of their own money. The conspiracy began in the late 1990’s and then grew slowly until 2004, when it exploded with the drastic increase in real estate prices in Sarasota. The conspiracy ended, when the real estate market collapsed in 2008.
This case was investigated by the Federal Bureau of Investigation, the FDIC’s Office of Inspector General, and the Sarasota County Sheriff’s Office. It was prosecuted by Assistant United States Attorneys Christopher Tuite and Cherie Krigsman.