36 Indicted for Minnesota Mortgage Fraud Schemes

Allison Tussey —  June 21, 2010 — Leave a comment

Jesse Steven Moxness, Thanh Van Ngo, Dang Hai Nguyen, Vince Long Nguyen, and Trung Quang Tran were charged on June 16, 2010, with one count of conspiracy to commit wire fraud and eight counts of mortgage fraud through use of interstate wire.

The indictment sets forth a pattern of behavior routinely seen by those who commit mortgage fraud. It alleges that from February of 2006 through February of 2009, the defendants conspired to obtain mortgage loan proceeds fraudulently by making materially false representations and promises to mortgage lenders as well as by withholding information from them about real estate transactions.

To further their scheme, the defendants purportedly caused numerous items to be sent via interstate wire. During the fraud period in this particular case, Tran was either an owner or co-owner of several businesses that negotiated with builders to purchase residential properties at discount prices. Those properties were located in a number of Minnesota communities, including Buffalo, Coon Rapids, and St. Paul. Vince Nguyen was the owner of a business that handled real estate closings. Ngo worked as a loan officer and co-owned a company with Tran through which he too negotiated with builders to purchase residential properties at discounted prices. Moxness was a home builder, and Dang Nguyen worked to recruit real estate investors. The indictment alleges that Tran and Ngo solicited investors who had good credit and enticed them to purchase homes by promising them kickbacks of between $1,250 and $10,000 per transaction.

In addition, Tran and Ngo falsely told investors the two of them or their company would lease the properties on their behalf and then use the rental income to pay the investors’ mortgage payments and property expenses. Moreover, the two defendants supposedly assured investors they would eventually help them sell the properties for profit, to be shared by the investors along with Tran and Ngo. In 2007, Tran purportedly asked co-defendant Dang Nguyen to begin recruiting investors, with his pay to be determined by the number of people he recruited. The indictment also states that once investors decided to buy properties, Tran and Ngo, aided by Dang Nguyen, fraudulently produced loan applications, which were ultimately submitted to various lenders for the purpose of loan underwriting. Those fraudulent documents overstated investors’ assets, income, and employment status, while omitting their real estate liabilities.

Tran, Ngo, and Nguyen routinely provided investors with temporary funds to mislead lenders into closing on the real estate deals. Reportedly based on the fraudulent applications and the misrepresentations to lenders, loans totaling more than $20 million were eventually approved. When many of the loans were approved, the lenders disbursed the loan proceeds to the title company where Vince Nguyen was employed. Then, allegedly, Nguyen worked with Tran and Ngo to disburse the proceeds of the mortgage loans contrary to the understanding of the lenders. Moreover, Vince Nguyen, or those operating at his direction, reportedly provided false settlement statements to lenders to conceal the fraud scheme.

Following each real estate closing, Tran and Ngo allegedly received a portion of the mortgage loan proceeds as a “management fee.” In the 54 transactions highlighted in this case, they received a total of $4.7 million in payments, with some of that money subsequently going to investors and other co-conspirators. However, despite their promises to investors, Tran and Ngo failed to pay many of the mortgage loan payments, leaving most investor-home owners with bad credit and properties in foreclosure. For his part, Moxness allegedly built nine of the 54 homes subject to the fraud scheme, in an attempt to further the scheme. He reportedly received $15,000 in fraudulently obtained mortgage loan proceeds for each residence he built.

If convicted, the defendants in this case face a potential maximum penalty of five years in prison for conspiracy to commit wire fraud and 20 years on each of the eight mortgage-fraud counts. All sentences will be determined by a federal district court judge.

Michael Fiorito was sentenced on April 29, 2010, to 270 months in federal prison on one count of conspiracy to commit mail fraud and six counts of mail fraud after being convicted of mortgage fraud following a three-week jury trial. The sentence, one of the longest known nationally for mortgage fraud, was imposed after the jury found Fiorito guilty of operating a mortgage fraud scheme that caused homeowners who were in foreclosure or close to foreclosure to refinance their homes or sell their homes. Then, he stole the money, either by taking the equity checks produced during the refinancing process or the closing checks intended for the sellers of the homes. During the course of the scheme, Fiorito, who posed as someone who could help troubled homeowners, converted $500,000 of their money for his own use. His assistant and accomplish in the scam, Kristin Louise Jerde, pleaded guilty to one county of conspiracy to commit mail fraud. On September 9, 2009, she was sentenced to serve three years of probation and ordered to pay $364,092.24 in restitution.

Dustin Lee LaFavre pled guilty on December 7, 2009, to conspiracy relative to a mortgage fraud scheme similar to the first one described above. The scheme, in operation between 2005 and 2008, involved approximately 183 properties and resulted in $43 million in losses to lenders. The case against Troy David Chaika, who is being prosecuted separately for his role in the fraud, continues.

Terry Louis Lemke was sentenced on March 2, 2010, to 24 months in federal prison after pleading guilty to one count of wire fraud and one count of money laundering in connection to a mortgage fraud scheme he carried out from June of 2006 through 2007. During that time, he took more than $800,000 from the escrow account of the real estate closing company he owned. That money had been deposited by clients for use at future real estate transaction closings.

Thomas J. Hunter, part owner of Legacy Lending, pled guilty on March 3, 2010, to one count of wire fraud and one count of money laundering in connection to a mortgage fraud operation that saw life from September of 2005 to August of 2007. The fraud involved the purchase of 37 properties and $20 million in lender losses. It centered around the use of straw buyers to purchase homes for inflated amounts, from which Hunter obtained funds. On March 5, 2010, Frederick Earle Deen, III, was sentenced to 24 months in federal prison after earlier pleading guilty to one count of wire fraud and one count of tax evasion in connection to his role in this mortgage fraud scheme.

Micah John Beaumia was sentenced on March 8, 2010, to 36 months in federal prison on one count of wire fraud and one count of money laundering after earlier pleading guilty to operating a mortgage fraud scheme from 2005 through 2006. During that time, Beaumia, a mortgage broker, worked with Jill M. Lehn, a closing agent, to provide lenders false documentation in order to obtain mortgage loan proceeds and conceal the fraud. In all, 13 Minnesota properties were fraudulently purchased for a total of $2.2 million. Lehn was sentenced in January 2008 to two years in federal prison for her role in the scam.

Timothy Lynn Beliveau pled guilty in March 2010, to a tax charge and a charge of engaging in illegal monetary transactions in connection to a mortgage fraud scheme he perpetuated between 2004 and July of 2007. During that time, he preyed upon homeowners who were facing foreclosure, convincing them to sell their homes to investors he recruited. Then, he took the sale proceeds under the guise of using the money to help the homeowners make future payments on the contracts they signed to buy back their homes. Most of the homeowners lost their sale proceeds and were unable to repurchase their properties. In all, Beliveau caused losses to vulnerable homeowners totaling more than $2.4 million.

Michael Anthony Prieskorn pled guilty on March 23, 2010, to one count of conspiracy and one count of engaging in illegal monetary transactions in connection to a mortgage fraud scheme that spanned from December of 2006 through April of 2007. During that time, he and his co-conspirator fraudulently obtained more than $5 million from private investors who purchased approximately 70 residential properties in Florida and Minnesota. To further the scheme, he promised investors he would help them sell the properties after they purchased them for inflated amounts. Prieskorn and his co-conspirator benefitted from those inflated prices; however, no assistance was provided to the investors, causing most of the properties to fall into foreclosure.  The case against his co-conspirator, Richard Mathew Laho, continues.

Gerald James Greenfield and Nicholas Ryan Delon Smith pled guilty on May 3, 2010, to charges related to mortgage fraud involving the sale of condominiums at Sexton Lofts in Minneapolis. Greenfield pled to one count of conspiracy, and Smith pled guilty to one count of conspiracy and one count of engaging in illegal monetary transactions. The fraud scheme, operational from August of 2006 to May of 2007, resulted in losses to lenders of more than $2.5 million. Those losses were due to the defendants’ misrepresentations, which prompted the lenders to make loans to straw buyers. Those loans were often in amounts that greatly exceeded market values for the properties involved. Brett A. Thielen, was charged by way of information in this matter and has pleaded guilty.

Cameron Roland Baird, a California resident, pled guilty on May 12, 2010, to one count of wire fraud and one count of money laundering in another mortgage fraud case, similar to the one described above. This scheme, which took place between July of 2007 and September of 2008, involved the fraudulent purchase of condominium units in Prior Lake and resulted in lenders losing $3.1 million. Prosecution of Baird‘s co-defendants, Beau Wesley Gensmer and Christopher Glenn Kennedy, both of Prior Lake, continues.

Dale Charles Dodge, Jr., pled guilty on May 12, 2010, to one count of wire fraud and one count of money laundering in connection to a mortgage fraud scheme he perpetrated from 2002 through 2005. In that case, Dodge, who owned a real estate closing company, took approximately $800,000 in mortgage loan proceeds from lenders, who had deposited the money into his company’s escrow account for distribution at future real estate closings.

Jeffrey Michael Taylor was sentenced to 30 months in federal prison on May 27, 2010, after earlier pleading guilty to one count of conspiracy to commit wire fraud in connection to a
mortgage fraud scheme he carried out in 2005. Specifically, he conspired with another person to defraud CitiMortgage out of $588,200 by falsifying loan documents relative to a vacation
property he bought in Arizona but later was unable to sell.

Fawaz Wazwaz and Genevieve McCullough were indicted on June 8, 2010, with one count of conspiracy to commit mortgage fraud by commercial carrier and interstate wire, six counts of mortgage fraud through interstate wire, and one count of mortgage fraud through use of commercial interstate carriers for their roles in a mortgage fraud scheme that allegedly spanned from 2004 through 2006. During that time, Fawz Wazwaz was a loan officer at a mortgage brokerage company, while McCullough was a real estate closer with other companies. Together they allegedly recruited straw buyers to purchase properties at inflated prices. To carry out the fraud, the defendants falsified loan documents and, upon obtaining mortgage loan proceeds, took some of those funds for their own benefit. On May 4, 2010, Taleb Wazwaz, a cousin of Fawz Wazwaz, pled guilty to one count of conspiracy to commit mortgage fraud through the use of interstate wires, in connection to this scam. Other Actions In addition to those individuals noted above, the U.S. Attorney’s Office in the District of Minnesota is taking action on mortgage fraud matters related to at least eight other individuals at this time.

B. Todd Jones, United States Attorney for the District of Minnesota, announced the results of “Operation Stolen Dreams,” for the State of Minnesota. “Operation Stolen Dreams” is a national initiative, organized by President Obama’s interagency Financial Fraud Enforcement Task Force and targeted at prosecuting mortgage fraudsters all across the country. Since March 1, 2010, approximately 36 individuals have been subjects of federal court actions in Minnesota relative to mortgage fraud. Nationally, that number stands at approximately 1,215.

In highlighting the initiative earlier today, United States Attorney General Eric Holder said, “Mortgage fraud ruins lives, destroys families and devastates whole communities, so attacking the problem from every possible direction is vital. We will use every tool available to investigate, prosecute, and prevent mortgage fraud, and we will not rest until anyone preying on vulnerable American homeowners is brought to justice.” In announcing the Minnesota results, U.S. Attorney Jones said, “Home ownership is the American dream, but some unscrupulous folks have turned that dream into a nightmare. Thanks to the tireless investigative work of federal, state, and local law enforcement agencies, along with the dedicated efforts of our prosecutorial partners at County Attorney offices across the State, we are locating these criminals, putting them behind bars, and, hopefully, sending a message that mortgage fraud will not go unpunished here in Minnesota.” A Coordinated Effort The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local United States Department of Justice law enforcement, who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the county to investigate and prosecute significant financial crimes, including mortgage fraud.

Federal mortgage fraud cases here in Minnesota are the result of investigations conducted by an array of local law enforcement officials as well as our federal partners at the FBI, the IRS, the U.S. Secret Service, and the U.S. Postal Inspection Service. It is because of their dedication and hard work that the U.S. Attorney’s Office in Minnesota is able to prosecute such a large number of mortgage fraud cases and achieve the results it has gotten. Operation Stolen Dreams Federal Minnesota Case Examples Tran, Dang Nguyen, Vince Nguyen, Ngo, and Moxness
Current federal Minnesota cases include one recently indicted involving five alleged fraudsters, 54 homes, $20 million in falsely obtained mortgage loans, and approximately $5 million in losses to mortgage lenders.

Mortgage fraud cases also are being prosecuted at the State level. County Attorneys across Minnesota are charging these cases with vigor on behalf of the citizens of the State. Below is a sampling of that work between March 1, 2010, and now. The counties represented include Carver, which is presently prosecuting two cases that are related to a current federal case, and Hennepin, which is presently handling some of the largest State cases.

Carver County – Guy Dean Abernathy (related to the federal Prieskorn and Laho case): Pled not guilty on May 7, 2010, to two counts of residential mortgage fraud involving a loss of approximately $530,000. Marci Sun-Young Todd (related to above case and the Prieskorn and Laho case): Pled not guilty on May 7, 2010, to two counts of residential mortgage fraud involving a
loss of $530,000.

Hennepin County – National Investment Group: On April 8, 2010, seven individuals and five companies each were charged with two counts of racketeering in connection to a mortgage fraud scheme involving $42 million. 

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Allison Tussey

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