Archives For Mortgage Fraud

Bruce Lewis, 65, Jacqueline Graham, 47, Anthony Vigna, 59, Rocco Cermele, 54, and Paula Guadagno, 58, were indicted and charged with conspiracy to commit bank fraud, wire fraud, and mail fraud in connection with a debt-elimination scheme to defraud homeowners and banks.

The Indictment alleges that in 2011 and 2012, Lewis, Graham, and an unindicted co-conspirator were partners in a business that they called the Pillow Foundation or the Terra Foundation (collectively, “Terra”).  Terra held itself out as a business that would investigate and eliminate mortgage debt in exchange for a fee.  Terra solicited clients who were having difficulties making their mortgage payments.

Vigna was a lawyer who worked in-house at Terra and provided legal services to it and its clients.  Cermele was Terra’s director of operations who recruited clients, among other duties.  Guadagno was a real estate title professional who performed real estate title work for Terra.

Lewis, Graham, Vigna, Cermele, Guadagno, and others at Terra told potential clients that Terra could eliminate their mortgage debt in exchange for a fee.  In reality, Terra filed fraudulent discharges of mortgages at local county clerk’s offices in Westchester and Putnam Counties, New York and in Connecticut.  These fraudulent documents made it appear as if Terra’s clients’ mortgages had been discharged, when in fact they had not.

To profit from their scheme, Terra and the defendants charged monthly fees that they said covered, among other things, audits of the clients’ properties that they often failed to perform.  Terra and the defendants also encouraged their clients to take out second or reverse mortgages on the properties for which Terra had claimed to have discharged the first mortgages.  Once the clients had taken out these second or reverse mortgages, Terra and the defendants retained substantial portions of the proceeds.  Some of these second or reverse mortgages were made under HUD’s Home Equity Conversion Mortgage Program.

In total, Terra and the defendants filed nearly 60 fraudulent discharges in Westchester and Putnam Counties in New York and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of over $33 million.  In reality, the Terra clients for whom the fraudulent discharges were filed were often left with both a second or reverse mortgage and their original mortgage that had not actually been discharged.

Vigna, Cermele, and Guadagno were taken into federal custody.  Lewis and Graham remain at large.

Each defendant is charged with one count of conspiracy to commit wire fraud, bank fraud, and mail fraud, which carries a maximum penalty of 30 years in prison and a $1 million fine.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Jennifer Beidel, Michael Maimin, and James McMahon are in charge of the

Preet Bharara, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), and Christina Scaringi, the Special Agent-in-Charge of the Northeast Region of the U.S. Department of Housing and Urban Development announced the unsealing of the Indictment.  Mr. Bharara praised the outstanding investigative work of the FBI and HUD-OIG.  Mr. Bharara also thanked the Westchester and Putnam County District Attorney’s Offices and the Cheshire Police Department in Cheshire, Connecticut, for their ongoing assistance in the case.

Manhattan U.S. Attorney Preet Bharara stated:  “The defendants allegedly preyed on vulnerable homeowners struggling with their mortgage payments and, with their greed, victimized them further.  When the defendants were done with the victims, after falsely promising to reduce or even eliminate their mortgage debt for fees, these homeowners were left much worse off, in even greater debt.  With the charges today, and thanks to the investigative work of the FBI and HUD, the defendants now face federal fraud charges.”

FBI Assistant Director-in-Charge William F. Sweeney stated:  “As charged, the defendants exploited a program designed to help cost-burdened individuals enjoy the privilege of affordable housing.  Crimes of this nature not only hurt their victims financially, but often force upon them other forms of anguish while harming the financial integrity of the very programs established to help them. We urge everyone to protect themselves against this type of fraud and abuse.  If something doesn’t sound right, trust your instincts and do some checking. If you think you may be or have been a victim of mortgage fraud, we urge you to contact your nearest FBI office.”

HUD-OIG Special Agent-in-Charge Christina Scaringi stated:  “HUD’s reverse mortgage program was created to help our senior citizens find greater financial security through FHA-insured loans.  The defendants’ alleged scheme to unjustly enrich themselves through the victimization of our senior citizens is a shameful act that will not be tolerated by the HUD OIG.  We will continue to aggressively pursue those who would prey on America’s senior citizens and encourage anyone having knowledge of such schemes to contact our HUD hotline.”

Stevie McDonald, 42, Winter Haven, Florida, was sentenced to 15 months in federal prison for bank fraud related to his role in a mortgage fraud conspiracy. As part of his sentence, the Court ordered him to pay restitution to J.P. Morgan Chase Bank in the amount of $74,868.

According to court records, on November 10, 2007, McDonald entered into a contract to purchase a home in Port Richey, Florida. He then applied for a mortgage loan from Washington Mutual Bank. In the loan documents that he signed and submitted to the bank, McDonald made false statements about his income and employment. In December 2007, during the course of closing on the property purchase, Washington Mutual paid more than $35,000 to a woman McDonald knew and later married. This payment was purportedly a satisfaction of an existing lien on the sale property. Subsequent investigation revealed that no such lien existed. Washington Mutual Bank suffered a financial loss as a consequence of McDonald’s default on the loan.

This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Jay L. Hoffer.

Mark F. Friend, 62, Stockton, California was sentenced by U.S. District Judge Garland E. Burrell Jr. to two years and four months in prison and ordered to pay $1,889,379 in restitution for conspiracy to commit bank fraud in relation to a mortgage fraud scheme.

According to court documents, between September 2006 and March 2007, while working for National City Mortgage, then a division of National City Bank, in Stockton, Friend arranged loans for borrowers that contained numerous falsehoods. He submitted false loan applications and other documents, and he made down payments on behalf of borrowers who did not have enough money, and then was repaid out of escrow after the loans were funded. The borrowers eventually stopped making payments on the loans, and National City Bank and other entities sustained losses amounting to $1,889,379.

Judge Burrell ordered Friend to self-surrender and begin his incarceration on January 13, 2017.

The plea was announced by Acting U.S. Attorney Phillip A. Talbert.  The case was the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney John K. Vincent prosecuted the case.

Aleksandr Kovalev, 53, Rocklin, California, pleaded guilty to wire fraud involving financial institutions in connection with a mortgage fraud scheme involving the purchase of at least 31 properties.

According to court documents, Kovalev was in the business of developing, building and selling property in Sacramento, Fairfield and Stockton, California. As the real estate market began to weaken, Kovalev offered to make incentive payments to purchasers, through “down payment assistance” or by making other payments to the buyers to be used in whatever manner the buyers wanted. Most of the payments to the buyers were out of escrow and were often paid through intermediaries, originating in Kovalev’s bank account. These payments were not disclosed to the lenders, and had the effect of substantially reducing the actual sales price below that was represented to the lenders. At least 31 properties were involved in Kovalev’s mortgage fraud scheme with substantial losses to the lenders.

To date, five co-defendants have pleaded guilty and have been sentenced: Jannice Riddick, 34, Sacramento, California (two years and 11 months in prison); Florence Francisco, 65, Houston, Texas (one year in prison); Adil Qayyum, 34, Rosele, Illinois (three years of probation); Elsie Pamela Fuller, 41, Richmond, California (one year and nine months in prison); and Leona Yeargin, 49, San Pablo, California (18 months in prison). Charges are pending against co-defendant Arthur Menefee, 45, Stockton, California.

Two other defendants were charged separately for their involvement in the scheme. Valeriy Vasilevitsky, charged in U.S. v. Vasilevitsky, 2:12-cr-344 KJM, and Ruth Willis, charged in U.S. v. Willis, 2:13-cr-228 MCE, have also pleaded guilty and await sentencing.

Kovalev is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on February 9, 2017. Kovalev faces a maximum statutory penalty of 30 years in prison and a fine of $1 million or twice the gross loss or gain.

This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorney Todd A. Pickles is prosecuting the case. The guilty plea was announced by Acting U.S. Attorney Phillip A. Talbert.

Orlando Ortiz, 53, Luis Enrique Tur, 47, Jeffrey Todd Canfield, 49, Rafael Amador, 34, Osvaldo Sanchez, 40, Mirna Pena, 54, and Pedro Reynaldo Allende, 66,all residents of Miami-Dade County, Florida, pled guilty to one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution. Ortiz, Tur, Canfield, Amador, and Sanchez  are scheduled to be sentenced on January 19, 2017. Pena and Allende are scheduled to be sentenced on March 28, 2017.

The charges arise from the involvement of the defendants in a complex mortgage fraud scheme involving two condominium conversion projects in central Florida.

According to court documents, including the agreed upon factual statements:

In 2007 and 2008, Ortiz, Tur, Canfield, Amador, and Sanchez participated in a mortgage fraud scheme involving two condominium projects: “Portofino at Largo,” in Largo, Florida, and “Bayshore Landing,” in Tampa, Florida.  Pena and Allende were involved in the same mortgage fraud scheme; however, their involvement was limited to units in the Portofino at Largo project.

During the course of the conspiracy, Pena, Allende, and other individuals recruited straw buyers and unqualified buyers, including Ortiz, Tur, and Canfield, to purchase units in the two condominium projects.  Among other things, the recruiters told certain prospective buyers that: buyers did not have to contribute any money to purchase a unit; buyers would receive a cash-back incentive or “kick-back” after closing; and buyers would receive several months’ mortgage payments.

The co-conspirators prepared and submitted false and fraudulent mortgage loan applications and related documents to various lenders including Bank of America, BankUnited, Chase Bank USA, CitiMortgage, First National Bank of Arizona, IndyMac Bank, JPMorgan Chase Bank, and Washington Mutual Bank.  Among other things, the loan applications and related documents contained false and fraudulent statements and omissions regarding: the borrower’s intention to reside in the unit; the borrower’s employment and income; the borrower’s assets and liabilities; the borrower’s payment of an earnest money deposit and cash-to-close; and the use of mortgage loan proceeds to pay “marketing fees” to various “marketing companies.”  In truth and in fact, the marketing companies were fraudulent businesses that did not provide any marketing services.  Instead, the “fraudulently induced marketing fees” were a means of diverting proceeds from the fraud scheme to the marketing companies.  The fraudulent marketing companies would then use the fraud proceeds to pay undisclosed kick-backs to the buyers.

Pena and Allende operated two Miami-based businesses, which were used to perpetrate the mortgage fraud scheme: Mortgage Bankers Lenders, Inc., a mortgage broker business, which submitted false and fraudulent loan applications and related documents to the lenders; and United Title Services & Escrow, Inc., which closed mortgage loan transactions even though the buyers had not paid earnest money deposits or cash-to-close, and used loan proceeds to pay “marketing fees” to a marketing company operated by unindicted co-conspirators.

Ortiz, Canfield, and Tur purchased units in Portofino at Largo.  Tur also purchased units in Bayshore Landing.  Ortiz, Canfield, and Tur engaged a Miami-based mortgage broker business operated by an unindicted co-conspirator to prepare and submit mortgage loan applications for their units.  On their behalf, the co-conspirator prepared and submitted fraudulent loan applications and other documents to various lenders.  The fraudulent loan documents included fabricated W-2 Wage and Tax Statements and pay stubs.  After closing on their units, Ortiz, Canfield, and Tur received substantial undisclosed kick-backs from a marketing company operated by an unindicted co-conspirator.  The kick-backs were funded with fraud proceeds, which had been paid to the marketing company as “marketing fees.”

Amador and Sanchez operated Allegiance Title of America, Inc., which served as the closing agent for mortgage loans involving condominium units in Portofino at Largo and Bayshore Landing.  Among other things, Amador and Sanchez caused Allegiance Title of America to disburse loan proceeds even though the buyers had not paid the earnest money deposits or cash to close, that was required by their loan applications and settlement statements.  Amador and Sanchez also caused Allegiance Title of America to pay fraudulent “marketing fees” to marketing companies.

The defendants face a maximum statutory term of thirty years’ imprisonment for their participation in the mortgage fraud conspiracy.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Timothy Mowery, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Juan J. Perez, Director, Miami-Dade Police Department (MDPD), made the announcement.

Mr. Ferrer commended the investigative efforts of the FHFA-OIG, FBI and MDPD.  Both cases are being prosecuted by Assistant United States Attorney Dwayne E. Williams.

 

Alexander Sivels, II, real estate consultant, 32, Baltimore, Maryland and Christopher A. Kwegan, real estate agent, 59, Randallstown, Maryland, were each sentenced to 27 months in prison, followed by three years of supervised release, for related mortgage fraud schemes. U.S. District Judge James K. Bredar handed down the sentence and also  ordered Sivels to pay restitution of $1,317,314.35, and ordered Kwegan to pay restitution of $530,641.27.

Sivels previously pleaded guilty to wire fraud involving the fraudulent purchase of at least nine properties in Baltimore using fraudulent loan documentation and settlement documents, resulting in actual or attempted losses of more than $1.3 million. Kwegan participated in the fraudulent sale of two properties with losses of more than $530,000.

According to Sivels’ plea agreement and other court documents, Sivels owned Royal Real Estate Consultants LLC, and co-conspirator Cecil Chester worked as an accountant from an office located on New Hampshire Avenue in Hyattsville, Maryland.  Co-conspirator Andreas Tamaris, 46, Bel Air, Maryland, purchased, renovated, and then resold distressed row houses in Baltimore City, primarily in Highlandtown.  In 2007 or 2008, Sivels met Tamaris and agreed to assist Tamaris to find purchasers for houses he had bought and renovated, or that were owned by developers who owed money to Tamaris for renovation work.  Tamaris told Sivels the amount he needed to receive from the sale of each property to recover his investment and earn a profit.  Tamaris told Sivels that he could keep any excess funds generated if Sivels sold the house for more than the amount Tamaris needed to cover his costs.

Between 2008 and 2011, Sivels participated in the sale of at least nine properties, all of which were eventually foreclosed upon, resulting in losses of more than $1.3 million.  In 2008 and 2009, Sivels and Chester recruited buyers to purchase houses, knowing that they did not qualify for the home mortgages.  To enable the buyers to purchase the properties, Sivels and his co-conspirators prepared fraudulent mortgage applications which misrepresented the buyers’ income and assets.  Sivels sometimes created fake tax documents and false pay stubs, and falsified bank statements to reflect the substantial balances referenced by the loan application.  The conspirators often inflated the price of the house to insure a profit for themselves.  At the settlements for the properties, the proceeds of the sale were generally distributed to Tamaris, who would write checks to Sivels for his portion of the profits.  From the sale of just four of the properties Sivels received payments totaling more than $200,000.

In 2010 and 2011, Sivels assisted with the sales of several other Tamaris-owned properties by providing prospective lenders with fraudulent verifications of employment for the purchasers, falsely representing that they worked at a home renovation company Sivels owned, receiving cash payments in return for his assistance.

According to his guilty plea, in the summer of 2008, Kwegan learned that the owner of a row house on Washington Boulevard in Baltimore City was trying to sell his home.  The owner had purchased the property 10 years earlier for $11,500 and Kwegan told him that he could sell it for $75,000.  The owner agreed to sell it for that price. Rather than trying to sell the property at the actual market price, Kwegan requested assistance from Cecil Chester, who was already operating a mortgage fraud scheme and they set the sale price of the row house at $250,000.

Kwegan arranged to use the personal identifiers of an individual recruited by Chester to buy the property as a straw purchaser.  Kwegan and his co-conspirators knew that the straw purchaser lacked the necessary assets to pay for the down payments and closing costs on the property, or the income to keep up the mortgage payments on the house after the transaction closed.  Chester provided a mortgage loan broker with a false loan application and fraudulent supporting documents which inaccurately represented that the straw purchaser’s employment, annual income, and assets.  Based upon these false representations, a bank wired $242,500 to finance the purchase of the property, at the settlement on September 30, 2008.  Kwegan used his own funds to obtain a cashier’s check in the amount of $9,391.53 to cover the down payment and the straw purchaser’s share of the closing costs.  After the settlement, just $15,773.65 was disbursed to the seller of the property.  In contrast, $145,000 was wired to an entity identified as “CAK,” which were Kwegan’s initials.   These funds were transferred into Kwegan’s bank account.  Kwegan then wrote a check to Chester for $35,000.  No payments were made on the mortgage.  The property went into foreclosure and remains unsold at this time, resulting in a loss of between $150,000 and $235,000.  At today’s hearing, the Court found that Kwegan was also involved in the fraudulent sale of another property with Chester, resulting in a loss of $296,000.  Kwegan derived over $100,000 in proceeds from this transaction and paid another $40,000 to Chester for his assistance.

Tamaris previously pleaded guilty to one count of conspiracy to commit mail and wire fraud and is scheduled to be sentenced on November 15, 2016.  Co-conspirator Cecil Sylvester Chester, age 69, of Mitchellville, Maryland pleaded guilty to the fraudulent purchase of seven properties in Baltimore, using fraudulent loan documentation and straw purchasers, resulting in losses of over $1.4 million. Chester is scheduled to be sentenced on November 28, 2016. Michael Gerard Camphor, 60, Baltimore, Maryland, previously pleaded guilty for his participation in the fraudulent purchase of four properties in Baltimore resulting in losses of over $736,000. Judge Bredar scheduled Camphor’s sentencing for December 19, 2016.

The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation; Special Agent in Charge Bertrand Nelson of the U.S. Department of Housing and Urban Development Office of Inspector General; and Special Agent in Charge Brian Murphy of the United States Secret Service – Baltimore Field Office.

Mortgage fraud perpetrators steal by inducing lenders to make loans that will never be repaid, and they harm neighborhoods when the inevitable foreclosures drive down property values,” stated U.S. Attorney Rod J. Rosenstein.

United States Attorney Rod J. Rosenstein commended the FBI, HUD OIG – Office of Investigations and the U.S. Secret Service for their work in the investigation.  Mr. Rosenstein thanked Assistant U.S. Attorney Jefferson M. Gray, who prosecuted the cases.

Barry Horrow, 68, Glenn Mills, Pennsylvania, pled guilty to 4 counts of bank fraud.

As part of his guilty plea, Horrow, a Certified Public Accountant who owned and operated his own accounting company, Horrow and Associates, which operated in both Delaware and Chester Counties, admitted that he committed bank fraud by helping one of his clients, George Barnard of Newtown Square [(who owned Capital Financial Mortgage Corporation (“CFMC”)] and who was charged previously in an indictment with various offenses stemming from a $13 million fraud scheme who owned) to defraud lenders into issuing mortgages for 3 multi-million dollar New Jersey Shore beach mansions and a yacht based on false tax returns, false audit reports, and other false information. Horrow admitted that he repeatedly provided false tax returns for Barnard to submit to lenders on which Horrow inflated Barnard’s income by hundreds of thousands of dollars, when Horrow knew that the lenders were going to be relying upon the inflated income figures in approving Barnard’s loan requests.

Horrow faces a maximum sentence of 120 years’ imprisonment, a five-year period of supervised release, a $4,000,000 fine, a $400 special assessment, and a likely advisory sentencing guideline range of 41 – 51 months’ imprisonment. Horrow also agreed, as part of his plea, to make restitution of over $2,965,000.

The plea was announced by United States Attorney Zane David Memeger. The case was investigated by the Federal Bureau of Investigation, the Department of Housing and Urban Development, Office of Inspector General, and the Internal Revenue Service, Criminal Investigative Division, and is being prosecuted by Assistant United States Attorney Michael S. Lowe.

Michelle Lefaoseu, also known as “Michelle Bennett,” “Michelle Lee” and “Michelle Page,” 42, Huntington Beach, California, was sentenced to 12 months and one day of imprisonment, followed by one year of supervised release, for participating in an extensive mortgage loan modification scheme.

According to court documents and statements made in court, Lefaoseu worked at a California-based company that falsely purported to provide home mortgage loan modifications and other consumer debt relief services to numerous homeowners in Connecticut and across the United States in exchange for upfront fees. The company did business, at various times, as “First Choice Financial Group, Inc.,” “First Choice Financial,” “First Choice Debt,” “Legal Modification Firm,” “National Freedom Group,” “Home Care Alliance Group,” “Home Protection Firm,” “Hardship Center,” “Network Solutions Center, Inc.,” “Premiere Financial Center,” “Premiere Financial,” “Rescue Firm,” “International Research Group LLC,” “Hardship Solutions,” “American Loan Center,” “Loan Retention Firm,” “Clear Vision Financial,” “Green Tree Financial Group,” “Green Tree Financial,” “Enigma Fund, Inc.,” “National Aid Group,” “Southern Chapman Group LLC,” “Save Point Financial,” “Best Rate Financial Solutions,” “Best Rate Financial Solution,” “Best Rate Financial,” “Best Rate Finance Group,” and “Nation Star Financial.”

Aria Maleki presided over the entire structure of this scheme, and Lefaoseu was head of the processing department. Acting as representatives of the above-named entities, members of Maleki’s sales team cold-called homeowners and offered to provide mortgage loan modification services to those who were having difficulty repaying their home mortgage loans. Homeowners were charged fees that typically ranged from approximately $2,500 to $4,300 for the services. To induce homeowners to pay these fees, scheme participants falsely represented that the homeowners already had been approved for mortgage loan modifications on extremely favorable terms; the mortgage loan modifications already had been negotiated with the homeowners’ lenders; the homeowners qualified for and would receive financial assistance under various government mortgage relief programs, including the Troubled Asset Relief Program and the Home Affordable Modification Program; and if for some reason the mortgage loan modifications fell through, the homeowners would be entitled to a full refund of their fees.

In fact, the homeowners had not been preapproved for mortgage loan modifications with lenders, mortgage loan modifications had not been negotiated with the lenders, homeowners had not qualified for and did not receive any financial assistance through government mortgage relief programs, and homeowners did not receive a refund of their fees upon request. Few homeowners ever received any type of mortgage loan modification through the defendants’ company, and few homeowners received refunds of their fees.

Participants in the scheme used pseudonyms and periodically changed their business and operating names to evade detection. They also directed homeowners to mail their checks to addresses and mail boxes that Maleki and others had set up in states other than California.

After members of the sales team fraudulently induced homeowners to pay for the company’s services, the homeowners’ files were transferred to Lefaoseu and the junior processors working under her supervision. Lefaoseu was fully aware of her co-workers’ lies and, during her contact with victims, repeatedly helped to cover up those lies.

As a result of this scheme, more than 1,000 homeowners suffered losses totaling more than $3 million.

On January 21, 2016, a grand jury in New Haven returned an indictment charging Maleki, Lefaoseu and five other California residents with conspiracy and fraud offenses related to this scheme. The defendants were arrested on January 26.

On July 11, 2016, Lefaoseu pleaded guilty to one count of misprision of a felony.

On March 22, 2016, Maleki pleaded guilty to one count of conspiracy to commit mail and wire fraud and, on July 18, 2016, he was sentenced to 112 months of imprisonment. He also forfeited approximately $350,000 that investigators seized from various bank accounts, approximately $362,000 sized from a Bitcoin account, a $100,000 cashier’s check, and a 2013 Ferrari 458 Italia.

The other five defendants, all of whom were members of Maleki’s sales team, pleaded guilty and were sentenced to prison terms ranging from 18 months to 58 months.

All seven defendants have been ordered to pay restitution in the amount of $2,390,496.59.

U.S. District Judge Stefan R. Underhill in Bridgeport, Connecticut, sentenced Lefaoseu and Deirdre M. Daly, United States Attorney for the District of Connecticut made the announcement. The matter was investigated by the U.S. Department of Homeland Security – Homeland Security Investigations, U.S. Postal Inspection Service, Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), U.S. Department of Housing and Urban Development – Office of Inspector General, Federal Housing Finance Agency – Office of Inspector General, and Federal Bureau of Investigation, with assistance from the Oklahoma Attorney General’s Office.

The case was prosecuted by Assistant U.S. Attorney Avi M.

Yun Soon Matsuba, aka Dorothy Matsuba, 65, Chatsworth, California; Thomas Matsuba, 64, Chatsworth, California; Jane Matsuba Garcia, 40, Chatsworth, California; and Jamie Matsuba, 31, Chatsworth, California, and Young Park, 53, Koreatown, California, were indicted for their alleged participation in a conspiracy to defraud banks and homeowners and were each charged with one count of conspiracy to commit wire fraud, make false statements and commit identity theft.  In addition, the 18-count indictment charges Dorothy Matsuba with five counts of wire fraud, five counts of making false statements and six counts of aggravated identity theft; Jane Matsuba Garcia with one count of wire fraud, two counts of making false statements and one count of aggravated identify theft; and Jamie Matsuba with one count of making a false statement.

Dorothy Matsuba is the alleged architect of a $30 million mortgage relief fraud scheme and the other four defendants are former employees of a purported mortgage relief company.

Dorothy Matsuba, Thomas Matsuba, Jane Matsuba Garcia and Jamie Matsuba were all arrested; Park remains a fugitive.  Thomas Matsuba is Dorothy Matsuba’s husband and Jane Matsuba Garcia and Jamie Matsuba are Dorothy Matsuba’s daughters.  Young Park is Dorothy Matsuba’s brother.

The indictment alleges that from 2005 to 2014, the defendants operated an interlocking web of companies, primarily under the names of Ownership Management Service LLC and Trust Holding Service LLC, which purported to help homeowners obtain relief from high mortgage debt through short sales, in which lenders agree to sell a mortgaged property for less than the amount owed on the mortgage.  In a scheme to defraud both the banks and the homeowners the defendants allegedly convinced homeowners to deed their property to trusts set up and controlled by the Matsubas and also promised to pay their mortgages while negotiating with banks to short sell those properties.  In the interim, the homeowners either remained in their properties or were relocated to another Matsuba-controlled property.  Instead of performing short sales as promised, Dorothy Matsuba and the other defendants failed to make mortgage payments and submitted false and fraudulent short sale purchase offers to the banks in an effort to delay foreclosure and maximize the time period over which the Matsubas could collect rent from the homeowners and other third parties placed in the properties by the Matsubas, the indictment alleges.  The Matsubas also routinely forged signatures, used false and stolen identities and filed fraudulent bankruptcy petitions—all in a scheme to delay foreclosure and maximize their profits at the expense of the homeowners and banks, the indictment alleges.

The scheme allegedly netted the defendants more than $30 million in rent during the conspiracy period.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Division, Acting Special Agent in Charge Charge Anthony J. Orlando of the Internal Revenue Service-Criminal Investigation (IRS-CI) Los Angeles Field Office, Special Agent in Charge Leslie P. DeMarco of the Federal Housing Finance Agency-Office of Inspector General’s (FHFA-OIG) Western Region and Sheriff Jim McDonnell of the Los Angeles County Sheriff’s Department made the announcement.

The FBI’s Los Angeles Division, IRS-CI’s Los Angeles Field Office, FHFA-OIG’s Western Region and the Los Angeles County Sheriff’s Department’s Real Estate Fraud Unit investigated the case.  Trial Attorney Niall O’Donnell and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section are prosecuting the case.  Senior Trial Attorney Nicholas Acker previously worked on the investigation.

Daniel Deaibes was sentenced today to 24 months for his role in a scheme to steal title to Southern California homes and then “sell” the properties to unsuspecting buyers – before the buyers realized who the true owners were.

From September 2012 through their arrest in November 2014, Deaibes and his co-conspirators, including co-defendants Mazen Alzoubi and Mohamed Daoud, fraudulently sold or attempted to sell at least 15 homes worth more than $3.6 million that actually never belonged to them. On at least 10 occasions, they were successful—earning illicit proceeds of nearly $2.2 million.

Deaibes pleaded guilty in March 2015 to participating in the fraud and was sentenced by U.S. District Judge Cynthia Bashant. As part of this plea, Deaibes admitted that he used aliases to deceive escrow and title officers into believing that he was “John Moran,” and that he was the true owner of property that was being marketed for sale. In fact, “John Moran” did not exist, and Deaibes and his co-conspirators planned to fraudulently sell the properties, divert the proceeds to their own bank accounts, and then quickly disburse the money overseas.  On at least three occasions, Deaibes, posing as “Moran” and presenting a fake driver’s license, appeared before notaries to sign title documents and property deeds.

To make it appear that they owned these properties, the co-conspirators generated forged deeds that made it appear the true property owner had sold his or her home to a sham real estate “investment” business the co-conspirators controlled. They forged the true owners’ signatures on the deeds, and used forged notary stamps to make them appear legitimate. In reality, though, the true owners were entirely unaware of the pretend sales. Once the fraudulent documents were recorded in the chain of title, Alzoubi (using aliases and stolen identities) listed the properties for sale, posing to buyers, escrow companies, and title officers as the new owner.  In this way, the co-conspirators collected all the proceeds of the sale, and the true owners were left with nothing.

Alzoubi, the ringleader of the fraudulent scheme, assumed multiple fake identities to keep the scheme going.  He also posed as real people, pretending on one occasion that he was an attorney for one of the true owners.  (Unbeknownst to Alzoubi at the time, he was talking to an undercover federal agent.)  As a result of his greater role in the scheme, Alzoubi was charged with, and in January 2016 pleaded guilty to, aggravated identity theft, which carries a mandatory sentence of two years in prison in addition to his sentence for the fraud and money laundering.  His sentencing is scheduled for November 7, 2016, at 9:00 am, before Judge Bashant.

Mohamed Daoud also pleaded guilty, in July 2015, admitting that he helped Alzoubi launder the proceeds of the scheme. They used Daoud’s company, “Norway LLC,” to pretend to acquire title to some of the properties. Daoud received approximately $270,000 in proceeds. In December 2015, before he was sentenced, Daoud fled the country and is now a fugitive.

Most of the properties the co-conspirators “sold” were post-foreclosure properties owned by banks or institutions such as Fannie Mae and Freddie Mac

Schemes like this one undermine the public’s confidence in their most personal and important investment, their homes,” said U.S. Attorney Laura Duffy. “I am committed to prosecuting people who continue to prey on the victims of the devastating mortgage meltdown, and sending those criminals to prison.”

This scheme was designed to literally rip home ownership right out of the hands of innocent victims, and for those victims the costs were far greater than a title to a house,” said Leslie P. DeMarco, Special Agent in Charge, Western Region. “This scheme is callous and the perpetrators deserve the punishment set out for them. FHFA-OIG remains committed to our relentless pursuit of individuals who try to profit from the aftermath of the housing crisis.”

Fraud targeting a family’s home, the heart of a family’s financial investment, has a ripple effect through our nation’s economy,” said FBI Special Agent in Charge Eric S. Birnbaum.  “The FBI is committed to investigate and uncover schemes by those who defraud homeowners.”

In addition to his jail sentence, Deaibes was ordered to pay $1,819,591 in restitution to the victims of the fraud.

DEFENDANT:

Daniel Deaibes, 14CR3325-BAS                 Age: 38           Rancho Cucamonga, CA     

COUNT ONE: Mail fraud, in violation of 18 U.S.C. § 1341

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.

CO-DEFENDANTS:

Mazen Alzoubi, 14CR3325-BAS                 Age: 33           Rancho Cucamonga, CA     

COUNT ONE: Conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C. § 1349.

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution, and forfeiture.

COUNT TWO: Mail fraud, in violation of 18 U.S.C. § 1341.

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.

COUNTS THREE AND FOUR: Aggravated identity theft, in violation of 18 U.S.C. § 1028A.

Maximum Penalties: mandatory 2 years’ imprisonment, consecutive to any other term of imprisonment, $250,000 fine, $100 special assessment, restitution.

COUNT FIVE: Conspiracy to launder money, in violation of 18 U.S.C. § 1956(h).

Maximum Penalties: 20 years’ imprisonment, $500,000 fine or twice the value of the property involved in the transaction, $100 special assessment, restitution, and forfeiture.

Mohamed Daoud, 14CR3326-BAS             Age: 53           Norway

COUNT ONE: Conspiracy to launder money, in violation of 18 U.S.C. § 1956(h)

Maximum Penalties: 20 years’ imprisonment, $500,000 fine or twice the value of the property involved in the transaction, $100 special assessment, restitution, and forfeiture.

AGENCIES

Federal Housing Finance Agency – Office of Inspector General

Federal Bureau of Investigation