Real Estate Professionals Indicted for Deceiving Lenders

Allison Tussey —  August 31, 2009 — 1 Comment

12 defendants and 3 companies were indicted on mortgage fraud offenses, including engaging in a pattern of corrupt activity, a first degree felony, for securing $14,766,515 in fraudulent loans used to purchase seven homes in Cuyahoga, Ottawa and Lucas counties, Ohio. Six of the seven houses fell into foreclosure. The following defendants were indicted:

Susan Alt, 56, Santa Monica, CA;

Joanne Schmidt, 56, and her husband, Howard Schmidt, 56, both of Agoura Hills, CA;

Deborah Brazalovics, 56, Wickiffe, OH; 

Paul Brazalovics, 33, Wickliffe, OH; 

Anthony Geraci, 39, Mayfield Village, OH;

Charlotte Gill, 38, Southwest Harbor, ME;

Andrew Fishman, 35, Hollywood, FL; 

James Trungale, 40, Austin, TX;

Diane Marciel, 48, Woodland Hills, CA;

Richard Kilfoyle, 50, Chesterland, OH; and

William Werner, 39, Cleveland, OH.

Both Century 21 Homestar Realty and Homestar Title Agencyare located in the same suite of offices at 23625 Commerce Park Boulevard in Beachwood.

Susan Alt orchestrated the fraud committed in the purchase of seven homes by enlisting the other defendants named below, who were realtors, title agents, mortgage brokers, and an appraiser, along with two defendants acting as buyers. Alt used her “shell” company, Equator Group, to funnel and launder money to and from these defendants, thereby deceiving the lender. The defendants collectively stole $3,001,232.26 from buying and selling the seven houses, selling three of them twice, for a total of 10 sales. In addition to the sales, the defendants defrauded the lender by taking out four fraudulent equity loans on the houses. Alt stole in excess of $2.2 million from the fraudulent deals.

The defendants’ enterprise consisted of submitting fraudulent loan applications to lenders in order to qualify for exorbitant loans. These applications containing falsified information were knowingly prepared and signed by two loan officers, Andrew Fishman of RBC Mortgagein Boca Raton, Florida, and James Trungale of Prime Mortgage in Austin, Texas.

The defendants engaged in fraudulent down-payment schemes. Despite the very high sale prices, the buyers did not make down-payments on the purchases of the Chagrin Falls and Gates Mills houses nor on the North Windward house in Port Clinton, Ohio. In addition, the buyers were reimbursed by Susan Alt for their down payments on the North Carriage Lane, Ridgewood Road and both North Island Circle, Ohio properties. This was deceptive to the lenders who based their loans, in part, on the buyers’ equity in the purchases.

The defendants also fraudulently disbursed money at closing to others involved in the fraud. The Disbursement Ledgers prepared by the title company reflected a “Relocation Fee to the Equator Group” for each of the deals. This fee was a reduction in the amount due to the sellers of the properties. The payment, authorized by a document titled “Irrevocable Order to Pay,” was wired from the closing proceeds to an account in the name of The Equator Group or to Alt. Alt duped the sellers into believing that the “Irrevocable Order to Pay” was a relocation fee that the sellers were paying to the buyers to help facilitate the sale of their properties. The form was actually a ruse by Alt to steal and launder money. Alt converted the money to her own use and also paid various defendants who participated in the transactions. The lenders were unaware of the “Irrevocable Order to Pay” documents.

County Prosecutor Bill Mason and the Cuyahoga County Mortgage Fraud Task Force announced thhe indictments. The Cuyahoga County Mortgage Fraud Task Force operates in conjunction with Ohio Attorney General Richard Cordray’s Organized Crime Investigations Commission. The Task Force is comprised of 16 federal, state, and local enforcement agencies.

Prosecutor Mason said, “Most of these defendants lived out of state and cared little about the effects of their criminal actions on the surrounding neighborhoods. As typical with mortgage fraud, most the homes fell into foreclosure. They stole more than 3 million dollars from 14 real-estate deals.”

Task Force members include: Ohio Organized Crime Investigations Commission, Cuyahoga County Prosecutor’s Office, Ohio Bureau of Criminal Identification and Investigation, Cuyahoga County Sheriff’s Office, Cleveland Heights Police Department, Solon Police Department, Beachwood Police Department, Cleveland Police Department, Pepper Pike Police Department, HUD, Cuyahoga County Recorder, Cuyahoga County Auditor, Cuyahoga County Treasurer, Department of Commerce-Division of Financial Institutions, Department of Financial Investigation, F.B.I., U.S. Attorney’s Office, and U.S. Postal Inspector.

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Allison Tussey

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One response to Real Estate Professionals Indicted for Deceiving Lenders

  1. With so many people guilty of deceptive mortgage practices, how to you make sure you are sending your clients to reputable mortgage specialist? If there is not already, there should be a resource where do a back ground check on your mortgage professionals.

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