Ernesto Diaz, 57, South El Monte, California, has agreed to plead guilty to a federal mail fraud charge in a scheme that falsely promised to eliminate mortgage debts for approximately 200 distressed homeowners who each paid a $15,000 fee. Instead of working on behalf of the homeowners, the man simply sent worthless “Sovereign Citizen” paperwork to lenders paperwork that did nothing to affect the mortgage of a single homeowner.
The defendant, who formerly worked as a real estate agent, agreed to plead guilty to one count of mail fraud. As part of the agreement, Diaz has agreed to cooperate in an ongoing investigation into against his company, Crown Point Education Inc., which had offices in Montebello and El Monte.
Diaz joined the Crown Point scheme in March 2010 after the company had been in business for approximately one year. Diaz spoke at seminars to recruit distressed homeowners and to train salespersons in the Crown Point program. In his plea agreement, Diaz admitted that he and others promised distressed homeowners at these seminars that, in exchange for fees that were generally $15,000 per property, Crown Point would eliminate the homeowners’ mortgages within six to eight months through a secret process that involved sending packets of documents to lenders. Even though he told victims that he could eliminate their mortgage woes, Diaz admitted in his plea agreement that the process had never been successful. Diaz failed to tell distressed homeowners that earlier Crown Point clients ““ including Diaz‘s own brother ““ had lost their houses to foreclosure and been evicted from their houses.
In the plea agreement, Diaz admitted that another person affiliated with Crown Point filed bankruptcy documents in the names of Crown Point clients to delay foreclosure and eviction. Diaz acknowledged that Crown Point filed many bankruptcy documents without the knowledge of the company’s clients and that signatures of debtors and notaries were forged on many documents filed with the Bankruptcy Court.
In his plea agreement, Diaz admits that approximately 200 homeowner-victims paid Crown Point nearly $2.5 million for help they did not receive.
The claims made to distressed homeowners were based on discredited “Sovereign Citizen” claims that mortgages are invalid because the banks did not actually lend the money used to fund mortgages and the notes were securitized.
Diaz has agreed to make his initial court appearance before a United States Magistrate Judge on September 13, 2012.
The charge of mail fraud carries a maximum statutory penalty of 20 years in federal prison.
The case against Diaz is part of an ongoing investigation being conducted by the Federal Bureau of Investigation.
This prosecution is part of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.