Man Pleads Guilty in Large Mortgage Fraud Scam

Allison Tussey —  March 2, 2011 — Leave a comment

Christopher M. Chiavola, 32, Chico, California, pleaded guilty before United States District Judge Edward J. Garcia to one count of mail fraud and one count of money laundering in connection with a mortgage fraud scheme allegedly orchestrated by co-defendant, Garret Griffith Gililland III.

According to the plea agreement, Chiavola recruited straw buyers for co-defendant Gililland‘s company, Nor Cal Innovative Investments Inc. (NCII). Chiavola and others falsified loan applications and supporting documents so that home buyers could qualify for loans for houses that were generally sold at artificially inflated prices. After the close of escrow, builders Anthony G. Symmes, William E. Baker, and others, would rebate significant sums back to the buyer or the buyer’s agent. With only a few exceptions, the rebates were entirely concealed from lenders and appraisers. According to the plea agreement, in or around April 2007, Chiavola and several other employees parted ways with Gililland and conspired with others including a licensed real estate professional to replicate the cash-back aspect of the Gililland scheme, but without Gililland‘s participation.

Chiavola is the fourth defendant to plead guilty in this investigation. Last year, Chico builder Tony Symmes pleaded guilty in a related case, as did Southern California mortgage broker Carlos Chamorro. Last month, NCII president Shane Burreson pleaded guilty. Gililland remains in custody after being extradited from Spain last year.

Chiavola is scheduled to be sentenced on May 13, 2011 at 10:00 a.m. The maximum statutory penalty for a violation of mail fraud is 20 years in prison, a $250,000 fine, and three years of supervised release. Money laundering carries a maximum sentence of 10 years and the same maximum fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

United States Attorney Benjamin B. Wagner announced the guilty plea.

This case is the product of an extensive investigation by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the Butte County District Attorney’s Office. Assistant United States Attorney Russell L. Carlberg is prosecuting the case.

“This case involves an extensive fraud scheme that contributed to the decline of the real estate market in Chico,” said U.S. Attorney Wagner. “We continue to press forward on this and other mortgage fraud cases.”

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Allison Tussey

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