Mortgage Company Co-Owner Admits Role in Large-Scale Straw Buyer Scheme

Allison Tussey —  October 29, 2013 — 2 Comments

Lester Soto, 57, Freehold, New Jersey, owner of a mortgage company that was responsible for a long-running, large-scale mortgage fraud that caused losses of more than $30 million admitted his role in the scheme.

The defendant pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to an information charging him with two counts of conspiracy to commit bank fraud.

As previously reported by Mortgage Fraud Blog, and according to the criminal complaint and other publicly-filed documents:

From September 2006 to May 2008, Soto and others, including fake document creators, a complicit lawyer and paralegal, and numerous loan officers, engaged in two related mortgage fraud conspiracies through a company called Premier Mortgage Services (APMS). Soto and his conspirators targeted properties in low-income areas of New Jersey. After recruiting straw buyers, Soto and his conspirators used a variety of fraudulent documents to make it appear as though the straw buyers possessed far more assets and earned far more income than they actually did.

Soto and his conspirators then submitted these fraudulent documents as part of mortgage loan applications to financial institutions. Relying on these fraudulent documents, financial institutions provided mortgage loans for the subject properties. Soto and his conspirators then split the proceeds from the mortgages among themselves and others by using fraudulent settlement statements (HUD-1s), which hid the true sources and destinations of the mortgage funds provided by financial institutions. The straw buyers had no means of paying the mortgages, and many of the properties entered into foreclosure proceedings.

Soto and his conspirators defrauded financial institutions out of more than $30 million. Besides being a part-owner of PMS, Soto also acted as a loan officer on certain PMS mortgage loan applications. Soto took a percentage of PMS’ profits. Soto employed document makers to create false and fraudulent documents and put mortgage brokers at PMS in contact with these document makers to create other false and fraudulent documents. Soto instructed PMS employees to provide him with loan files that PMS employees believed contained suspicious information and then personally shepherded these loan files through to funding.

Other conspirators, including Isaac DePaula, Adilson Silva, and Klary Arcentales were loan officers at PMS. DePaula, Silva, and Arcentales recruited straw buyers, provided false and fraudulent documents to the straw buyers, and incorporated false and fraudulent documents into loan applications to induce financial institutions to fund mortgage loans. The loan officers profited illegally by receiving a commission from PMS for each mortgage loan that they closed and also profited illegally by diverting portions of the fraudulently obtained mortgage proceeds for themselves, often via shell corporations or nominee bank accounts.

Rodrigo Costa created false and fraudulent documents, including Verifications of Deposit and Verifications of Rent. Other defendants, including DePaula and Silva, then submitted Costa’s fraudulent documents to support the fraudulent mortgage loan applications of various straw buyers. For his participation, Costa received a portion of the illicit proceeds from the mortgages.

Michael Rumore was an attorney licensed in the state of New Jersey. Rumore served as the settlement agent on mortgage loans brokered by DePaula, Silva, and Soto for various subject properties. Rumore used his status as an attorney to further the fraudulent scheme, including by convening closings, receiving funds from lenders, and preparing HUD-1s that purported to reflect the sources and destinations of funds for mortgages on subject properties B, when in fact, the HUD-1s were neither true nor accurate. Rumore disbursed mortgage loan proceeds directly to PMS, Soto, DePaula, and Silva, including amounts not reflected on the HUD-1s. Rumore received a fee for each fraudulent loan in which he participated.

Antonio Pimenta owned and managed Kelmar Construction Co. (Kelmar). Kelmar built properties that were then sold to straw buyers utilizing fraudulent mortgage loans brokered by Arcentales.

The counts with which Soto is charged are each punishable by a maximum potential penalty of 30 years in prison and a fine of $1 million. Sentencing is scheduled for February 10, 2014.

U.S. Attorney Paul J. Fishman announced the guilty plea.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea. Fishman also thanked the Social Security Administration-Office of Inspector General, under the direction of Special Agent in Charge Edward Ryan, for its participation in the investigation.

The government is represented by Assistant U.S. Attorneys Rahul Agarwal and Zach Intrater of the U.S. Attorney’s Office Criminal Division.

Be Sociable, Share!

2 responses to Mortgage Company Co-Owner Admits Role in Large-Scale Straw Buyer Scheme

  1. Great job, law enforcement!! Keep after ‘em!!!

  2. It is good that this was conspiracy was caught and brought to justice. The media should give just as much attention to the authorities in ringing charges against the conspirators.
    This will demonstrate that the regulatory practices in place do work in protecting consumer rights from harm of fraud.

Leave a Reply

*

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>