Multi-Year Sentences in Straw Buyer Fraud Scheme

Rachel Dollar —  October 21, 2015 — Leave a comment

Peter Kuzmenko, 37,  West Sacramento, California, was sentenced to 19 years in prison; Aaron New, 41, Sacramento, California, was sentenced to 11 years and three months in prison; Nadia Kuzmenko, 36, formerly of Loomis, California, was sentenced to eight years in prison; and Edward Shevtsov, 51, North Highlands, California, was sentenced to eight years in prison for their involvement in a mortgage fraud scheme that cost financial institutions approximately $16 million.

On February 13, 2015, after a 21-day trial, a federal jury found the four defendants guilty of multiple counts of mail and wire fraud associated with their involvement in the mortgage fraud scheme. In addition, Peter Kuzmenko, Edward Shevtsov, and Aaron New were found guilty of money laundering associated with the scheme, and Nadia Kuzmenko was found guilty of witness tampering.

According to the evidence presented at trial, from late 2006 through 2007, the defendants engaged in a mortgage fraud scheme involving more than 35 properties in the Sacramento area. The defendants were responsible for securing more than $26 million in residential mortgage loans on over 35 homes purchased through straw buyers. Records introduced at trial showed each of the defendants personally received hundreds of thousands or millions of dollars.

United States District Judge John A. Mendez, in sentencing the defendants, said in this case there was “overwhelming evidence of the defendants’ guilt” and that this was a “significant fraud.”

Nadia Kuzmenko was a licensed real estate sales person who created fraudulent loan applications on behalf of the straw buyers. The loan applications contained materially false information as to the straw buyers’ income, employment, assets, and intent to occupy the residences. The loan paperwork also hid from lenders millions of dollars in payments that went to the defendants. With respect to the witness tampering count, the evidence showed that after she learned the FBI was investigating her, Nadia Kuzmenko told various witnesses to lie to the FBI and blame a dead woman for the fraud.

Aaron New was a licensed real estate broker who submitted the fraudulent loan applications to lending institutions and convinced home sellers to sign off on fraudulent invoices to divert money out of escrow and to the defendants. New also served as a straw buyer himself.

Peter Kuzmenko and Edward Shevtsov recruited straw buyers and helped create fraudulent loan paperwork. They also controlled shell accounts in which millions of dollars were diverted out of escrow based on fraudulent invoices and false representations made to lenders. Peter Kuzmenko was also a straw buyer himself. Peter Kuzmenko is currently in custody and Edward Shevtsov was remanded into custody upon sentencing.

These defendants were important players in a network of fraudsters responsible for millions of dollars in losses associated with dozens of inflated property sales using multiple straw buyers,” said U.S. Attorney Benjamin B. Wagner. “The sentences demonstrate that mortgage fraudsters will not escape accountability for their crime by blaming others. Our enforcement efforts in this area are far from done.”

Today’s sentencing serves as a warning for would-be fraudsters and represents years of dedicated, collaborative investigation,” said Supervisory Special Agent Dan Bryant of the FBI’s Sacramento field office. “The FBI is committed to work with its partners to ensure thorough, comprehensive investigations of such large, complex financial fraud schemes, especially when such crimes victimize a community and damage the regional economy.”

Mortgage fraud is an incredibly destructive crime that leaves many victims in its wake,” said Thomas McMahon, Acting Special Agent in Charge, IRS-Criminal Investigation. “The impact on homeowners and communities is devastating. While nothing can reverse the damage caused by these defendants, it highlights the ongoing commitment of IRS-CI to hold accountable those involved in these types of crimes.”

The sentences were imposed by United States District Judge John A. Mendez and announced by United States Attorney Benjamin B. Wagner. The case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorneys Lee S. Bickley and Michael D. Anderson and Special Assistant U.S. Attorney David J. Ward are prosecuting the case.

Co-defendants Vera Kuzmenko and Rachel Siders will be tried on November 2, 2015.

Three other mortgage fraud defendants have also been sentenced. Lucia Yolanda Chavez, 37, Bakersfield, California, was sentenced to four years in prison and ordered to pay $1,8 million in restitution. Joseph Chavez, 41, Bakersfield, California, was sentenced to three years in prison for conspiracy to commit bank fraud, mail fraud, and wire fraud and ordered to pay $1.44 million in restitution.  Hubert Rotteveel, 52, Dixon, California, was sentenced to three years and four months in prison for mail fraud.

The sentences were imposed by United States District Judge John A. Mendez and announced by United States Attorney Benjamin B. Wagner. The case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorneys Lee S. Bickley and Michael D. Anderson and Special Assistant U.S. Attorney David J. Ward are prosecuting the case.

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