Jackie Williams, 42, Bishop, Georgia, was sentenced to serve 70 months in Federal prison for wire fraud by the Honorable C. Ashley Royal, United States District Judge, in Athens, Georgia.  Ms. Williams was also ordered to pay restitution in the amount of $563,097.01.

Williams pled guilty to the charge on March 16, 2016.  As part of her guilty plea, Williams admitted to orchestrating a real estate fraud scheme which victimized several people in the Athens, Georgia area.  Williams admitted to defrauding investors from 2012-2014; specifically, she induced people to invest in a purported real estate business, claiming that she bought distressed homes and sold them for a substantial profit.  However, in numerous cases Williams never purchased the home that she told her victims she had used their money to buy, and she created falsified documents, such as fake purchase contracts and mortgage preapproval letters, to perpetuate her fraud.  In fact, Williams used her investors’ money for her own personal gain, and/or to pay off portions of the money she had borrowed from previous investors.  As part of her guilty plea, Williams admitted that she owes $563,097.01 in restitution to eight victims.

Noting that the 70-month sentence imposed was greater than the usual range of 33 to 41 months for a fraud of this magnitude, United States Attorney G. F. “Pete” Peterman, III, stated that, “It is particularly disturbing that Ms. Williams’ fraud in this case was against many older or retired victims who invested substantial portions of their savings which, even with the restitution order entered today, they are unlikely to ever recover.  If for no other reason, this office is particularly pleased that the Court chose to impose a harsher sentence than what the federal sentencing guidelines typically recommend.”

G. F. “Pete” Peterman, III, United States Attorney for the Middle District of Georgia, made the announcement. The case was investigated by the Federal Bureau of Investigation and the Sheriff’s Offices for Barrow, Madison and Oconee Counties.  Assistant United States Attorney Peter Leary handled the prosecution for the Government.

Timothy R. Bradley, 41, formerly of Toledo, Ohio, now of Cary, North Carolina; and Martha E. Ednie, 54, Toledo,  Ohio, were each sentenced to 30 months in prison for their roles in a $1.5 million conspiracy to defraud several banks.  Both defendants worked in the real estate business.

Bradley was previously found guilty of one count commit bank fraud and 11 counts of bank fraud. Ednie was previously found guilty of one count commit bank fraud and 20 counts of bank fraud.

Bradley worked as a real estate agent working for various brokerages in the Toledo, Ohio area, while Ednie was a mortgage broker who operated Apex Mortgage Company. Bradley and Ednie conspired with others, beginning in 2005, to obtain fraudulent mortgage loans by concealing the true purchase price of the underlying properties from banks making the loans, according to court documents.

The true purchase price was represented by an “addendum” to the real estate contract, which lowered the purchase price. These addendums were signed near the time of closing and were concealed from the lenders. Unbeknownst to the lenders, they were loaning the home purchasers between 82 percent and 135 percent of each home’s value based on the adjusted addendum purchase price, according to court documents.

Bradley was listed as the real estate agent on the contracts and Ednie secured financing in her role as mortgage broker. Bradley and others attracted buyers to the scheme by advertising the properties as good sources of rental income and assuring cash back at closing, according to court documents.

Carole S. Rendon, Acting U.S. Attorney for the Northern District of Ohio, and Kathy Enstrom, Special Agent in Charge, IRS-Criminal Investigations made the announcement.  The investigating agency in the case is the Internal Revenue Service-Criminal Investigations, Toledo.  The case is being handled by Assistant United States Attorney Gene Crawford.

Charles Wayne Farris, 55, Aliso Viejo, California, pleaded guilty before U.S. District Court Judge David O. Carter for the Central District of California to one count of conspiracy to commit mail and wire fraud in connection with his role as the sales manager of a multi-million dollar fraudulent mortgage modification scheme.

Farris admitted that, between October 2008 and June 2009, he participated in a scheme to induce homeowners to pay between $3,500 and $5,500 for the services of the Rodis Law Group (RLG) and a successor entity, America’s Law Group (ALG).  RLG and ALG advertised on radio stations nationwide, urging struggling homeowners to call a toll-free number and stating that the companies consisted of “a team of experienced attorneys” who were “highly skilled in negotiating lower interest rates and even lowering your principal balance.”  In fact, RLG and ALG were telemarketing operations that never had teams of experienced attorneys.  During much of the scheme, Ronald Rodis was the only attorney at RLG.

Farris supervised a sales force of dozens of telemarketers who fielded calls from struggling homeowners.  At Farris’s direction and using scripts that he created, the telemarketers made numerous misrepresentations regarding the companies’ ability to negotiate loan modifications from the homeowners’ mortgage lenders.  For example, the telemarketers stated that RLG and ALG had been in business for 11 years when in fact the company had only opened in October 2008.  They falsely stated that RLG and ALG routinely obtained positive results for homeowners, including lower monthly payments, reductions in principal balance and lower interest rates.  In fact, positive results were rarely achieved for any RLG or ALG clients.  Telemarketers also falsely reiterated that homeowners would have a team of attorneys and real estate professionals assigned to their case.

In a plea agreement filed in federal court, Farris admitted that the RLG and ALG schemes fraudulently obtained approximately $9 million from more than 1,500 victims. His sentencing is on April 17, 2017.

This defendant managed an entire team of people whose sole job was to lure struggling home owners into the fraud scheme,” said U.S. Attorney Eileen Decker of the Central District of California. “It is because of Mr. Farris that so many people were victimized for so much money.”

This defendant supervised dozens of telemarketers who used lies and false promises to take money from struggling homeowners for a worthless service,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to prosecute all kinds of mass-marketing and telemarketing fraud schemes, especially those that prey on vulnerable victims.”

The defendants in this case preyed upon vulnerable homeowners facing the loss of their home and callously took advantage of what hope they had left,” said Assistant Director in Charge Deirdre L. Fike of the FBI’s Los Angeles Field Office. “Paid advertisements can lend a veneer of credibility to any scam, and I would encourage anyone considering paying fees up front for services to be skeptical before handing over hard earned money.”

Farris was charged along with two co-defendants, Bryan D’Antonio and Ronald RodisRodis pleaded guilty to one count of conspiracy to commit mail and wire fraud on June 27, 2016.  D’Antonio is charged with 23 felony counts.  He is charged with nine counts of wire fraud and one count of conspiracy to commit wire fraud.  Each of these counts carries a statutory maximum penalty of 20 years in prison.  In addition, D’Antonio is charged with 13 counts of criminal contempt for violating a 2001 federal court order, which permanently banned D’Antonio from participating in future telemarketing operations.  Criminal contempt of court has no statutory maximum penalty.  D’Antonio is scheduled for trial beginning September. 20, 2016.

This case was investigated by the FBI and is being prosecuted by Assistant U.S. Attorney Joseph T. McNally of the Central District of California and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch.

 

John and Julieanne Dimitrion scammed good people out of their homes, the FBI says, and then they disappeared.They were the “masterminds of a large fraud scheme,” the FBI’s Brandon Simpson told CNN’s “The Hunt with John Walsh,” which hit Tricia Dano’s family especially hard.

Source: FBI: Gov’t conspiracy group may have aided fugitives – CNN.com

Michael L. Johnson, 56, Odessa, Florida, pled guilty to misappropriation of bank funds and embezzlement.  He faces a maximum penalty of 30 years in federal prison.

According to the plea agreement and court proceedings, Johnson was employed as a Senior Vice President/Special Assets Officer at American Momentum Bank.  In his capacity as a Special Assets Officer, Johnson was responsible for marketing and selling bank-owned properties to investors in order to remove these troubled assets from the bank’s balance sheet.  Johnson signed the closing documents, including the HUD-1 Settlement Statement, on behalf of American Momentum Bank.

Beginning around June 2012, and continuing through November 2014, Johnson devised a scheme to misapply and embezzle funds provided by American Momentum Bank.  After the sale of bank-owned properties had been approved by the bank, Johnson set up closings with real estate settlement agents.  He then contacted the agents and ordered additions and/or changes to the disbursement side of the HUD-1.  After closing, funds provided by American Momentum Bank were directed to bank accounts controlled by Johnson’s family members.

The guilty plea was announced by United States Attorney A. Lee Bentley, III and the case was investigated by the Unites States Secret Service, the Tampa Police Department and the Federal Housing Finance Agency – Office of Inspector General. It is being prosecuted by Special Assistant United States Attorney Chris Poor.

 

I often see press releases that define straw buyers as individuals who did not intend to reside in property that they purchased.  I also receive many emails about these types of situations that conflate straw buyer fraud and occupancy fraud.

Straw buyer fraud is not differentiated by the intent to occupy.  I think that the confusion arises from the fact that straw buyer fraud almost always involves occupancy fraud.  But occupancy fraud is, by itself, mortgage fraud.  Straw buyer fraud has additional elements and is something else entirely.

In general, a straw buyer/borrower is a person who acts as the buyer in a real estate transaction but has no intention of  being financially responsible for the property. The most obvious example is where a person is paid to lend their identity and credit to a transaction.   So, for instance, let’s say that I cannot qualify to buy the $500,000 house I want because I have horrible credit and, while I technically make more money each month than the payment amount, I don’t make enough that my front-end and back-end ratios will allow me to qualify for a mortgage.  So, I agree to pay you $5,000 and you agree to act as the buyer of my dream home.  We apply for the mortgage in your name and use your social security and credit.  The application has all of your financial information on it and we don’t even bother to mention me to the lender at all.  At closing, you sign the promissory note and deed of trust or mortgage and other loan documents.  But, as soon as we walk out of the closing, you hand me the keys, we shake hands, and we go our own separate ways.  I move into the house and place my beautiful new blue sofa in front of the fireplace.  I make the payments every month.  I fix the roof when it needs repair.  I put a swing set in the backyard for my children.  Even though you have title to the house, I was always intended to be the real owner.

There are many variations on this scenario.  For instance, straw buyers are often used in real estate investment schemes.  There are underwriting limits on the number of residential mortgage a single person can have at one time – and there is also generally a point where the carrying costs on properties will cause an individual to lose their ability to qualify for additional mortgages.  If the scheme principals have maxed out their lending ability, they often use straw buyers so that they can extend that ability and purchase more homes.  Sometimes the straw purchasers are relatives or employees – but I have seen ads on Craig’s List looking for ‘investors’ who are paid up front, lend their credit and then allegedly have no further responsibility for the property – and, of course, no right to share in any profits when the property is sold.

Other times, straw buyers are parents that act as credit partners for their children – buying the house in their own names because their offspring cannot qualify – but with no intention of having the ultimate financial responsibility for the property.

There are as many colors of sofas are there are variations on the schemes.

And, unless the intended tenant of the property is the straw buyer (which I have personally never seen), straw buyer schemes always involve occupancy fraud.

Occupancy fraud is purchasing a property and representing to the lender that you will live in the property when you have no intention of living in the property.   You can lie about your intent to live in an investment property in order to get a better interest rate while still intending to own and be financially responsible for the property – you have committed occupancy fraud but not straw buyer fraud.  The majority of occupancy frauds do not involve straw buyers at all.  And, occupancy fraud is mortgage fraud all by itself, regardless of whether there is a straw buyer involved.

 

John Leadbeater, 59, Kearny, New Jersey, was sentenced to 60 months in prison for his role in a $13 million mortgage fraud scam that used phony documents and “straw buyers” to make illegal profits on overbuilt condos in Wildwood and Wildwood Crest, New Jersey.  Leadbeater previously pleaded guilty before U.S. District Judge Jerome B. Simandle to a superseding indictment charging him with conspiracy to  commit wire fraud.

According to documents filed in the case and statements made in court: Leadbeater and his conspirators located condominiums overbuilt by financially distressed developers in Wildwood and Wildwood Crest, New Jersey. They then recruited “straw buyers” from New Jersey, New York, Ohio, Arkansas, and California, to purchase those properties. The straw buyers had good credit scores, but lacked the financial resources to qualify for the mortgage loans. The conspirators created false documents, including loan applications that contained fraudulent financial and employment information, to make the straw buyers appear more credit-worthy and induce the lenders to make the loans.

Once the loans were approved, Leadbeater and his conspirators created and signed fraudulent closing documents in order to induce the mortgage lenders to send the loan proceeds in connection with real estate closings on the properties. Once the mortgage lenders sent the loan proceeds, Leadbeater and his conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled. They also distributed a portion of the proceeds to the other members of the conspiracy for their respective roles.

Leadbeater admitted to personally participating in fraudulent activity related to nine properties in Wildwood and Wildwood Crest. He admitted causing mortgage lenders to fund $4,711,557 worth of mortgages based on the bogus loan applications and closing documents prepared by him and his conspirators.

In addition to the prison term, Judge Simandle sentenced Leadbeater to five years of supervised release. A restitution hearing has been set for July 28, 2016. U.S. Attorney Paul J. Fishman announced the sentence and credited special agents from the FBI’s Atlantic City Resident Agency, under the direction of Special Agent in Charge Timothy Gallagher in Newark; and special agents of IRS-Criminal Investigation in Mays Landing, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, for the investigation leading to the sentencing.

The government is represented by Assistant U.S. Attorneys Jacqueline M. Carle and Matthew T. Smith of the U.S. Attorney=s Office Criminal Division in Camden.  Defense counsel are Thomas J. Cammarata Esq. and Jeffrey Garrigan Esq., Jersey City

LAKEWOOD, Wash. — A Lakewood family has been torn apart by a suspected mortgage fraud. A Seattle woman is accused of cashing her aunt’s mortgage checks instead of paying off the loan, and the aunt believes there are dozens of scam victims.Sue Kahawaii and her family had lived in their Lakewood home for 27 years. Now they say they’ve lost it to foreclosure because of the actions of a loved one, Alicia Shefchik. They say she spent the money on world travel and Super Bowls.

Source: Lakewood family torn apart by a suspected mortgage fraud | KOMO

Christopher A. Kwegan, 59, real estate agent, Randallstown, Maryland pled guilty to charges arising from the fraudulent purchase of a Baltimore City property using fraudulent loan documentation and a straw purchaser.

According to his guilty plea, in the summer of 2008, Kwegan learned that Mr. K.D. was trying to sell a row house he owned in Baltimore City, Maryland on Washington Boulevard.  Mr. K.D. had purchased the property 10 years earlier for $11,500.  Kwegan told Mr. K.D. that he could sell it for $75,000.  Mr. K.D. was dubious, but agreed to sell it for that price.

Rather than trying to sell the property at the actual market price, Kwegan requested assistance from accountant Cecil Sylvester Chester, 69, Mitchellville, Maryland, and real estate agent/consultant Michael Gerard Camphor, 60, Baltimore, Maryland, who were already operating a mortgage fraud scheme.  Kwegan arranged to use the personal identifiers of an individual recruited by Chester – Ms. D.B. – to buy the property as a straw purchaser.

Ms. D.B., who lived in Queens, New York, was inexperienced with residential real estate transactions and with the Baltimore real estate market. To encourage Ms. D.B. to buy the property, Chester promised her that she would need to put up little if any money to cover the down payment and closing costs on this property. Ms. D.B. lacked the necessary assets to pay for the down payments and closing costs on the property out of her own resources, or the income to keep up the mortgage payments on the house after the transaction closed, as Kwegan and Chester knew.

Kwegan and Chester set the price not at $75,000, but at $250,000.  Chester provided a mortgage loan broker located in Towson with a false loan application and fraudulent supporting documents which inaccurately represented that Ms. D.B. worked for a fictitious company that Chester had created, and which falsely inflated her annual income. Chester also falsely represented that Ms. D.B. lived in Baltimore City, and the amount of assets she had in a bank account.

Based upon these false representations, a bank wired $242,500 to finance the purchase of the property, at the settlement on September 30, 2008.  As the purchaser, Ms. D.B. was required to provide $9,391.53 to cover the down payment and her share of the closing costs.  Because she lacked the necessary funds, Kwegan used his own funds to obtain a cashier’s check for that amount, which was tendered to the settlement company on her behalf.

After the settlement, just $15,773.65 was disbursed to Mr. K.D., the seller of the property.  In contrast, $145,000 was wired to an entity identified as “CAK,” which were Kwegan’s initials.   These funds were transferred into Kwegan’s bank account.  Kwegan then wrote a check to Chester for $35,000.

No payments were made on the mortgage.  The property went into foreclosure and remains unsold at this time, resulting in a loss of between $150,000 and $235,000.

Kwegan faces a maximum sentence of 30 years in prison and a $250,000 fine for conspiring to commit wire and mail fraud, and for wire fraud.  U.S. District Judge James K. Bredar has scheduled sentencing for November 4, 2016 at 10:00 a.m.

Chester previously pleaded guilty to the same charges arising from the fraudulent purchase of seven properties in Baltimore, resulting in losses of over $1.7 million. Camphor previously pleaded guilty to charges arising from the fraudulent purchase of four properties in Baltimore resulting in losses of over $736,000. Judge Bredar scheduled Camphor and Chester’s sentencings for August 26 and October 4, 2016, respectively.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office; Special Agent in Charge Cary A. Rubenstein of the U.S. Department of Housing and Urban Development Office of Inspector General; and Special Agent in Charge Brian Murphy of the United States Secret Service – Baltimore Field Office.

United States Attorney Rod J. Rosenstein commended the FBI , HUD OIG – Office of Investigations and the U.S. Secret Service for their work in the investigation.  Mr. Rosenstein thanked Assistant U.S. Attorneys Jefferson M. Gray and Evan T. Shea, who are prosecuting the case.

Former NFL wide receiver Irving Fryar is out of prison after serving just eight months of a five-year sentence for mortgage fraud.

Source: Irving Fryar released after 8 months of 5-year prison sentence | ProFootballTalk