Attorney General Bill McCollum announced that his office has sued ten companies and fifteen individuals for their alleged roles in a significant mortgage fraud scheme in Central Florida. The ring obtained more than $37 million in mortgage loans for at least 60 home purchases and siphoned off more than $6 million of those loan proceeds for their own use. The lawsuit was filed in Orange County Circuit Court by the Attorney General’s Mortgage Fraud Task Force.
The lawsuit names:
American Heritage Mortgage Group, Inc.;;
Security One Mortgage Corp.;
Security Trust Title LLC;
Trincity Trucking Inc.;
Allen Boyarsky;
Stephen Mahadeo;
E. Brooke Co. LLC;
Longdenville Investment & Management Inc.
American Heritage Commercial Capital;
P & R Funding Corporation;
Steele Property Investments, Inc.;
Bethann Schuldiner;
Anthony Didonato;
Steve Groden;
Brad Frank Groden;
1st Capital Mortgage Associates, Inc.;
Heather Showalter;
Jeanette Lugo;
Magdalene Williams;
Norma Lopez;
Kenneth West;
Marcus Habeeb;
Luis Delgado;
Aziz Mohammed
and Betty Bedeau.
Beginning in July 2005 and continuing through at least January 2007, three of the ring’s leaders allegedly defrauded banks by recruiting straw buyers with good credit and using these straw buyers to create false loan applications to purchase homes. They also allegedly created and provided fraudulent supporting documentation for the mortgage loan applications including false employment information and verifications for the straw buyers, whose purpose was to conceal the true identity of those behind the purchasing process. The lawsuit claims the ring conspired with real estate agents to artificially inflate the purchase prices of homes, thus enabling them to obtain larger mortgage loan amounts.
According to the lawsuit, American Heritage Mortgage Group, Inc. and Security One Mortgage Corp. processed the fraudulent loan applications. The participants allegedly used companies they owned or controlled to divert more than $6 million from the fraudulently obtained mortgages at the homes’ closings. Further, in many cases, the defendants allegedly failed to make the required mortgage payments on behalf of straw buyers and allowed 50 properties to fall into foreclosure.
Notable lenders including IndyMac Bank and New Century Mortgage are among those banks affected by the scheme. The Attorney General’s lawsuit requests injunctive relief prohibiting the defendants from continuing the alleged behavior and seeks damages for those who were targeted by the scheme. Civil penalties of $10,000 per violation of Florida’s Deceptive and Unfair Trade Practices Act are also being sought.
“In this particular situation, the economy is the victim,” said Attorney General McCollum. “This group of individuals systematically defrauded banks and mortgage lenders, stealing millions for their own personal use and leaving a gaping hole in the system.”
Rachel Dollar, the editor of Mortgage Fraud Blog is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors.