Alberto Hernandez and John Fraga were charged in a 21-count Indictment for their participation in a mortgage fraud scheme that resulted in the approval and disbursement of six mortgage loans, totaling approximately $980,000. According to the Indictment, from August 2003 to April 2004, defendant Hernandez, through his company, Ash Homes, sold six properties in Miami-Dade County, Florida to unqualified buyers. The purchases were all financed through Federal Housing Authority (FHA) loans, which are meant to provide low and middle income purchasers with an opportunity to purchase homes at better rates than would otherwise be available. These buyers are able to obtain better rates because FHA agrees to guarantee repayment of the loans.

In all six residential property sales, Hernandez, through straw donors, fraudulently financed the down payments and closing costs of the buyers. Defendant Fraga was one of the false donors, as well as a silent investor with defendant Hernandez. Both defendants received sizable payments once the properties were sold to the unqualified buyers. In each of the six residential property sales, defendant Hernandez signed an Addendum to the HUD-1 settlement statement falsely certifying that he, as seller, was not financing the buyer’s closing contributions. Once the loans were closed, four of the six properties went into foreclosure. As the guarantor of the loans, HUD was required to take title to the property and reimburse the banks for their losses. The approximate aggregate losses to HUD related to these properties is in excess of $550,000.

If convicted, the defendants face 20 years’ imprisonment on the wire and mail fraud charges, 5 years’ imprisonment on the false statement charges, and 2 years’ imprisonment for making false statements to HUD.