Archives For Down Payment Fraud

Mark F. Friend, 62, Stockton, California was sentenced by U.S. District Judge Garland E. Burrell Jr. to two years and four months in prison and ordered to pay $1,889,379 in restitution for conspiracy to commit bank fraud in relation to a mortgage fraud scheme.

According to court documents, between September 2006 and March 2007, while working for National City Mortgage, then a division of National City Bank, in Stockton, Friend arranged loans for borrowers that contained numerous falsehoods. He submitted false loan applications and other documents, and he made down payments on behalf of borrowers who did not have enough money, and then was repaid out of escrow after the loans were funded. The borrowers eventually stopped making payments on the loans, and National City Bank and other entities sustained losses amounting to $1,889,379.

Judge Burrell ordered Friend to self-surrender and begin his incarceration on January 13, 2017.

The plea was announced by Acting U.S. Attorney Phillip A. Talbert.  The case was the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney John K. Vincent prosecuted the case.

Aleksandr Kovalev, 53, Rocklin, California, pleaded guilty to wire fraud involving financial institutions in connection with a mortgage fraud scheme involving the purchase of at least 31 properties.

According to court documents, Kovalev was in the business of developing, building and selling property in Sacramento, Fairfield and Stockton, California. As the real estate market began to weaken, Kovalev offered to make incentive payments to purchasers, through “down payment assistance” or by making other payments to the buyers to be used in whatever manner the buyers wanted. Most of the payments to the buyers were out of escrow and were often paid through intermediaries, originating in Kovalev’s bank account. These payments were not disclosed to the lenders, and had the effect of substantially reducing the actual sales price below that was represented to the lenders. At least 31 properties were involved in Kovalev’s mortgage fraud scheme with substantial losses to the lenders.

To date, five co-defendants have pleaded guilty and have been sentenced: Jannice Riddick, 34, Sacramento, California (two years and 11 months in prison); Florence Francisco, 65, Houston, Texas (one year in prison); Adil Qayyum, 34, Rosele, Illinois (three years of probation); Elsie Pamela Fuller, 41, Richmond, California (one year and nine months in prison); and Leona Yeargin, 49, San Pablo, California (18 months in prison). Charges are pending against co-defendant Arthur Menefee, 45, Stockton, California.

Two other defendants were charged separately for their involvement in the scheme. Valeriy Vasilevitsky, charged in U.S. v. Vasilevitsky, 2:12-cr-344 KJM, and Ruth Willis, charged in U.S. v. Willis, 2:13-cr-228 MCE, have also pleaded guilty and await sentencing.

Kovalev is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on February 9, 2017. Kovalev faces a maximum statutory penalty of 30 years in prison and a fine of $1 million or twice the gross loss or gain.

This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorney Todd A. Pickles is prosecuting the case. The guilty plea was announced by Acting U.S. Attorney Phillip A. Talbert.

Orlando Ortiz, 53, Luis Enrique Tur, 47, Jeffrey Todd Canfield, 49, Rafael Amador, 34, Osvaldo Sanchez, 40, Mirna Pena, 54, and Pedro Reynaldo Allende, 66,all residents of Miami-Dade County, Florida, pled guilty to one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution. Ortiz, Tur, Canfield, Amador, and Sanchez  are scheduled to be sentenced on January 19, 2017. Pena and Allende are scheduled to be sentenced on March 28, 2017.

The charges arise from the involvement of the defendants in a complex mortgage fraud scheme involving two condominium conversion projects in central Florida.

According to court documents, including the agreed upon factual statements:

In 2007 and 2008, Ortiz, Tur, Canfield, Amador, and Sanchez participated in a mortgage fraud scheme involving two condominium projects: “Portofino at Largo,” in Largo, Florida, and “Bayshore Landing,” in Tampa, Florida.  Pena and Allende were involved in the same mortgage fraud scheme; however, their involvement was limited to units in the Portofino at Largo project.

During the course of the conspiracy, Pena, Allende, and other individuals recruited straw buyers and unqualified buyers, including Ortiz, Tur, and Canfield, to purchase units in the two condominium projects.  Among other things, the recruiters told certain prospective buyers that: buyers did not have to contribute any money to purchase a unit; buyers would receive a cash-back incentive or “kick-back” after closing; and buyers would receive several months’ mortgage payments.

The co-conspirators prepared and submitted false and fraudulent mortgage loan applications and related documents to various lenders including Bank of America, BankUnited, Chase Bank USA, CitiMortgage, First National Bank of Arizona, IndyMac Bank, JPMorgan Chase Bank, and Washington Mutual Bank.  Among other things, the loan applications and related documents contained false and fraudulent statements and omissions regarding: the borrower’s intention to reside in the unit; the borrower’s employment and income; the borrower’s assets and liabilities; the borrower’s payment of an earnest money deposit and cash-to-close; and the use of mortgage loan proceeds to pay “marketing fees” to various “marketing companies.”  In truth and in fact, the marketing companies were fraudulent businesses that did not provide any marketing services.  Instead, the “fraudulently induced marketing fees” were a means of diverting proceeds from the fraud scheme to the marketing companies.  The fraudulent marketing companies would then use the fraud proceeds to pay undisclosed kick-backs to the buyers.

Pena and Allende operated two Miami-based businesses, which were used to perpetrate the mortgage fraud scheme: Mortgage Bankers Lenders, Inc., a mortgage broker business, which submitted false and fraudulent loan applications and related documents to the lenders; and United Title Services & Escrow, Inc., which closed mortgage loan transactions even though the buyers had not paid earnest money deposits or cash-to-close, and used loan proceeds to pay “marketing fees” to a marketing company operated by unindicted co-conspirators.

Ortiz, Canfield, and Tur purchased units in Portofino at Largo.  Tur also purchased units in Bayshore Landing.  Ortiz, Canfield, and Tur engaged a Miami-based mortgage broker business operated by an unindicted co-conspirator to prepare and submit mortgage loan applications for their units.  On their behalf, the co-conspirator prepared and submitted fraudulent loan applications and other documents to various lenders.  The fraudulent loan documents included fabricated W-2 Wage and Tax Statements and pay stubs.  After closing on their units, Ortiz, Canfield, and Tur received substantial undisclosed kick-backs from a marketing company operated by an unindicted co-conspirator.  The kick-backs were funded with fraud proceeds, which had been paid to the marketing company as “marketing fees.”

Amador and Sanchez operated Allegiance Title of America, Inc., which served as the closing agent for mortgage loans involving condominium units in Portofino at Largo and Bayshore Landing.  Among other things, Amador and Sanchez caused Allegiance Title of America to disburse loan proceeds even though the buyers had not paid the earnest money deposits or cash to close, that was required by their loan applications and settlement statements.  Amador and Sanchez also caused Allegiance Title of America to pay fraudulent “marketing fees” to marketing companies.

The defendants face a maximum statutory term of thirty years’ imprisonment for their participation in the mortgage fraud conspiracy.

Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Timothy Mowery, Special Agent in Charge, Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG), George L. Piro, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Juan J. Perez, Director, Miami-Dade Police Department (MDPD), made the announcement.

Mr. Ferrer commended the investigative efforts of the FHFA-OIG, FBI and MDPD.  Both cases are being prosecuted by Assistant United States Attorney Dwayne E. Williams.

 

Rebecca Gheiler, 49, Miami, Florida, was indicted and charged with conspiracy to commit bank and wire fraud and six counts of bank fraud.

According to the indictment, Tribute Residential, LLC (“Tribute”), which was controlled by Gheiler, owned and sold condominium communities.  To entice buyers to purchase condominium units in these communities, Gheiler developed a program of incentives.  As part of this program, buyers were promised that Tribute would pay the mortgage and homeowners’ association dues during the buyer’s first two years of occupancy.  Other incentives developed and paid for by Gheiler included upfront cash to close and/or kickbacks to buyers after closing.  During each transaction, the HUD-1 Settlement Statement, signed by Gheiler as the seller, contained falsified information regarding the terms of each transaction, including the actual down payment amount paid by the buyer. In order to conceal the incentives from the mortgage lenders, Gheiler directed her co-conspirator, Angel Garcia-Oliver, to form companies that received monies from Tribute that were eventually paid to buyers and entities controlled by other co-conspirators.

If convicted, Gheiler faces a maximum penalty of 30 years in federal prison on each count.  The indictment also notifies Gheiler that the United States is seeking a forfeiture money judgment.

Garcia-Oliver previously pleaded guilty for his role in this case. His sentencing hearing is scheduled for January 9, 2017.

United States Attorney A. Lee Bentley, III announced the indictment. The case was investigated by Federal Housing Finance Agency – Office of Inspector General, the Florida Office of Financial Regulation, and the Federal Bureau of Investigation.  It will be prosecuted by Assistant United States Attorney Vincent Chiu and Special Assistant United States Attorney Chris Poor.

Marek Harrison, 53, Plant City, Florida, Brian Allard,45, Seminole, Florida, and Scot Rounds, 44, Winter Garden, Florida were indicted and charged with bank fraud and conspiracy to commit bank fraud.

According to the indictment, Harrison and Allard created and executed a mortgage fraud scheme involving Saratoga Resort Villas, a condo conversion of a former hotel located in Kissimmee, Florida.  The scheme involved kickbacks of mortgage proceeds to buyers and co-conspirators and misrepresentations regarding the source of down payment funds.  None of the incentives and kickbacks were disclosed to the mortgage lenders.  Harrison and Allard recruited the buyers and found individuals to front down payment money for those buyers.  Rounds, a mortgage broker, brokered the loans for the transactions, recruited straw purchasers, and distributed kickbacks to buyers.

If convicted, each faces a maximum penalty of 30 years in federal prison on each count.  The indictment also notifies the defendants that the United States is seeking a forfeiture money judgment in the amount of the proceeds of the charged criminal conduct.

The case was investigated by the Federal Housing Finance Agency – Office of Inspector General.  It will be prosecuted by Special Assistant United States Attorney Chris Poor and Assistant United States Attorney Vincent Chiu.

Maria Del Carmen Rodriguez, Miami, Florida was charged by Information with Conspiracy to Commit Bank Fraud on August 29, 2016 in the United States District Court for the Southern District of Florida.

According to the Information, at least as early as January 2007, Juan Carlos Sanchez, operating Homefirst Realty Group, Inc., began marketing the Marina Oaks Condominiums in Fort Lauderdale, Florida.  He was given control of the marketing and increased the sales price of the individual condominium properties by an additional $40,000 per unit.  The buyers were promised incentives that would pay all of their closing costs, refund their initial deposits and pay their monthly condominium association dues.  Buyers were advised they would have no out of pocket expenses, would be paid approximately $30,000 to $40,000 after the transaction closed and that they would not receive 1099s for the incentives.

Rodriguez was encourage to purchase several units with promises of incentives and a rental income program that would cover the monthly mortgage payments.  When buyers purchased multiple units, their loan applications were expedited and sent to different lenders to avoid detection and the multiple purchases were not listed on the other loan applications. Rodriguez bought Unit 503 and Unit 511 at SW 18 Terrace, Fort Lauderdale, Florida

Rodriguez prepared and caused to be prepared false and fraudulent mortgage applications and related documents that were submitted to lenders.  False statements include representations relating to the funds available for closing, occupancy, real property ownership and rental history.  Rodriguez also prepared false HUD-1’s which falsely represented that the buyers met their cash to close obligations.  In fact, Sanchez and other co-conspirators provided the funds to the closing agent on behalf of the buyer.

Once the mortgage proceeds were sent to the closing agent, a portion of the proceeds were disbursed to one of  Sanchez’ companies, specifically Creative Concepts International which was listed on the HUD-1 as the recipient of a large fraudulent lien payoff.  Sanchez and the closing agent would utilize funds received by or intended for Creative Concepts International to pay the closing costs and buyer incentives to Rodriguez.

 

 

Paul Harold Doughty, 67, Edmond, Oklahoma, the former president and chairman of First State Bank of Altus (“FSB”), was convicted on ten charges of bank fraud, conspiracy to commit bank fraud, misapplication of bank funds, making a false bank entry, and unauthorized issuance of a bank loan in connection with FSB and various loan schemes, .  Fred Don Anderson, 67, Eagle Point, Oregon, pleaded guilty to one count of conspiring with Doughty to commit bank fraud.  Anderson partnered with Doughty in several businesses headquartered in Altus, Oklahoma.  In July 2009, state banking regulators closed FSB due to the bank’s loan losses, and the Federal Deposit Insurance Corporation was appointed as the bank’s receiver.

In April 2015, a federal grand jury charged Doughty and Anderson with fraud related to three alleged loan schemes: (1) a series of FSB loans to finance a real estate development in Routt County, Colorado; (2) a series of “senior life settlement loans” from FSB to support an Altus aerospace company; and (3) a $2 million unauthorized loan from FSB to a company under Doughty and Anderson’s control.

The jury heard that in 2006 and 2007, Doughty and Anderson recruited buyers for 19 Colorado real estate lots priced at approximately $700,000 each.  Doughty approved and issued 14 lot loans to buyers, totaling more than $10,000,000 in loan proceeds for the seller, Mountain Adventure Property Investments, LLC (“MAPI”).  MAPI was a Colorado company that Anderson had an indirect ownership interest in and where he served as president and manager.  Evidence at trial showed that each loan exceeded Doughty’s individual lending authority at FSB, and most of the loans were issued without approval of FSB’s loan committee, including a $580,000 loan to Anderson’s personal company.  The jury heard that Doughty and Anderson presented lots to borrowers as “zero money down” investments, and that the down payments for the purchases were often advanced or refunded to the buyers by Anderson on behalf of MAPI.  Doughty and Anderson also assured the buyers that MAPI would make all payments on the loans to the bank.  The jury heard that on the few occasions when Doughty presented a Colorado loan to FSB’s loan committee, he misrepresented the source and amount of borrowers’ down payments and the borrowers’ responsibility for making payment on the loans.  In connection with these Colorado lot loans, the jury convicted Doughty of one count of bank fraud conspiracy, four counts of bank fraud relating to separate lot loans, and one count of unauthorized issuance of a loan to Anderson’s personal company.

Trial evidence showed that Doughty funded five so-called “senior life settlement” loans through FSB in 2008.  Each loan was $2.5 million, and one of the loans went to Anderson’s personal company.  Doughty and Anderson recruited borrowers to take out these “self-paying” loans to provide money for investments in Altus-based Quartz Mountain Aerospace, Inc. (“QMA”).  Evidence at trial showed that a portion of the loan proceeds was invested in QMA, and another portion would pay the loan’s interest.  The remaining proceeds on the loans would buy and maintain third-party life insurance policies, where the death benefits on the third parties were intended to repay the loan’s principal.  The jury heard that each loan exceeded Doughty’s lending authority, and that he issued at least $10,000,000 in senior life settlement loans without FSB’s loan committee or board approval.  With each loan, Doughty and Anderson directed $125,000.00 in “service fees” to Altus Ventures, a company under their control.  The jury heard evidence that at the time the loans were issued, the fees to Altus Ventures were not disclosed to FSB or to the borrowers taking out those loans.  In connection with the senior life settlement loans, the jury convicted Doughty of one count of misapplication of bank funds and one count of a false entry in bank records related to the concealment of the fees to Altus Ventures.

The jury also heard evidence that in January 2008, Doughty arranged a $2 million loan from FSB to Ethanol Products Group, LLC (“EPG”), a startup company in which both Anderson and Doughty had ownership interests.  Evidence showed that Doughty advanced the $2 million from FSB, above his individual lending authority, without approval by FSB’s loan committee or board.  Soon before issuing the loan, Doughty e-mailed Anderson his “cash strategy” for two other companies they controlled; the “strategy” showed all the EPG loan proceeds would be directed to companies controlled by Anderson and Doughty, ultimately diverting $100,000.00 in “officer bonuses” to Anderson and Doughty.  The jury found Doughty guilty of one count of unauthorized issuance of a loan and one count of misapplication of bank funds related to the EPG loan.

The jury heard evidence over seven days, and deliberated approximately seven hours before reaching a verdict this afternoon.  The jury acquitted Doughty on three charges.

On April 14, 2016, Anderson pleaded guilty to a one-count Information charging him with conspiring with Doughty to commit bank fraud.  As part of the plea agreement, the government agreed to dismiss at sentencing the charges against him from the indictment.  Anderson testified as a witness for the government at Doughty’s trial.  At sentencing, Anderson faces up to five years in prison and a fine of $250,000.

Doughty faces up to 30 years in prison and a fine of $1,000,000.00 for each of the ten counts of conviction.  Under federal law, each defendant will be required to pay restitution and to forfeit to the government the amount of the proceeds of the fraudulent schemes.

The convictions were announced by Mark A. Yancey, Acting United States Attorney for the Western District of Oklahoma and are the result of an investigation conducted by the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation – Office of Inspector General.  The case was prosecuted by Assistant U.S. Attorneys Chris M. Stephens and K. McKenzie Anderson.

Murray O. Wilhoite, Jr., 68, Franklin, Tennessee, was convicted of three felony charges following a trial before U.S. District Court Judge Aleta A. Trauger.  The jury convicted Wilhoite of making a false statement to a bank, making a false statement in a federal bankruptcy filing, and making a false statement under oath during a bankruptcy hearing.

Evidence presented during the trial demonstrated that Wilhoite obtained a $1.2 million loan in December 2007 by pledging, as collateral, a Franklin, Tennessee property that he did not own. During trial, testimony and exhibits proved that Wilhoite knowingly misrepresented to an FDIC-insured bank that he owned certain real property that he pledged as collateral. However, as trial evidence proved, the property was owned at all relevant times by his father.

In documents signed during the closing for this loan, Wilhoite falsely represented that he was the owner and titleholder of the property, and the bank relied on his statements in permitting him to obtain a loan using the Franklin property as collateral in lieu of a down payment.  Wilhoite subsequently lied during a 2011 bankruptcy filing, by again misrepresenting that he owned the Franklin property, and did so for the purpose of preventing the bank from foreclosing on this property after he defaulted on his loan. Wilhoite lied again at a 2013 hearing before the U.S. Bankruptcy Court for the Middle District of Tennessee, during which he perjured himself by falsely stating that he had not known that the Franklin property was designated as collateral for the loan. The evidence at trial proved that Wilhoite made the bankruptcy-related false statements knowingly and with the intent to deceive.

Wilhoite faces up to 30 years in prison and a fine of up to $1,000,000 on the false statement to a bank charge, and up to 5 years in prison and fines of up to $250,000 on the other charges. Wilhoite will be sentenced by Judge Trauger on September 23, 2016. The sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and applicable federal statutes.

The conviction was announced by announced United States Attorney David Rivera.  The case was investigated by the Federal Bureau of Investigation and the Office of the United States Trustee. The case is being prosecuted by Assistant U.S. Attorneys Sandra G. Moses and William F. Abely.

Samuel R. VanSickle aka Donald Blunt, aka Jacob Aiken, aka Paul Walsh, aka William Hall, Attorney, 52, Accident, Maryland was sentenced to two years in prison followed by five years of supervised release for conspiring to commit bank fraud arising from three fraudulent bank loans in which VanSickle received proceeds from the sale of real property in Garrett County, Maryland, and Cheat Lake, West Virginia, totaling over $5.7 million. U.S. District Judge Marvin J. Garbis also ordered VanSickle to forfeit and pay restitution of $2,755,102.50, and forfeit his interest in 40 properties held in his name or in the names of others that are located in Maryland, West Virginia and Pennsylvania, up to the value of $2,755,102.50.

VanSickle and co-defendant Louis W. Strosnider, III, 50, Oakland, Maryland, owned and developed property in Garrett County, Maryland. Strosnider operated Stony Brook Development Company, located in McHenry, Maryland.  Vansickle used the following business names:  Freedom Church, Gospel Church, Equity Exchange, Unity Mortgage, Impartial Lenders and Noble Forest Consultants.

According to his plea agreement, from December 2001 to May 2005, Strosnider fraudulently obtained real estate loans from banks to buy properties controlled, through aliases, by VanSickle.  VanSickle concealed from the lenders his role as seller of the properties and recipient of the sales proceeds through fictitious identities such as “Donald Blunt, Trustee for Gospel Church,” “Donald Blunt, Trustee for Freedom Church,” “Equity Exchange,” “Unity Mortgage,” “Jacob Aiken” and “Allen Helms.” The scheme also involved fictitious down payments, inflated collateral, and false contracts.

For example, in 2002, VanSickle provided $600,000 for the purchase of Red Run, a restaurant and bed and breakfast which bordered on Deep Creek Lake in Garrett County, Maryland.  In April 2003, VanSickle caused Red Run to be transferred for $0 to “Donald Blunt, Trustee for Gospel Church” – a fictitious church with a fictitious trustee.  In February 2004, Strosnider signed a contract to buy Red Run from Gospel Church for $3 million.  The contract recited a fictitious $750,000 down payment.  Strosnider applied to a bank for a loan to complete the purchase of Red Run.  When the bank required additional collateral, VanSickle supplied a timber contract for land in Garrett County with a valuation signed by “Paul Walsh” of “Noble Forest Consultants.”  Both “Noble Forest Consultants” and “Paul Walsh” were fictitious.  The settlement for the sale of the property was conducted by attorney Angela Blythe.  Blythe failed to collect Strosnider’s funds to close the loan.  At VanSickle’s direction, Blythe paid over the sales proceeds of $1.6 million to “Unity Mortgage,” which was VanSickle.  “Unity Mortgage” did not, in fact, have a mortgage on Red Run.

VanSickle and Strosnider used similar fraudulent methods in Strosnider’s purchase from VanSickle of 5.87 acres on State Park Road, bordering Deep Creek Lake, and 116 acres of undeveloped land on Cheat Lake, West Virginia.

VanSickle received over $5.7 million in sales proceeds from the fraudulent transactions.   Strosnider defaulted on all three loans. As a result of the scheme, the loss to the financial institutions was $2,755,102.50, the amount of the loans minus the recovery from foreclosure and sale of the collateral.

Strosnider previously pleaded guilty to his participation in the conspiracy and awaits sentencing. In a related case, Angela M. Blythe, 52, Oakland, Maryland, was convicted by a federal jury on October 9, 2015, after a nine day trial, of conspiring with VanSickle to commit bank fraud, bank fraud, and two counts of making a false statement to a bank.  U.S. District Judge William D. Quarles sentenced Blythe to a year and a day in prison, and entered an order requiring Blythe to forfeit $696,517 and pay restitution of $948,203.25.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office.  United States Attorney Rod J. Rosenstein praised the FBI for its work in the investigation and thanked Assistant United States Attorneys Joyce K. McDonald and Philip A. Selden, who prosecuted the case.

Joseph Pasquale, 39, Worcester, Massachusetts, to four years and nine months in federal prison for conspiracy to commit bank fraud and bank fraud. A federal jury found him guilty in January 2016.

According to testimony and evidence presented at trial, Pasquale worked as a real estate sales associate for a brokerage based in Cape Coral, Massachusetts. Between October 2007 and March 2008, he was involved in the negotiation and sale of four condominium units at the Arbors of Carrollwood, to clients in California and Massachusetts. Pasquale engaged in a conspiracy to conceal sales incentives from mortgage lenders, which these clients received from the seller, along with private loans that Pasquale made to the buyer-clients enabling them to bring cash to their respective real estate closings. As a consequence of his actions, Pasquale helped to cause a loss of approximately $937,000 to Wells Fargo Bank when the mortgages involved in the case went into foreclosure.

Pasquale was sentenced by U.S. District Judge Elizabeth A. Kovachevich.  The case was investigated by the Federal Bureau of Investigation and the Federal Housing Finance Agency – Office of Inspector General. It was prosecuted by Special Assistant United States Attorney Chris Poor and Assistant United States Attorney Jay L. Hoffer.