Archives For inflated purchase prices

Cecil Sylvester Chester, 70, Mitchellville, Maryland was sentenced to two years in prison, followed by three years of supervised release, for a mortgage fraud scheme involving the fraudulent purchase of seven properties in Baltimore, Maryland using fraudulent loan documentation and straw purchasers, resulting in losses of over $1.4 million.

Chester worked as an accountant from an office located on New Hampshire Avenue in Hyattsville, Maryland.  Co-conspirator Andreas E. Tamaris, 46, Bel Air, Maryland,   purchased, renovated, and then resold distressed row houses in Baltimore City, primarily in the Highlandtown area. Co-conspirators Michael Gerard Camphor, 60, Baltimore, Maryland, was a real estate agent and Christopher A. Kwegan, 59, Randallstown, Maryland,was a real estate agent and general contractor.

According to his guilty plea, from February 2008 to July 2009, Chester and his co-conspirators, found buyers for Tamaris’ properties and for other property owners. Chester persuaded individuals, who were inexperienced with residential real estate transactions and who lacked the funds needed to pay the down payment and closing costs, to purchase Baltimore row houses owned by Tamaris or otherwise located by the conspirators. Chester advised these “straw purchasers” that they didn’t need to contribute funds for the down payment or closing costs to buy these properties. Chester also advised that he would place tenants in the properties whose rent payments would cover the monthly mortgage payments after the transactions closed, and that Chester would collect the rent and make the mortgage payments.

Chester and his co-conspirators set the purchase price for the properties to exceed their actual fair market value, thereby generating excess proceeds from the transactions from which they could profit.  For example, when Kwegan located a house he wanted to sell, he sought assistance from Chester and real estate agent/consultant Camphor, who were already operating a mortgage fraud scheme. Chester, Kwegan and Camphor set the price of a row house in Baltimore at $250,000, rather than the actual market price of approximately $75,000. Kwegan derived over $100,000 in proceeds from the sale of this home to a straw purchaser and paid another $40,000 to Chester for his assistance.

Chester, Camphor, and others recruited buyers to purchase houses, knowing that they did not qualify for the home mortgages.  The conspirators provided false information about the straw purchasers’ employment, income and financial assets, as well as fraudulent supporting documentation to the mortgage loan brokers to enable the straw purchasers to qualify for home mortgage loans. The conspirators falsely indicated to the mortgage loan brokers that the straw purchasers each intended to use the property as their primary residence following the purchase. Tamaris and other individuals supplied the funds needed for the down payment and closing costs on each of the transactions, and were in turn reimbursed from the loan proceeds at settlement.

Chester brought the straw purchasers to the closing, and then caused the straw purchasers to falsely sign certifications in the closing documents affirming that they intended to use the properties as their primary residence and that no portion of the down payment and closing costs were borrowed.  Following the settlement on each transaction in which they participated, Chester and the other conspirators received substantial payments drawn from the proceeds of the loan.

Few, if any, payments were made towards the mortgages.  The seven properties in which Chester was involved all went into foreclosure, resulting in a loss of at least $1.483 million.

Chester was sentenced by U.S. District Judge James K. Bredar. Judge Bredar also ordered Chester to pay restitution of at least $1.483 million, with the exact amount to be determined by the Court.

In related proceedings, Tamaris, Camphor, Kwegan, and Alexander Sivels, II, 32, Baltimore, Maryland, previously pleaded guilty to their roles in this, or related mortgage fraud schemes.  Tamaris was sentenced to 15 months in prison and was ordered to pay $1,229,206.28 in restitution.  Sivels and Kwegan were each sentenced to 27 months in prison.  Judge Bredar ordered Sivels to pay restitution of $1,317,314.35, and ordered Kwegan to pay restitution of $530,641.27. Camphor is scheduled to be sentenced on December 19, 2016.

The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation; Special Agent in Charge Bertrand Nelson 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. Attorney Jefferson M. Gray, who is prosecuting 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.

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.

Antoine Johnson, 40, Davidson, North Carolina was sentenced to 27 months in prison for his role in a mortgage fraud conspiracy involving luxury condominiums in Oak Island, North Carolina.

According to filed court documents and the sentencing hearing, throughout 2007 and 2008,  Johnson, who engaged in the mortgage fraud scheme with seven other co-conspirators, who operated as a promoter for the mortgage fraud conspiracy, controlled A&J Entertainment, Inc. (A&J Entertainment), a company used by the conspiracy to funnel kickbacks derived from the fraudulent scheme and to support false or inflated statements of employment and income in mortgage loan applications.

Court documents show that the co-conspirators perpetrated the scheme by recruiting straw buyers who agreed to buy condominiums in their name but had no intention of living in the properties or making payments to the corresponding mortgage loans.  The builder agreed to sell the units to the conspiracy’s straw buyers at an inflated price, causing the lenders to issue mortgage loans based on the inflated prices.  Then at closing, the closing attorney prepared separate accounting statements instructing the builder to pay the difference between the true price and the inflated price of the condominiums to one or more of the conspirators.

According to court records, the conspirators induced mortgage lenders to issue mortgage loans, by submitting loan packages that contained forged documents and fraudulent information about the buyers’ income and employment.  In some instances, the co-conspirators persuaded and bribed a bank employee to provide a bogus verification of deposit as support for the fraudulently obtained loan.  Over the course of the fraudulent scheme, the conspirators caused a total of loss of approximately $4.5 million involving approximately 20 properties.

Court records indicate that Johnson operated as promoter in the scheme, helping to bring the transactions together, for which he received approximately $200,000 in kickbacks funneled through A&J Entertainment’s bank account.

Johnson waived formal indictment and was charged by information on January 13, 2016 and pled guilty on January 19, 2016.  The factual basis filed with the plea agreement sets forth the details of the scheme.

The other seven defendants involved in this fraudulent scheme were previously sentenced as follows:

  • Robert Davis, Jr., 41, Charlotte, North Carolina, was sentenced to 46 months in prison and two years of supervised release.Davis operated as a real estate agent for the scheme.
  • Robert Mahaney, Jr., 55, of Ridgeway, South Carolina, was sentenced to 30 months in prison and two years of supervised release.Mahaney was a mortgage broker for the conspiracy.
  • Ahmed H. Green, 37, Charlotte, North Carolina, was sentenced to 27 months in prison and three years of supervised release.Green acted as a promoter and sometimes as a straw buyer for the conspiracy.
  • Carisa L. Majesky, 49, Charlotte, North Carolina, was sentenced to 24 months in prison followed by two years of supervised release.Majesky operated as a real estate agent for the scheme.
  • Somer Bey, 51, Charlotte, North Carolina,  was sentenced to 17 months in prison followed by one year of supervised release.Bey was a real estate agent for the scheme.

    Eric Marlon Davis, 43, Charlotte, North Carolina, was sentenced to nine months in prison and one year of supervised release, nine months of which in home detention. Davis was a promoter in the scheme.

  • Danielle Anderson, 41, Charlotte, North Carolina, was sentenced to six months in prison and one year of supervised release six months of which in home confinement. Anderson was a bank employee who participated in the scheme.

Johnson will be ordered to report to the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

Johnson was sentenced by Chief U.S. District Judge Frank D. Whitney. The sentenced was announced by Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina who was joined in the announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Miriam Baer, Executive Director of the North Carolina Real Estate Commission.Assistant United States Attorney Maria Vento prosecuted the case.

U.S. Attorney Rose thanked the FBI and the North Carolina Real Estate Commission for their investigation of this case.

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.

Mayory Calvo, 34, Doral, Florida was indictedand charged with one count of mortgage fraud conspiracy, two counts of bank fraud, and one count of loan and credit application fraud. If convicted, she faces a maximum penalty of 30 years in federal prison on each charge.  The indictment also notifies Calvo that the United States is seeking a money judgment (forfeiture) for the proceeds of the charged offenses.  The indictment was returned in open court on May 4, 2016 but was sealed.  The indictment was unsealed on May 13, 2016.  Calvo was arraigned and pled not guilty on June 17, 2016.  Trial is currently scheduled to commence the week of August 1, 2016 before Judge Steven D. Merryday.

According to the indictment and court proceedings, Calvo worked at Elite Mortgage Funding as a sales associate and assisted with the processing of mortgage loans associated with the purchase of properties in Pasco County, Pinellas County and Hillsborough County, Florida. She also lived, for a time, in Hillsborough County, Florida, and signed loan applications to obtain mortgage loans through Elite Mortgage for properties that she purchased.

The indictment alleges that Calvo participated in a mortgage fraud conspiracy, along with Jesus Sira aka Jay Sira (the incorporator and initial president and secretary of Elite Mortgage), Nestor Urdaneta-Gonzalez, and others.  The indictment further alleges that one or more conspirators agreed to purchase properties in exchange for a fee or commission; completed, executed and submitted the FNMA 1003 application containing false and fraudulent information concerning the applicant borrowers, purpose of the loan, source of down payment, employment information and/or monthly income; caused the property seller to execute a disbursement letter directing a material portion of the sales proceeds be disbursed to First Financial Consulting which would be submitted to title companies; executed HUD-1’s with false information or that failed to include important disbursement information; and distributed or shared funds acquired during the conspiracy often using bank accounts in the names of First Financial Consulting or Elite Mortgage.  According to the press release, the agreements to purchase properties were for amounts in excess of the original asking price.

The indictment reflects a specific transaction at 30401 Colthurst Street, Wesley Chapel, Florida, 33544 for a loan of $241,764 through National City Bank that was applied for by Mayory Calvo wherein it was falsely represented that she intended to use the property as her primary residence, she was a single woman (she was actually married to Jesus Sira), and a U.S. Citizen (she was a permanent resident), and that she was being paid $11,211 in monthly base employment income by Elite Mortgage.

The case was announced by United States Attorney A. Lee Bentley, III and investigated by the Federal Bureau of Investigation and the Federal Housing Finance Agency Office of Inspector General.  It is being prosecuted by Special Assistant United States Attorney Chris Poor and Assistant United States Attorney Jay Trezevant.  The case is pending in the Middle District of Florida as case number 8:16-cr-00195.

Kevin Campbell, 53, Pyesville, Maryland, was sentenced to 19 months in prison followed by five years of supervised release for conspiring to commit mail, wire and bank fraud arising from mortgage fraud schemes resulting in losses totaling approximately $1.2 million and was ordered to pay restitution of $1,182,822.

Jonathan L. Miles, 45, Perry Hall, Maryland to 18 months in prison followed by five years of supervised release for conspiring to commit bank fraud, and entered an order that Miles pay restitution of $1,182,822.

Campbell invested in Baltimore residential real estate, and controlled four companies that bought and sold residential real estate: KMJ Realty LLC; E&W Realty LLC; C Realty LLC; and City Realty LLC. Miles was a loan officer for a mortgage brokerage company formerly located in Reisterstown, Maryland. Continue Reading…

Nathan Shane Wolf, 44, Charlotte, North Carolina and John Wayne Perry, Jr., 34, Charlotte, North Carolina, and Purnell Wood, 44, were sentenced on federal racketeering charges in connection with their roles in the Operation Wax House fraud scheme.

Wolf, a licensed real estate agent, was sentenced to seven years in prison followed by three years of supervised release. Wolf was convicted by a jury in October 2013. According to trial evidence, Wolf was a participant in the enterprise’s mortgage fraud operations, accounting for over $13 million in fraudulently-obtained loans, with losses of more than $7 million. Witnesses testified that Wolf arranged for builders of luxury real estate to pretend to sell such real estate at an inflated price – what Wolf called the “gross price” – in order to get an inflated mortgage loans from a bank. In reality, the builders accepted the true, lower, price – what Wolf called the “strike price” – while Wolf arranged for the difference between the inflated price and the true price to be paid from the loan proceeds as kickbacks. Such kickbacks were funneled through sham companies and disguised to look like payments for work actually done on the real estate. Trial evidence established that the work was never done, but instead these kickbacks were payments to the buyers and promoters who helped bring the parties to the fraud together. According to the evidence at trial, the kickbacks generally ranged from approximately $50,000 to almost $600,000. According to the sentencing hearing, Wolf received more than $200,000 in commissions on the fraudulent transactions, which represented the vast majority of his income during the years he was committing fraud. Continue Reading…

Alberic Okou Agodio, 30, Bethesda, Maryland, pleaded guilty to conspiracy, wire fraud, and aggravated identity theft, arising from a mortgage fraud scheme.  He used the names of immigrants and students, along with false financial information, to obtain approximately $3.8 million in home mortgage loans.  He bought approximately three dozen row houses in Baltimore, all of which are in default or foreclosure. Continue Reading…