In the following press release Queens District Attorney Richard A. Brown, joined by Police Commissioner Raymond W. Kelly and New York State Secretary of State Lorraine A. Cortes-Vasquez, today announced the indictment of a Whitestone real estate appraisal company and its chief executive officer for allegedly inflating the value of properties in connection with numerous residential mortgage applications.

In a 397-count indictment, D & T National Appraisals, Inc., and its CEO, Donato Odato, 54, of 166-11 Cryders Lane in Whitestone, have been variously charged with second- and third-degree forgery, criminal possession of a forged instrument, first- and second-degree falsifying business records, first- and third-degree identity theft, first-degree scheme to defraud and fifth-degree conspiracy. Odato faces up to seven years in prison if convicted. The corporate defendant faces a fine of up to $10,000 for each felony count conviction or double the amount of the illegal gain.

District Attorney Brown said, “The arrests are the result of a nine-month investigation which alleges a pattern of fraud committed by the defendants in the sale of numerous homes in Queens County and elsewhere in the United States and resulted in artificially high appraisals of the properties. This type of mortgage fraud has the potential to needlessly cost lenders and purchasers millions of dollars, as well as undermine the credibility of the entire real estate market. I want to

acknowledge the hard work of all the investigative agencies involved. Without their team efforts, we would not have been able to have uncovered and pursued these allegations.”

Secretary of State Cortes-Vasquez said, “We at the Department of State are pleased to have been able to assist the Queens District Attorney in bringing about today’s indictment. As we all recognize, abuses in the real estate industry have caused serious problems afflicting many New Yorkers. As an integral partner of Governor Spitzer’s “HALT” (Halt Abusive Lending Transactions) Task Force, the Department of State has been working closely with the Department of Banking to

uncover illicit transactions involving real estate brokers, mortgage brokers and home inspectors as well as appraisers.

Anyone who intentionally defrauds homeowners and potential buyers deserves to be prosecuted to the full extent of the law. Today’s indictment is a reminder that they will be.”

District Attorney Brown said that, according to the indictment, Odato, as the chief executive officer of D & T National Appraisals, Inc., recruited licensed appraisers over the Internet and offered them positions with his company as part of a ruse to steal their personal identity information. Thereafter, it is alleged he would forge the names of the prospective job seekers on numerous appraisals that he filed in connection with residential mortgage applications.

It is further alleged that Odato took advantage of the Internet’s anonymity, as well as his own background as a former licensed assistant appraiser, to fraudulently induce lenders and other real estate professionals to use his company’s claimed appraisal services. It is alleged that instead of actually doing the appraisal work, Odato would simply concoct information on real estate values from various sources and then inflate the values to match mortgage applications.

The alleged scheme came to light when financial institutions began reaching out to the appraisers who allegedly had their identities stolen and advised them that their services would no longer be needed due to their inappropriate and highly inflated valuations of properties based on falsified data. The appraisers, in turn, contacted the Queens District Attorney’s Office to report the identity theft.

The defendants were arraigned yesterday afternoon before Acting Queens Supreme Court Justice James P. Griffin who released Odato on $100,000 bail and set a return date of January 14, 2008.

The investigation was conducted by Detective David Gilbert, of the District Attorney’s NYPD Squad, under the supervision of Sergeant Frank Horvath, and Captain John Zanfardino, and under the overall supervision of Deputy Chief Louis M. Croce, Jr. and Chief of Detectives George F. Brown, and by Senior Investigator Ernest Delaney, of the Investigations Unit of the Division of Licensing at the New York State Department of State (DOS), under the supervision of Chief Investigator Michael Elmendorf, as well as by DOS Senior Attorney Whitney Clark.

Also assisting in the investigation were Detectives Investigators Joseph Brancaccio and Lester Frank and Sergeant Evelyn Alegre, of the District Attorney’s Detective Bureau, under the supervision of Sergeant John Kenna, Lieutenant Robert Burke and the overall supervision of Deputy Chief Al Velardi and Chief Lawrence Festa, and Supervisory Forensic Accountant James Dever and Investigations Division Analyst-Intern Jason J. Bush. Peter A. Crusco, Executive Assistant District Attorney for Investigations, is prosecuting the case.

It should be noted that an indictment is merely an accusation and that a defendant is presumed innocent until proven guilty.

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Press Release

In the following press release Eric Melgren, United States Attorney for the District of Kansas, announced that s ix people were indicted Wednesday on federal charges of taking part in a conspiracy to fraudulently obtain $14 million worth of loans on homes in the Kansas City area.

Named in the indictment were Wildor Washington, Jr., 37, Leawood, Kan.; Maurice Ragland, 33, Lee’s Summit, Mo.; Victoria Bennett, 34, Leawood, Kan.; Kara E. Robinson-Franks, 37, Grandview, Mo.; Scott Alexander, 69, Merriam, Kan.; and Terrence Cole, 41, Kansas City, Kan.

According to the indictment:

Washington owned Heritage Financial Investments, Legacy Enterprises, B&L Custom Development and Liberty Escrow. Through his companies, he prepared fraudulent loan applications submitted to lenders throughout the country including Hamilton Mortgage of Phoenix, Ariz; First Magnus of Overland Park, Kan.; Aegis Funding Corporation of Houston, Texas; National City Mortgage of Dayton, Ohio; Mortgage Solutions of Kansas City, Mo.; ABN Amro in Ann Arbor, Mich.; and Countrywide Home Loans in Overland Park, Kan.

Maurice Ragland owned TERM Appraisers, The Real Estate Group and JTF Enterprises, which created fraudulent property appraisal reports used to secure mortgage loans.

Bennett was a loan processor for Washington.

Robinson-Franks held herself out as a real estate agent and vice president of operations for Heritage Financial Investments and Legacy Enterprises.

Cole was chief financial Officer for Legacy Enterprises and Treasurer for Liberty Escrow.

Alexander was a licensed mortgage broker who owned Atlantic Mortgage.

According to the indictment, the conspiracy existed from January 2002 through January 2004 for the purpose of enriching the conspirators through obtaining artificially oversized home loans from lenders. Conspirators targeted home buyers with low incomes and limited experience in real estate. They told buyers they could obtain home loans regardless of their credit rating and financial situation.

The conspirators submitted fraudulently inflated real estate appraisals and false financial information to lenders. At or near the time of the closing, the conspirators imposed excessive and unexpected loan origination fees and higher interest rates on borrowers.

The conspirators obtained the identity of licensed appraisers by searching the Internet and appropriating their identifying information and state license numbers. The conspirators also used fictitious identities and license numbers.

Counts in the indictment include:

Conspiracy to commit mortgage fraud (Washington, Ragland, Bennett, Robinson-Franks, Alexander and Cole)

Wire fraud involving a property in the 200 block of Olive, Kansas City, Mo. (Washington, Alexander)

Wire fraud involving a property in the 4400 block of Virginia, Kansas City, Mo. (Washington, Alexander)

Wire fraud involving a property in the 500 block of Sharon Drive, Liberty, Mo. (Washington, Ragland, Alexander)

Wire fraud involving a property in the 4600 block of West 146^th Street, Leawood, Kan. (Robinson-Franks, Washington, Alexander, Bennett, Cole)

Another wire fraud involving a property in the 4600 block of West 146^th Street, Leawood, Kan. (Robinson-Franks, Alexander, Washington, Bennett)

Wire fraud involving a property in the 12400 block of East 58^th, Kansas City, Mo. (Washington, Alexander, Robinson-Franks, Cole)

Wire fraud involving a property in the 4600 block of West 146^th Street (Robinson-Franks, Washington, Alexander, Bennett)

Money laundering involving a property in the 500 block of Sharon Drive in Liberty, Mo. (Washington, Ragland, Alexander).

Money laundering involving a property in the 12400 block of East 58^th Street, Kansas City, Mo. (Washington, Alexander, Raglan)

Money laundering involving a property in the 4600 block of 146^th Street, Leawood, Kan. (Robinson-Franks, Bennett, Washington)

The Internal Revenue Service– Criminal Investigation, the Johnson County Sheriff’s Department, the Overland Park Police Department, and the U.S. Secret Service’s Financial Crimes Task Force worked on the case. Assistant U.S. Attorney Marietta Parker is prosecuting.

Resources:
Press Release

In the following November 1, 2007 press release New York Attorney General Andrew M. Cuomo announced that he is suing one of the nation’s largest real estate appraisal management companies and its parent corporation for colluding with the largest savings and loan in the country to inflate the appraisal values of homes.

In a scheme detailed in numerous e-mails, eAppraiseIT (“EA”), a subsidiary of First American Corporation (NYSE: FAF), caved to pressure from Washington Mutual (“WaMu”) (NYSE: WM) to use a list of preferred “Proven Appraisers” who provided inflated appraisals on homes. The e-mails also show that executives at EA knew their behavior was illegal, but intentionally broke the law to secure future business with WaMu.

“The independence of the appraiser is essential to maintaining the integrity of the mortgage industry. First American and eAppraiseIT violated that independence when Washington Mutual strong-armed them into a system designed to rip off homeowners and investors alike,” said Attorney General Cuomo. “The blatant actions of First American and eAppraiseIT have contributed to the growing foreclosure crisis and turmoil in the housing market. By allowing Washington Mutual to hand-pick appraisers who inflated values, First American helped set the current mortgage crisis in motion.”

As First American acknowledged in its 2006 annual report, appraisal fraud can damage the entire housing market, including consumers and investors alike. Consumers are harmed because they are misled as to the value of their homes, increasing the risk of foreclosure and hindering their ability to make sound economic decisions. Investors are hurt by such fraud because it skews the value and risk of loans that are sold in financial markets.

In April 2006, EA began providing appraisal services for WaMu, which became EA’s biggest client. Within weeks, WaMu began complaining to EA that its appraisals were not high enough. WaMu pressured EA to employ exclusively a new panel of appraisers that WaMu hand-selected as “Proven Appraisers.” This set of appraisers was chosen by WaMu specifically because they inflated property appraisals. WaMu profited from these higher appraisals because they could close more home loans, at greater values. Over the course of their relationship, between April 2006 and October 2007, EA provided approximately 262,000 appraisals for WaMu.

Attorney General Cuomo’s investigation uncovered a series of e-mails between executives at EA, First American, and WaMu that show EA officials were willingly violating state and federal appraisal independence regulations to comply with WaMu’s demands:

• On February 22, 2007, in response to a description of the WaMu “Proven Appraiser” program as one in which “we will now assign all Wamu’s work to Wamu’s ‘Proven Appraisers’… [and] Performance ratings to retain position as a Wamu Proven Appraiser will be based on how many come in on value,” eAppraiseIT’s president told senior executives at First American: “ we have agreed to roll over and just do it… ”
• On April 4, 2007, eAppraiseIT’s executive vice president stated in an e-mail to First American: “we as an AMC [Appraisal Management Company] need to retain our independence from the lender or it will look like collusion… eAppraiseIT is clearly being directed who to select. The reasoning… is bogus for many reasons including the most obvious – the proven appraisers bring in the values.”
• On April 17, 2007, eAppraiseIT’s president wrote an e-mail to First American explaining why its conduct was illegal: “We view this as a violation of the OCC, OTS, FDIC and USPAP influencing regulation.”
• E-mail evidence also shows that WaMu pressured EA to inflate appraisals as a condition for doing future business together:
• On September 27, 2006, First American’s vice chairman reported that a WaMu executive told him: “if the appraisal issues are resolved and things are working well he would welcome conversations about expanding our relationship…”

Attorney General Cuomo continued, “Just as my office stepped in when colleges and loan companies were profiting at students’ expense, this lawsuit and my ongoing investigation into the mortgage industry should send a clear message: companies must play by the rules or they will have to account for their misdeeds.”

Attorney General Cuomo’s lawsuit seeks to end the illegal relationship between First American and EA and WaMu. It also seeks penalties and disgorgement from First American and EA. The lawsuit alleges that First American and EA violated appraiser independence laws, which regulate the conduct of real estate appraisers. The lawsuit was filed in the Supreme Court of New York, New York County.

This case is being handled by Assistant Attorney General Christopher Mulvihill, under the supervision of Deputy Chief Trial Counsel Nicole Gueron and Executive Deputy Attorney General for Economic Justice Eric Corngold.

Resources:
Complaint
Press Release

In the following press release The Office of the United States Attorney for the District of Vermont announced that Gerald Mullaney, 60, of East Greenbush, New York, pleaded guilty on September 24, 2007 in United States District Court in Burlington to a charge of bank fraud. Chief U.S. District Judge Williams K. Sessions III released Mullaney on conditions pending sentencing, which is set for January 28.

On November 9, 2006, a federal grand jury in Burlington returned a one count indictment charging Mullaney with bank fraud. The indictment accused Mullaney of falsifying the appraisals he performed for about 100 mortgage loans for homes in northern New York that were financed by National City Mortgage Company. According to the indictment, Mullaney falsely inflated the appraised values of the homes, and his appraisals also provided other materially false information about comparable properties and the properties for which the loans were being sought.

Mullaney faces up to 30 years of imprisonment and a fine of up to $1 million. The actual sentence will be determined with reference to federal sentencing guidelines.

This case was investigated by the Burlington, Vermont office of the Federal Bureau of Investigation. The investigation into this fraud continues and it is possible other persons may face charges in the future.

Mullaney is represented by Barbara O’Connor. The prosecutor is Assistant U.S. Attorney Gregory Waples.

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Press Release

R. Alexander Acosta, United States Attorney for the Southern District of Florida announced that a joint federal-state investigation, spearheaded by the Internal Revenue Service and the Broward County Sheriff’s Office, culminated in a 70-count indictment, unsealed today, charging 15 defendants in a wide-ranging mortgage fraud scheme. This scheme yielded 12 fraudulent loans, totaling approximately $8,300,000.

According to the Indictment, defendants Henry Quintero-Lopez and Lazaro Villalba orchestrated a scheme through which they located properties for sale in the Southwest Ranches area of Broward county. Quintero-Lopez and Villalba would offer the owners full asking price for the properties, and then inflate the contract purchase price submitted to the lender to allow their companies, New World International and D& H Investments of South Florida, to receive as a “fee” moneys in excess of the true purchase price.

To execute their scheme, Quintero-Lopez and Villalba would recruit individuals who, for a fee, would serve as “straw buyers” of the properties selected. Quintero-Lopez and Villalba would obtain fraudulent pay stubs, IRS forms W-2, verification of employment and verification of deposit forms from defendant Joaquin M. Perea, the owner of J.P.Accounting Service in Miami, Florida. These false documents would, in turn, be submitted to the mortgage brokers, defendants Antonio Ramos, at Home Mortgage Finance Group in Miami, and Ruben Jimenez, at Lenders Choice Mortgage Services in Miami.

According to the Indictment, Ramos and Jimenez knowingly assisted Quintero-Lopez and Villalba in obtaining the fraudulent mortgages from lenders in the names of the straw buyers. The Indictment further alleges that defendants Eric Garcia and Martine Yanisse Castrillon were licensed State of Florida registered trainee appraisers who knowingly prepared fraudulent appraisals at the request of Quintero-Lopez and Villalba.

The Indictment also alleges that defendants Felipe M. Nunez, Michelle Volcy, Luc Bruna, Maykel Clavero-Gonzalez, Iray Ponte, Nidia Rodriguez-Rial, and Iliana Lima were straw buyers who were paid thousands of dollars by Quintero-Lopez and Villalba to sign the purchase documents and appear at the closings to have the properties placed in their names.

Eight fraudulent mortgages are listed in the Indictment, which includes charges of conspiracy to commit mail and wire fraud, substantive mail and wire fraud, conspiracy to engage in money laundering, and substantive money laundering. Each defendant faces a statutory maximum sentence of five (5) years in prison and a fine up to $250,000 on the conspiracy count; a statutory maximum sentence of twenty (20) years in prison and a fine of up to $250,000 on each of the wire and mail fraud counts; and a maximum statutory sentence of twenty (20) years in prison and a fine of up to at least $500,000 on each of the money laundering counts.

Mr. Acosta commended the investigative efforts of the Internal Revenue Service and Broward County Sheriff’s Office for their work on this case. The case is being prosecuted by Assistant United States Attorney Thomas Lanigan.

Resources:
Indictment

In the following press release the FBI in Dallas, TX announced that following a week-long trial before U.S. District Judge Barbara M.G. Lynn, a federal jury in Dallas has convicted Gandhi Ben Morka on all seven counts of an indictment charging him with various offenses in a mortgage fraud scheme, announced U.S. Attorney Richard B. Roper.

Specifically, the jury found Morka, 52, of Arlington, Texas, guilty of one count of conspiracy to commit mail fraud and wire fraud, four counts of wire fraud and two counts of mail fraud. Morka faces a maximum statutory sentence of 125 years in prison and a $1.75 million fine.

Gandi Ben Morka was arrested in May 2007 by agents of the Federal Bureau of Investigation on charges in a superseding indictment returned by a federal grand jury in the Northern District of Texas in April 2007. That indictment superseded an indictment returned in May 2005 that charged seven individuals, Sean Cung-Kim Nguyen, Dai Quoc Nguyen, Xuyen Thi-Kim Nguyen, Tam Nguyen, Myna Tran, Hong Thanh Duong and Cuc Kim Tran, with various offenses related to their role in a mortgage fraud scheme to defraud Countrywide Home Loans, d/b/a America’s Wholesale Lender (Countrywide). That scheme resulted in millions of dollars of losses to Countrywide based on fraudulent mortgage loan applications and appraisals for residential home purchases in the Dallas area. Most of the defendants have been convicted and sentenced to prison terms of up to 78 months and ordered to pay up to millions of dollars in restitution.

The government presented evidence at trial that Morka conspired with the above-named co-defendants to defraud Countrywide by locating single family residences in and around the Dallas area that were for sale and recruiting straw purchasers and borrowers to purchase the targeted residences. Then Morka would prepare appraisals on the properties, inflating the value to an amount far greater than the fair market value. The co-conspirators would prepare and submit false and fraudulent loan applications in the names of the straw purchasers in order to secure a mortgage loan for the targeted single family residences in an amount substantially greater than the fair market value of the purchased property and obtain substantially inflated loans from Countrywide, based on those false and fraudulent misrepresentations. The co-conspirators paid the original owners of the properties and distributed the remaining fraudulently obtained loan proceeds among themselves.

Overall, the co-conspirators worked together to steal money from Countrywide on a number of real estate transactions. While more than 18 different houses were targeted in the scheme, Morka’s trial focused on two homes: 7605 Constitution, Plano, Texas and 6727 Silvercrest Drive in Arlington, Texas.

U.S. Attorney Roper praised the investigative efforts of the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorneys Sarah Saldaña and Lynn Hastings.

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Press Release

In the following press release from Jacksonville, FL, Acting United States Attorney James R. Klindt today announced that Justin D. Barker, 31, and Robert W. Hulbert, Jr., 45, both of Jacksonville, pleaded guilty to conspiracy to commit wire and bank fraud. The maximum penalty faced by both individuals is 30 years’ imprisonment, a fine in the amount of $1 million, a term of supervised release of up to five years, and special assessment of $100.

According to the plea agreements, between January 2005 and June 2006, Barker negotiated with sellers of residential real estate properties, who executed Purchase and Sale Agreements to sell their properties at a given price. A co-conspirator, who was a licensed real estate appraiser, then fraudulently appraised the properties at substantially higher amounts than those stated on the Purchase and Sale Agreements. The conspirators provided a second, fraudulent, Purchase and Sale Agreement, showing the inflated appraisal price along with various fraudulent loan application documents, to lenders, including federally insured lending institutions. Based on the fraudulent documents, the lenders approved loans in the amounts of the inflated appraisals.

Hulbert, as the manager of the Jacksonville branch of Nations Title Agency of Florida, operated as the closing agent for the transactions. At the closings, Hulbert would disburse funds from the lenders, providing the sellers with checks in the amount of the original sales prices, and providing the remainder of the loan funds, the proceeds of the fraud to one or more of the conspirators.

The fraudulently obtained mortgages resulted in lenders extending approximately $17.7 million in mortgage loans, which would not have been approved but for the fraudulent documents. The conspirators grossed approximately $4.024 milion in proceeds from the fraudulent transactions.

The case was investigated by the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Susan Humes Raab and Arnold B. Corsmeier.

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Press Release

In the following press release from Columbus, OH it was announced that a federal grand jury here has returned a 68-count indictment charging nine people with conspiracy, tax evasion, wire fraud, bank fraud and money laundering for their roles in a mortgage fraud scheme that involved more than 500 pieces of property and more than $25 million in mortgage loans in the central Ohio area between 2003 and 2006.

Gregory G. Lockhart, United States Attorney for the Southern District of Ohio, Jose A. Gonzalez, Special Agent in Charge, Internal Revenue Service Criminal Investigation, and J. Mark Batts, Acting Special Agent in Charge, Federal Bureau of Investigation, announced the indictment returned late yesterday.

The indictment alleges that the defendants conspired to exaggerate the value of real estate properties in and around Columbus, Ohio, both to lending institutions and to prospective purchasers. The prospective buyers had been recruited largely because of their relative ignorance regarding real estate business and investment practices.

The defendants allegedly used fraudulent documents to misrepresent the credit worthiness of those purchasers to lending institutions in order to get the institutions to approve excessive mortgage loans secured by the inflated-value properties.

The indictment charges:

DONALD F. GREEN , age 48, of Columbus. Green sold rental properties he owned as part of the scheme.

SHAWN A. GRIFFIN , age 37, of Cleveland, a real estate investor who recruited unwitting buyers.

GEORGE T. “Terry” JORDAN , age 50, of Canal Winchester, a licensed real estate agent who helped arrange the sales.

ARYEH M. SCHOTTENSTEIN , age 33, of Oak Park, Michigan, real estate investor who helped recruit individual and organizational investors.

JEFFREY M. LIEBERMAN , age 56, of Bexley, real estate appraiser who helped prepare exaggerated appraisals of the properties.

DWAYNE L. CARTER , age 37, of Columbus, loan officer who helped arrange the sales.

JONATHAN L. BOYD , age 38, of Columbus, loan officer who helped arrange the sales.

JAMES DARNEIL GAITHER , age 37, of Columbus, appraiser who helped prepare exaggerated appraisals of the properties.

KENYATTA JOHNSON , age 37, of Michigan, loan officer with ABN AMRO who helped arrange the sales.

A typical pitch used to lure prospective buyers would be to tell them they could buy property with no money down and, in fact, that they would receive money back at closing. They would also be told that they would not be responsible for monthly payments and that repairs would be made to the property without costing them anything.

The defendants allegedly used fraudulent documents and phony appraisals to overstate the value of the properties involved. They would secure mortgages based on the inflated value of the properties, promise repairs and improvements on the property, then take the money and leave the buyer owing more than the property was worth.

The indictment alleges three counts of conspiracy punishable by up to five years imprisonment and a $250,000 fine, four counts of tax evasion punishable by up to five years imprisonment and a $250,000 fine, 25 counts of wire fraud each punishable by up to 20 years imprisonment and a $1 million fine, nine counts of bank fraud punishable by up to 30 years imprisonment and a $1 million fine, and 25 counts of money laundering punishable by up to 10 years imprisonment and a $250,000 fine.

“While financial institutions are the victims of such crimes, entire neighborhoods pay the price,” Lockhart said. “Mortgage fraud leaves in its wake vacant houses with liens much larger than the properties are worth.”

Lockhart commended the investigation by IRS and FBI agents and Assistant U.S. Attorney Daniel A. Brown, who is prosecuting the case.

The following Columbus, OH properties are mentioned in the indictment:
165 N. 21st St
726 S. Champion Ave.
970 S. Front St .
538 Berkeley Rd.
665 S. 22nd St.
672 S. 22nd St .
1760 Sixth St.
992 S. 22nd St .
68 N. Eureka Ave.
1580 E. Fourth Ave.
788 Gilbert St.
35 S. Richardson Ave.
1590 Aberdeen Ave.
228 E. Hinman Ave.
832 N. St. Clair Ave.
2682 E. Sixth Ave.
452 Garfield Ave.
978 S. Front St.
53 Barthman Ave.
813 Carpenter St.
239 S. Warren Ave.
1262 Atcheson St.
189 N. Ohio Ave.

Resources:
Press Release
Indictment

Picture Courtesy of Columbus Dispatch