In the following press release United States Attorney Dunn Lampton announced that a federal grand jury has returned an 11-count indictment against Gene A. Bradford in connection with a mortgage loan fraud scheme. The indictment, unsealed today at Bradford’s arraignment, charges Bradford with one count of conspiracy to commit mail fraud & wire fraud, five counts of wire fraud, one count of conspiracy to commit money laundering, and three counts of money laundering. Also included in the indictment is a notice of the government’s intent to pursue forfeiture of Bradford’s property constituting or derived from the proceeds of his illegal activity . The indictment alleges that the value of such illegal proceeds is approximately $1 Million.

According to the indictment, Gene A. Bradford worked as a mortgage broker in Hinds and Madison Counties doing business as Guardian Financial Group, LLC. The indictment alleges that from January, 2003 through approximately December 2004, Bradford and others acting at his direction prepared false and fictitious documents to insure that lenders would make mortgage loans to prospective borrowers. If the mortgage loans were successful, Bradford received a fee for his brokerage services.

The false and fictitious documents, along with the loan application containing false information, were included in loan application packets submitted to potential lenders by Bradford and others acting under his direction. The indictment further alleges that in order to obtain funding for borrowers who were otherwise unqualified to receive mortgage loans, Bradford and others acting at his direction would fabricate various kinds of documents, including but not limited to, fictitious social security benefit statements, false income and/or employment information, false verifications of rent, or false verifications of bank funds on deposit. False entries were also included on HUD-1 Settlement Statements submitted to various lenders with the final loan packets which reflected that the borrower paid cash at the closing of the loan when no such funds were paid by the borrower. During the time period covered by the indictment, Bradford is alleged to have obtained fraudulent mortgage loans totaling over $1 Million.

This mortgage fraud investigation has been ongoing for over two years and is a joint investigation by the Internal Revenue Service and the United States Postal Inspection Service, assisted by other participating agencies in the Jackson Financial Crimes Task Force, including the Federal Bureau of Investigation, Federal Deposit Insurance Corporation-Office of Inspector General, Housing and Urban Development-Office of Inspector General, Mississippi Secretary of State’s Office, Mississippi Real Estate Commission and Appraisal Board, Mississippi Department of Banking and Consumer Finance, Hinds County Sheriff’s Office, Madison Police Department and the Madison-Rankin District Attorney’s Office.

United States Attorney Lampton stressed that this indictment represents an accusation only and all defendants are entitled to a presumption of innocence.

In the following press release United States Attorney Mary Beth Buchanan and the Mortgage Fraud Task Force announced today, April 10, 2008, that on April 8, 2008 and on April 9, 2008 two individuals pleaded guilty in federal court to mortgage fraud charges.

Aaron Thompson, age 32, of Pittsburgh, Pennsylvania, and Randy Carretta, age 44, of Pittsburgh, Pennsylvania, pleaded guilty to one count each of Participating in a Wire Fraud Conspiracy before United States District Court Judge Joy Flowers Conti and Chief United States District Court Judge Donetta Ambrose, respectively.

In connection with the guilty plea of Thompson, Assistant United States Attorney Brendan T. Conway advised the court that Leon Truskowski and Colleen Chiavetta operated a mortgage broker business, located in Pittsburgh’s West End, called People’s Home Mortgage that assisted borrowers in obtaining financing to purchase homes. Thompson was employed by People’s Home Mortgage, and he, with the assistance of other members of the conspiracy, submitted loan applications on behalf of borrowers that contained material misrepresentations about the borrowers’ financial condition. Thompson and his co-conspirators also submitted false documents in connection with the loan applications, including but not limited to, appraisals that inflated the true value of the properties, appraisals that represented that they were prepared by licensed appraisers when they were really prepared by unlicensed appraisers, and employment and income verification documents that misrepresented the borrowers’ employment status and overstated the borrowers’ income. In addition, the conspirators arranged for the payments associated with the loan transactions to be distributed contrary to the representations to the lender about how the loan proceeds would be distributed, and they inflated sales prices so that the conspirators could obtain money at the real estate closings.

Thompson also participated in this scheme in that he acted as a buyer and borrower knowing that the loan applications contained misrepresentations and that many of the supporting documents submitted to the lending institutions were fraudulent.

In connection with the guilty plea of Carretta, Assistant United States Attorney Brendan T. Conway advised the Court that Jason Jester and Carretta operated Precision Mortgage, a Carnegie mortgage broker business that assisted borrowers in obtaining financing to purchase homes.

Jester and Carretta submitted loan applications and associated documents knowing that the loan applications contained fraudulent representations about the financial condition of the borrowers and that the documents were fraudulent. The fraudulent documents included, among others, verifications of employment, verifications of deposit, appraisals, pay stubs, and W-2s.

Judge Conti scheduled sentencing for Thompson for September 12, 2008 and Judge Ambrose scheduled sentencing for Carretta for September 5, 2008.

The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both for both defendants. Under the Federal Sentencing Guidelines, the actual sentences imposed are based upon the seriousness of the offenses and the criminal history, if any, of the defendants.

The Mortgage Fraud Task Force conducted the investigation that led to the prosecution of the defendants. The Mortgage Fraud Task Force is comprised of investigators from federal, state and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.

Mortgage industry members with knowledge of fraudulent activity are encouraged to call the Mortgage Fraud Task Force at (412) 894-7550. Consumers are encouraged to report suspected mortgage fraud by calling the Pennsylvania Attorney General’s Consumer Protection Hotline at (800) 441-2555.

In the following press release it was announced that Fabian Lamont Thorne, age 35, of Newark, New Jersey, pled guilty today to a one-count information charging him with conspiracy to commit wire fraud. Thorne is facing up to 5 years in prison and a $250,000 fine. In connection with his guilty plea, Thorne stipulated to a loss amount of $371, 411.48 for restitution and sentencing purposes. Chuck Rosenberg, United States Attorney for the Eastern District of Virginia; Joseph Clarke, Special Agent-In-Charge, Department of Housing and Urban Development, Office of Inspector General; and Jennifer Smith Love, Special Agent-In-Charge, Federal Bureau of Investigation, Richmond Division announced the plea.

Fabian Thorne has admitted that he was involved in a mortgage fraud conspiracy along with Anna Thorne, Sterling Palmer, and others from about June 2005 through about July 2006. During that time period, Fabian Thorne and his confederates worked at Prestige Mortgage, where they arranged to purchase homes from people in financial trouble through a “home relief” program offering the home owners an opportunity to sell their homes to someone associated with Prestige Mortgage in an attempt to save the homes from foreclosure. Fabian Thorne stipulated, however, that the home relief program was executed without full disclosure to the victim homeowners of how the transaction worked. In fact, a significant portion of the equity in the victims’ homes was taken by Fabian Thorne and his co-conspirators in the transactions. Furthermore, numerous false representations were made on the mortgage documentation to allow the loans to go through. Fabian Thorne has admitted that if the true nature of the transactions had been revealed to the mortgage lender, the loans would not have been approved.

The investigation was conducted by the Department of Housing and Urban Development, Office of Inspector General and the Federal Bureau of Investigation. Assistant United States Attorney Michael Gill is prosecuting the case for the United States.

In the following press release United States Attorney David E. Nahmias announced that VIRGINIA ROSE NOVRIT, 67, of Hilton Head, South Carolina, CLARENCE LORENZO DAVIS, 68, of Hilton Head, South Carolina, GREGORY JEROME WINGS, JR., 25, of Atlanta, Georgia, OLYMPIA D. AMMONS, 31, of St. Louis, Missouri, and RONALD DENZIL MARTIN, JR., 37, of Lithonia, Georgia, were sentenced this week by United States District Judge Beverly B. Martin on charges of conspiracy, bank fraud, wire fraud, and money laundering related to a multi-million dollar mortgage fraud scheme.

United States Attorney David E. Nahmias said, “These defendants and their co-defendants are responsible for causing millions of dollars in losses to mortgage lenders by artificially inflating the sales prices on million dollar homes and submitting fraudulent loan applications to fund the purchases of these homes. In cooperation with federal, state, and local law enforcement agents, we will continue to vigorously investigate and prosecute mortgage fraud schemes in the metro Atlanta area.”

NOVRIT was sentenced to 3 years, 5 months in prison to be followed by 4 years of supervised release, and ordered to pay $839,585 in restitution. NOVRIT was convicted by a jury on November 26, 2007, after a three week trial.

DAVIS was sentenced to 4 years, 3 months in prison to be followed by 4 years ofsupervised release, and ordered to pay $839,585 in restitution. DAVIS was convicted by the same jury on November 26, 2007.

WINGS was sentenced to 10 years, 2 months in prison to be followed by 4 years of supervised release, and ordered to pay $8,577,845 in restitution. WINGS pleaded guilty on September 7, 2007.

AMMONS was sentenced to 5 years, 3 months in prison to be followed by 4 years of supervised release, and ordered to pay $7,549,044 in restitution. AMMONS pleaded guilty on October 2, 2006.

MARTIN was sentenced to 1 year, 1 day in prison to be followed by 3 years of supervised release, and ordered to pay $423,595 in restitution. MARTIN pleaded guilty on May 16, 2007.

According to United States Attorney Nahmias and the information presented in court: From late 2004 through early 2006, NOVRIT, DAVIS, WINGS, AMMONS, and MARTIN participated in a mortgage fraud scheme that involved millions of dollars in fraudulently inflated mortgage loans being provided to unqualified straw borrowers. The straw borrowers were paid as much as $600,000 per property from fraudulently obtained loan proceeds through shell companies. NOVRIT and DAVIS together obtained mortgage loans totaling more than $4 million within a six month period to purchase eight properties. WINGS obtained mortgage loans totaling over $1.2 million to purchase a single property by providing the lender with false qualifying information. WINGS also recruited a number of other unqualified buyers into the scheme and obtained a share of the fraudulently obtained loan proceeds from those transactions for doing so. AMMONS was a loan originator for “Ace Mortgage Funding,” a national mortgage brokerage firm.

AMMONS brokered fraudulent mortgages totaling over $7 million. MARTIN was paid $75,000 to act as a straw buyer and submit a fraudulent loan application for one property.

Four other defendants have already been sentenced to prison terms in related cases, and five more defendants await sentencing. This case was investigated by Special Agents of the Federal Bureau of Investigation. Assistant United States Attorneys Gale McKenzie, William L. McKinnon, Jr., and Douglas Gilfillan prosecuted the case.

In the following press release Florida Attorney General Bill McCollum today announced that two Hillsborough County men have been convicted of conspiracy to commit racketeering for their involvement in a mortgage fraud scheme. David E. Tuggle, Jr. and Eric S. Steinhauser pleaded guilty today in Polk County and could face up to five years in prison when sentenced in September. As part of the plea agreement, neither man may be employed in the mortgage, title, or real estate industries. The men were prosecuted by the Attorney General’s Office of Statewide Prosecution.

Tuggle, 31, and Steinhauser, 29, were part of a criminal enterprise which submitted fraudulent mortgage loan documents to Argent Mortgage Company through Brandon-based Sunstate Mortgage Company. From 2003 through 2005, Tuggle and Steinhauser submitted more than 300 mortgage loan applications to Argent Mortgage. Of those 300 applications, more than 280 were funded and collectively valued at more than $34 million. Investigators believe the men paid one of their co-conspirators, a former Argent vice president, more than $100,000 for insuring the approval of these fraudulent loans.

Tuggle and Steinhauser are cooperating with authorities in both the pending case against their co-defendants and in a previously filed case. The investigation was a joint effort by the Florida Department of Law Enforcement, the Hillsborough County Consumer Protection Agency, and the Office of Statewide Prosecution. Argent has cooperated fully with the investigation.

In the following press release Illinois AG Lisa Madigan announced the filing of a suit in Cook County Circuit Court against One Source Mortgage, Inc., and the president of the company, Charles G. Mangold. One Source operated on Chicago’s northwest side.

“This company’s conduct is a prime example of the behavior of unscrupulous mortgage brokers that has led to a foreclosure crisis for many Illinois homeowners,” Madigan added.

One Source solicited consumers through advertisements in the Chicago Sun-Times and direct mailings that promised mortgages with very low monthly payments. These advertisements did not adequately disclose, however, that the low monthly payments were based on introductory “teaser” interest rates that expired after one month. The interest rate for the mortgage would then adjust every month thereafter. If consumers continued to make the advertised monthly payment, they would not pay any of the principal of the loan or even the full amount of interest that accrued on the loan each month. The unpaid interest would then be added to the principal of the loan, causing the principal balance of the loan to increase. One Source allegedly did not tell consumers any of these details about their loans.

As a result, some consumers believed that their teaser rate or low monthly payment would last beyond the first month of the mortgage loan and even for the life of the loan. One Source allegedly told an Illinois consumer that he would have an interest rate of 0.950 percent for the first year of his loan. In reality, the consumer’s interest rate increased to 7.5 percent after the first month. One Source allegedly told another consumer that the combined principal and interest payment on her two mortgages would be $1,357.47. Sixteen months later, the principal and interest payment on this consumer’s loans was actually $2,616.16. According to the complaint, One Source told another consumer that a minimum monthly payment of $700 would cover all the accrued interest on his loan. In reality, the consumer would have to pay $1,816 per month just to cover the monthly interest.

In addition to misrepresenting the nature of the mortgage loans sold to consumers, One Source also grossly overstated homeowners’ incomes so that consumers appeared to be able to afford a much larger mortgage amount. This was done without the knowledge of the borrowers, who had frequently submitted verifiable documentation of their true income to One Source. For example, One Source falsely listed one consumer’s monthly income as $9,000 on her mortgage loan application. This consumer had provided pay stubs and tax returns to the company to verify her income of approximately $2,200 a month. This consumer was unaware that the company listed her income as $9,000.

The complaint also details how One Source allegedly used high pressure sales tactics to rush consumers through the closing on their mortgage loans. On average, most consumers’ closings lasted less than 30 minutes. Some consumers had closings that lasted only 10 or 15 minutes. To entice consumers to close on their loans, One Source would promise to refinance consumers into loans with more favorable terms at a later date. One Source would often do this under the guise of helping consumers improve their credit. One Source allegedly promised one consumer that her credit would improve if she refinanced her home multiple times. This consumer refinanced her home three times in one year through One Source. The company received approximately $30,000 in loan origination fees alone from these transactions. Now, this consumer is facing foreclosure.

By the time the One Source consumers learned of their true loan terms, they were left with few options as the payments were unaffordable, the homes had been stripped of their equity and the mortgage loans contained stiff prepayment penalties, preventing refinancing. A number of One Source consumers are now having difficulty paying their mortgages and must sell their homes in order to avoid foreclosure.

Resources:
Press Release

In the second case announced by Illinois AG Lisa Madigan’s second lawsuit involves a number of fraud schemes orchestrated by defendant Dayton D. Vickers Ellis, a/k/a Dale Ellis, president of the following mortgage brokering and home repair businesses also named as defendants in the lawsuit: Advocate Financial Services, Inc., Alpha Construction & Development, Inc., American Heritage Building Consultants, Inc., Apollo Custom Builders, Inc., Illinois Restoration Program, Inc., a/k/a Illinois Lending Institution, Indiana Restoration Program, California Restoration Program, and New York Restoration Program. Ellis’ operation was headquartered on the north side of Chicago.

According to Madigan’s complaint, Ellis used three different schemes to defraud homeowners. Ellis’ fraudulent schemes all began with deceptive advertising and took different forms. Ellis sent direct mail solicitations to Illinois consumers describing an alleged government program that offered grants for home repairs. Ellis directed consumers who responded to these mail solicitations to submit mortgage loan applications to Advocate Financial Services. Ellis falsely told consumers that these mortgage applications were part of the purported government grant process. Ellis received substantial fees for originating loans. Before any home repair work was even started, Ellis would disburse money from the consumers’ mortgage proceeds directly to his construction company, American Heritage Building Consultants. In many instances, Ellis did not finish, or in some cases, even begin, the promised home repair work.

The complaint describes how Ellis’ first scheme worked to defraud consumers. For instance, in one case, a consumer owned her home free and clear prior to her transaction with Advocate. Ellis advised that consumer to take equity out of her home to pay for home repairs through his company and to pay off other unsecured debt. The consumer took out a mortgage for $105,000. During the mortgage underwriting process, Ellis advised the lender for the consumer’s loan that the consumer owed money to American Heritage Building Consultants. Ellis then recorded a mortgage in the name of American Heritage Building Consultants and secured this mortgage with the consumer’s property. In reality, American Heritage Building Consultants had not performed any work on the consumer’s home, and the consumer had not even entered into a contract for home repairs with the company. Nonetheless, American Heritage Building Consultants collected an approximately $20,000 disbursement at the consumer’s loan closing. The consumer never received any home repair work or a refund of the money.

Ellis’ second and third types of schemes involved taking consumers’ money for home repairs that were usually never performed on the basis that the government had a home repair grant matching program. In both of these schemes, Ellis would visit the homes of consumers who responded to his government home repair grant solicitation. At these home visits, Ellis explained that he was a government employee representing the fictional “Illinois Restoration Program.” Then, Ellis would explain two home repair grant programs, neither of which actually existed:

·         The “50/50 program.” Under this purported program, the government would match the money the consumer invested in a home repair project on a dollar for dollar basis. To obtain such a grant, the consumer first had to write a check to Ellis’ Illinois Restoration Program for the amount the consumer wanted the government to match.

·         •  The “10% down payment program.” Under this purported program, Ellis told consumers that the government would pay 90 percent of the estimated cost of a home repair project. To qualify for this program, the consumer had to provide Illinois Restoration Program with a 10 percent down payment on the project. Ellis then uses high pressure sales tactics to steer consumers into agreeing to more substantial home repair projects under the guise of the money-saving benefits of the “10 percent down payment program.”

In both of these schemes, consumers would write checks to one of Ellis’ companies and he would cash or deposit the checks, but consumers never received any grants or home repairs.

Resources:
Press Release

In the following press release United States Attorney Karen P. Hewitt announced that Alejandro Lopez, Emilio Lopez, Ravinderjit Singh Sekhon, and Linda Velasquez each pled guilty today in federal court in San Diego to conspiracy and wire fraud charges. The defendants entered their guilty pleas before United States Magistrate Judge Nita L. Stormes, subject to final acceptance of the pleas by United States District Court Judge Marilyn L. Huff at the time of sentencing.

According to court records, Alejandro and Emilio Lopez were two of the owners of “Century 21 El Dorado,” a San Marcos, California firm (pictured below) that offered real estate and home financing services targeting mostly Hispanic clientele. Alejandro and Emilio Lopez headed the “Lopez Team,” which consisted of, among others, loan officers, loan processors and real estate agents who conducted fraudulent real estate and loan broker activities. Ravinderjit Singh Sekon was a loan officer, and Linda Velasquez was the office manager. The Lopez Team obtained funding for financially unqualified clients from several sub-prime lenders who offered “stated” or “no income verification” loans at higher interest rates than conventional loans. To secure the loans, they submitted false information on loan applications and false supporting documents to lenders. During the conspiracy, they brokered fraudulent loans (including first and second mortgages), averaging approximately $400,000, for over 200 unqualified clients.

Picture Courtesy of The Voice of San Diego

As part of their guilty pleas, the defendants admitted that they solicited clients at swap meets and by advertising in Spanish language newspapers and publications and on Spanish language radio stations. At times they used third parties with higher credit scores as “straw buyers,” misrepresenting to lenders that the third parties would occupy the homes. To fraudulently qualify clients for loans, the Lopez Team inflated clients’ incomes and bank account balances; falsified employment, rent, and credit information; misrepresented that clients were United States citizens; used altered social security cards and bank statements; and purchased from tax preparers letters that misrepresented that clients were business owners and that the tax preparers had prepared the clients’ tax returns. When lenders called to check the references, they impersonated employers, landlords, and creditors to falsely verify the information.

The defendants admitted that they obtained $1,070,000 in loan commissions from their fraudulent loan activities. As part of their plea agreements, Alejandro Lopez, Emilio Lopez, Sekhon, and Velasquez have agreed to repay to the Government their illegal gains, totaling $1,070,000, in the form of forfeitures or fines.

United States Attorney Hewitt said, “In the midst of our nation’s sub-prime loan crisis, the U.S. Attorney’s Office is committed to prosecuting fraud schemes such as this one and will aggressively pursue those who attempt to circumvent lenders’ loan requirements.”

FBI Special Agent in Charge Keith Slotter commented, “We continue to investigate allegations of mortgage fraud, not only because of the wrongdoing that is associated with this particular criminal behavior, but because we are committed to protecting many Americans from paying higher mortgage rates as a result of unscrupulous behavior on the part of a few.”

Sentencing is scheduled before Judge Marilyn L. Huff on February 4, 2008 at 9:00 a.m., in federal court in San Diego .

Resources:
Criminal Complaint
Voice of San Diego news report
Press Release