Entries in Equity Stripping/Skimming (25)
Michigan AG taking legal action against alleged equity strippers
Wednesday, September 27, 2006 at 02:28PM “Home equity stripping is a scam that has severe financial and emotional impacts on its victims,” stated Cox. “My office is committed to pursuing those who engage in this heartless activity.”
The equity stripping scam usually begins with promises made to homeowners in danger of losing their properties to foreclosure. These promises often include cash payments for the home, or the guarantee of a loan. Homeowners are asked to sign complicated paperwork as a ruse to make the scam appear to be legitimate. Often times, the paperwork is in the form of a deed that transfers ownership of the home to the scammer, which results in homeowners owing more per month than before the foreclosure, or learning that their mortgage has not been paid. Homeowners are often forced to vacate their residences and, in most cases, receive little or no money for the equity they have built in their homes over the years.
The Bairds scheme allegedly involved the buying and selling of homes without executing the proper legal documents, enabling them to victimize at least two homeowners who employed their services. In one instance, the Bairds are alleged to have bought and sold the same home without paying off the mortgage of the selling party, while at the same time they attempted to collect land contract payments from the buying party. As a result, the buyers may now face eviction, and the sellers may owe mortgage obligations for a home they no longer own. The sellers may also face threats of foreclosure, mounting late fees, and damage to their creditworthiness.The legal action against Baird Enterprises, LLC, and its principals is in the form of a Notice of Intended Action (NIA), a step that generally must be taken before a company may be sued by the Attorney General under the Consumer Protection Act. After receiving the NIA, the company and its owners have ten days to cease violating the Consumer Protection Act or risk facing a lawsuit. A voluntary resolution often requires the payment of a substantial civil penalty and reimbursement to the State for the cost of the investigation.
“I urge the public to exercise the utmost caution when buying and selling homes,” stated Cox. “The purchase or sale of any valuable asset requires the help of trusted and licensed professionals. You must read the fine print.” Copy of a Consumer Alert titled “Home Lending and Foreclosure Rescue Scams” and information on a variety of other topics affecting consumers are available from the Attorney General’s Consumer Protection Division by calling 1-877-SOLVE-88 (1-877-765-8388) or by accessing the Attorney General’s Web site, http://www.michigan.gov/ag.
Consumers interested in receiving electronic mail notification of Attorney General Consumer Alerts can sign up on the Attorney General’s Web site by accessing the “Join the AG Mailing List” icon. Consumers may also elect to receive electronic notices of press releases and formal opinions.
Three more defendants added to equity skimming indictment
Thursday, July 20, 2006 at 09:36PM In the following press release the US DOJ in Los Angelese announced that a federal grand jury has returned a new indictment that adds three defendants to a case stemming from a $12 million foreclosure scam in which homeowners who were in default on their mortgages were promised refinancing, but ended up having their homes sold to others after the equity had been skimmed.
The superseding indictment, which was returned late Wednesday, alleges a scheme orchestrated by Martha Rodriguez and Edward Seung Ok, who operated real estate company Silvernet Properties in Downey and escrow agency Bellasi Escrow in Seal Beach. Rodriguez, a 35-year-old Downey resident, and Ok, a 40-year-old Torrance resident, were arrested last November when the grand jury issued its first indictment.
The indictment returned today adds three defendants, as well as additional fraud counts and new identity theft charges. The new defendants are Cynthia Valenzuela, 23, of Downey, who is Martha Rodriguez’s cousin; Vladimir Stefanovic, 35, of Lancaster, who is Martha Rodriguez’s boyfriend; and Maria G. Juarez, 36, of Reseda.
The indictment outlines a foreclosure scheme that targeted commercial lenders and homeowners in such areas as Artesia, Lakewood, Gardena, Wilmington, Carson, West Covina, La Puente, El Monte, Westminster, Downey, Van Nuys and San Bernardino. The scheme victimized more than 100 homeowners and allegedly caused losses of at least $12 million.
By combing databases that list pending foreclosure sales, the defendants located homeowners whose loans were in default. The victim homeowners were told that they could stop the foreclosure of their homes with short-term loans and by refinancing the mortgage with a co-signer who had good credit. However, instead of obtaining refinancing, the defendants submitted loan applications in the names of “straw buyers” who were purportedly buying the property. In some cases, the straw buyers were paid for the use of their personal information; in other cases, the defendants used personal information of people without their knowledge. The loan applications for the straw buyers – which always contained false information about the straw buyers – caused a series of lenders to fund mortgages. The loan proceeds were used to pay off the loan in default, and the remaining proceeds were skimmed off by the defendants.
Even though they were promised that they would keep their homes, the victim homeowners lost title to their homes, and the lenders suffered losses when the straw buyers failed to make loan payments and the second loan went into default.
Rodriguez has been held without bond since her arrest last year. Ok is free on a $1 million bond. Valenzuela, Stefanovic and Juarez have agreed to self-surrender this morning at United States District Court in Los Angeles. They are expected to make their first court appearances this afternoon.
The indictment alleges 19 counts of mail fraud, each of which carries a maximum possible penalty of 20 years in federal prison, and seven counts of aggravated identity theft, each of which carries a mandated penalty of two years in prison. Only Rodriguez and Valenzuela are charged in all of the counts.
Rodriguez allegedly ran the foreclosure scam while awaiting sentencing after pleading guilty to defrauding the Department of Housing and Urban Development in another loan fraud scheme. If the jury determines that she committed the foreclosure fraud offenses while free on bond, she could receive another 10 years in prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt. This case is the result of an investigation by the Federal Bureau of Investigation.
The Editor - Ian Shuter
On February 23, 2007 Martha Rodriguez, 35, pled guilty in United States District Court in Los Angeles to one count of mail fraud and one count of money laundering in relation to the scheme that ran from May 2003 until November 2005.
Rodriguez is scheduled to be sentenced by United States District Judge George H. King on August 20, 2007.
Click here for the US DOJ Press Release.The Editor - Ian Shuter
On February 16, 2007 Cynthia Valenzuela, a 24-year-old Downey resident pled guilty to mail fraud charges. Valenzuela is scheduled to be sentenced by United States District Judge George H. King on August 20.
Two plead guilty in Equity Skimming scheme
Friday, June 23, 2006 at 09:01PM The Office of the United States Attorney announced the guilty pleas, which the defendants entered before U.S. District Court Judge Mary M. Lisi in U.S. District Court, Providence.
At the plea hearing, Assistant U.S. Attorney Andrew J. Reich said that the government could prove that Giordano, who owned the three nursing homes through partnerships, and Montecalvo, who maintained financial control over the homes for Giordano, caused payments totaling $780,539 to be made to My Place, Inc., which a member of Giordano’s family owned.
My Place, Inc. provided a limited number of services to nursing home employees, none of which were reasonable or necessary to the operation of the nursing homes. It held holiday parties for staff and families, conducted raffles, provided arts and crafts and occasionally gave gifts of nominal value to employees along with their pay checks. Nursing home administrators and others sometimes complained to Montecalvo and Giordano about the uselessness of payments to My Place but the defendants insisted that the payments be made.
While those payments were being made, the nursing homes, Mount Saint Francis Health Center, Coventry Health Continuum, and Hillside Health Center, were either in default of mortgages insured by the Department of Housing and Urban Development, or were operating without enough cash to satisfy all of their financial obligations. It is illegal to make unnecessary or unreasonable payments when in default of HUD-backed mortgages or when operating in a “non surplus cash” position.
“Diverting funds in this manner seriously undermines HUD’s efforts to provide adequate nursing home facilities to those who are seriously in need.” said HUD Inspector General Kenneth M. Donohue. “HUD’s Office of Investigations is pleased to join the U.S. Attorney’s Office in undertaking this investigation and prosecution for the benefit of the citizens of Rhode Island, and of HUD-funded nursing homes.”
In plea agreements with the government, Giordano and Montecalvo acknowledged that the charges to which they pled guilty resolve only the criminal aspects of the investigation and do not restrict “the United States of America, acting by and on behalf of HUD, from pursuing any administrative actions” against the defendants and any of the entities connected to the nursing homes.
The maximum penalty for equity skimming is five years imprisonment and a $500,000 fine. The defendants are free on unsecured bond pending sentencing, which is scheduled for September 15.
The HUD Office of Inspector General (OIG) and HUD auditors conducted the investigation, with assistance from the Federal Bureau of Investigation.
Suspect charged in real estate swindle
Tuesday, September 6, 2005 at 08:17AM The Daily Review in Alameda County (CA) reports that A 25-year-old Newark man has been charged with 13 felony counts of real estate fraud after he allegedly bilked money from his company and tricked six California homeowners out of their deeds. Kaseem Mohammadi was arraigned at the Hayward Hall of Justice on Wednesday and pleaded not guilty to the charges, said Deputy District Attorney William Denny.
Judge Alfred Delucchi ordered that Mohammadi be held at Santa Rita county jail in Dublin in lieu of $155,000 bail, Denny said.
The Alameda County District Attorney’s Office sought charges against Mohammadi and two other men after six homeowners, including one in Hayward and another in Oakland, complained that they lost the titles to their homes because of their dealings with Mohammadi and accomplices, 27-year-old Rahim Hamidi of Walnut Creek, and Manteca resident Elmer Aslami, 31. Hamidi has been charged with four counts, and Aslami with one.
The men, who worked for Newark’s Golden Key Inc., promised to help financially distressed homeowners by increasing their credit scores and lowering their monthly mortgage payments, Denny said. In all, six homeowners — three of whom spoke only Spanish — claim they lost more than $500,000 in home equity during a 13-month period between May 2004 and August 2005. The victims also said their titles had been lost to investors, Denny said.
In addition to victimizing the homeowners, Mohammadi is believed to have stolen about $268,000 from his employer, Denny said.
For more information, call the Real Estate Fraud Unit of the Alameda County District Attorney’s Office at (877) 288-2882.
District Man convicted in foreclosure equity skimming scam
Thursday, September 1, 2005 at 01:56AM Ventura County (CA) District Attorney Gregory D. Totten announced that Anthony Navarro, who in recent years has called himself Anthony Spencer (DOB 04/18/61), was sentenced on August 18, 2005, to serve 15 years in state prison. Navarro/Spencer’s sentencing followed his guilty pleas in April 2005, to 24 felony charges arising from a 2 ½ year financial crime spree involving cumulative theft of approximately $2 million. The charges to which Navarro/Spencer pleaded guilty include multiple counts of grand theft, identity theft, loan fraud, check fraud, forgery, filing false documents, and money laundering. The crimes Navarro/Spencer committed were investigated jointly by the Santa Paula Police Department and the Ventura County District Attorney Bureau of Investigation.
Navarro/Spencer was previously imprisoned from 1998 until 2001, for felony convictions in four cases arising from a similar but smaller scale financial crime spree. While on parole in 2001, Navarro/Spencer started a new scam. He formed “Global Surplus Recovery, Inc.,” or “GSR.” The idea behind GSR was to steal the equity in homes belonging to people facing foreclosure. Navarro/Spencer, through a variety of lies, induced homeowners in foreclosure to hire GSR to obtain for them any surplus funds realized upon sale. In 2002-2003, dozens of people hired GSR. Financial records show that GSR received some $700,000 in surplus funds over a period of less than two years. Only a small percentage of those funds were distributed to clients. Most clients got little or no money.
In a separate scheme in 2003, Navarro/Spencer defrauded Santa Paula resident Melvin “Ozzie” Osborn out of more than $435,000. Navarro/Spencer told Osborn he would help Osborn buy a Christmas tree farm in Santa Paula. Navarro/Spencer later reported to Osborn that he had brokered the deal, producing a signed contract and other legal documents. Osborn gave Navarro/Spencer more than $435,000. In fact, Navarro/Spencer never even approached the farm owners. The entire transaction was fictitious. Navarro/Spencer used the Osborn funds to make lavish purchases.
Navarro/Spencer also committed a series of loan frauds, identity thefts, and check frauds involving a cumulative taking of more than $1 million. These frauds culminated in Navarro/Spencer’s purchase of an Oak View home for $960,000 in February 2004, in which he used the identity and credit profile of an identity theft victim named “Spencer.”
Navarro/Spencer has been in custody in Ventura County jail since his arrest in June 2004, with bail set at $1 million. He will now be transferred to state prison to serve his sentence.
Man sentenced in equity skimming HUD fraud
Wednesday, August 17, 2005 at 11:39AM On August 17, 2005 Baldyga was sentenced to 12months and 1 day imprisonment, with the sentence to begin on September 16, 2005.
Click here for a copy of the indictment.
Home Equity Scams on the Rise
Tuesday, June 7, 2005 at 09:59AM National Public Radio - June 3, 2005
With the housing market remaining strong across much of the country, some homeowners are being cheated out of their homes. It’s called equity stripping, and those who have the hardest time making their mortgage payments are often the most at risk.
Click here to go to the website of National Public Radio and listen to the audio article.
Thieves Use Paperwork to Steal Homes
Monday, May 23, 2005 at 07:10AM CBS News – May 20, 2005
Randall Pinkston reports for CBS News that when Jon Thomas returned to Cleveland to bury his mother, he thought that was the worst of it. Then he drove by her house and discovered a stranger was living there. "When you find people in your house, you expect to call police, come down, take the people out, arrest them and be happy," Thomas said. What happened? "Couldn’t do any of that."
Because, according to official records, he didn’t own the house. It had been stolen -soon after his parents moved into this nursing home. And getting it back wouldn’t be easy. We flew Thomas here from his home in New York to recount his ordeal.What? That’s the one word everyone says: "What? What do you mean stolen? You can’t steal a house!"
Even his lawyer was skeptical. "Frankly, I said to myself maybe this guy doesn’t understand how real estate works. That can’t quite be," said attorney Dean Boland. But they soon discovered not only how the house was snatched, but how easy it was to do. According to Boland, "The key documents were a fake ID card, a power of attorney and a quit claim deed … literally three pieces of paper."
That’s the beauty of this fraud. Scam artists look for empty homes, then obtain a blank deed from any office supply store. They fill it out, forge the signature, have it notarized, and file it. At that point, the house is considered officially sold. That’s what happened to Jon Thomas. A woman claiming to be his sister - he’s an only child - had a fake power of attorney notarized. She then filed papers transfering the house to a new owner.
That’s what authorities believe Richard Lenard did with the Thomas home. Legal records show that Lenard’s company purchased the house for only $25,000. He eventually took out a mortgage for over $200,000 and it was all done without the Thomas’ knowledge. The FBI calls it equity skimming, and says it’s a national problem of growing concern. In Philadelphia alone, 36 stolen houses led to the convictions of 11 people.
"It’s happening right this minute as you and I are speaking," said Philadelphia District Attorney Lynne Abraham. She’s already investigating a new case involving another 40 houses.
It took Jon Thomas more than two years to regain his house, and during that time the house was badly damaged. Adding insult to injury, the fraudulent owner actually advertised and held two estate sales, exchanging a family’s memories for money. Thomas says if they didn’t steal it, they sold it or they destroyed it. Lenard has been indicted on 38 counts and awaits trial in criminal court.
The Editor - Ian Shuter
The Cleveland Plain Dealer reports that Lenard was sentenced to 5 years imprisonment during a hearing at Cuyahoga County Common Pleas Court. Judge John Russo ordered that $60,000 police seized from Lenard be returned to one of the victims in this case, Jon Thomas.