homesmillbrae.com » Mortgage Fraud

Feds crack down on foreclosure auction scams

Tue, 04 Jun 2013 18:42:24 +0000

SAN FRANCISCO — At the height of the financial crisis, bargain hunters would gather each week on county courthouse steps to bid on foreclosed properties throughout Northern and Central California. The inventory lists were long, especially in hard-hit areas such as Sacramento and Stockton. But the auctions were generally short affairs — often because real estate speculators were illegally fixing the bidding process.

In the past three years, federal prosecutors have charged 54 people and two companies in three states for bid-rigging during courthouse auctions of foreclosed properties. Most cases originated in California, the state with the highest foreclosure rate during the financial crisis. Nearly identical rings were also broken up in Raleigh, N.C., and Mobile, Ala.

Working in concert, the would-be buyers would appoint just one person to bid on each property on the auction block, thus securing the “winning” bid. Minutes after the official proceeding was over, they would then conduct an auction among themselves, often on the same courthouse steps.

That’s when a property’s true price would emerge. The conspirators would then divvy up the difference paid at the official auction and the private one.

Federal prosecutors say such schemes have operated for decades, once earning a few thousand dollars per property. But the explosion of foreclosures amid the country’s financial meltdown a few years ago upped illicit gains to millions of

dollars. The scammers took money that otherwise would have gone to banks selling the foreclosed properties or beleaguered homeowners who should have been compensated.

The bidding investigations are being driven by a special task force established at the U.S. Justice Department in the wake of the financial crisis to combat mortgage fraud. The probes aim to “stop those who engage in illegal conduct that thwarts the competitive process, and take advantage of American consumers when they are most vulnerable,” said Assistant Attorney General Bill Baer, head of DOJ’s antitrust division in Washington, D.C.

Prosecutors say the circle of conspirators gradually widened at each courthouse: First-time buyers would be brought into the conspiracy as an increasing number of speculators attended the auctions. Those not in on the schemes were often pressured not to return by verbal harassment and, in some cases, physical jostling.

In the last two years, more than 30 people have pleaded guilty to participating in a series of courthouse bid-rigging conspiracies in Northern California counties. Another 11 have been busted in Central California. Similar prosecutions have been carried out in Alabama, where eight people have pleaded guilty in Mobile in the last two years. Five others have pleaded guilty in North Carolina since 2010 to operating a bidding conspiracy around Raleigh.

For many now going to prison, this is their first brush with the law.

Father and son Robert and Jason Brannon were each sentenced to 20 months in prison this month in Mobile, Ala., after pleading guilty to participating in 17 rigged bids. The two opened a real estate investment company in 2003, after Robert Brannon sold a portion of the family farm. When they began attending auctions to acquire rental properties, they discovered that some speculators were rigging the bids and joined in the conspiracy, according to court documents.

In addition to the jail time, the Brannons were ordered to pay restitution of almost $22,000 each, their cut from the rigged auctions.

In April, real estate investor Mohammed Rezaian pleaded guilty to participating in similar scams in Northern California. He has agreed to cooperate in the prosecution of other perpetrators and pay a fine of $213,000. He also faces a little less than two years in prison when sentenced sometime next year. Neither he nor his lawyers returned phone calls.

Federal officials say they expect to charge a few more people in the coming months but that cases are expected to soon drop off now that the heated foreclosure market of late 2008 and 2009 has cooled.

Madeline Schnapp, an economist with PropertyRadar, a company that tracks foreclosures, said sales at auctions have fallen from a height of about 30,000 a month to about 5,000 a month in California as government programs and new laws have made it more difficult for banks to begin foreclosure proceedings.

“There’s not much of a supply now,” she said.

Paul Pfingst, a lawyer who represents another investor charged in participating in a Central California ring, says illegal temptation got the better of many speculators who couldn’t resist victimizing seemingly unsympathetic banks. His client, Andrew Katakis, is accused of participating along with four others in a $2.5 million conspiracy to rig bids in the Stockton area, which has led the nation in foreclosures.

“The amount of money and properties that were changing hands was staggering,” said Pfingst, who maintains his client’s innocence. “It caused many people to cross from legality to illegality.”

AP-WF-06-01-13 1941GMT

Article source: http://www.insidebayarea.com/california/ci_23379517/feds-crack-down-foreclosure-auction-scams

4 sentenced in $20M mortgage fraud scheme

Sun, 13 May 2012 09:02:41 +0000

DISCOVERY BAY, Calif.—Four people have been sentenced in a $20 million mortgage scheme that involved properties in Northern California.

Seventy-six-year-old Ronald Nelson and his wife, 53-year-old Edith Nelson, both of Discovery Bay, each received more than 30 months in federal prison on Thursday. The couple pleaded guilty to bank fraud and tax evasion earlier this year.

Two San Francisco Bay area real estate agents, 49-year-old Cristeta Lagarejos and 68-year-old Nelda Asuncion, also pleaded guilty in the case. Lagarejos received an 18-month sentence. Asuncion was sentenced to 30 months in prison.

Prosecutors say the defendants obtained loans for more than 20 properties—many of them senior care facilities—using fake buyers and false employment and earnings information between 2002 and 2007.

The Nelsons were barred from operating senior homes. But prosecutors say they used the straw buyers to skirt that restriction.

Article source: http://www.mercurynews.com/breaking-news/ci_20609868/4-sentenced-20m-mortgage-fraud-scheme

SF Real Estate Agent, Brokered Radio Show Host Sentenced In Mortgage Fraud Case

Mon, 09 Apr 2012 11:58:33 +0000

Edwin Parada

A SAN FRANCISCO real estate agent, pastor, and brokered Spanish-language radio host has been sentenced to 15 years in prison after pleading guilty to mortgage fraud charges, reports BAY CITY NEWS.

EDWIN PARADA was sentenced FRIDAY to prison in the scheme, which involved contacting victims through the radio show and through his real estate work, offering to help them with refinancing or buying and selling their homes, and taking money from the victims while in some cases taking title to their homes or refinancing the properties and taking equity for himself.

He allegedly laundered the money through family members and a business.

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Article source: http://www.allaccess.com/net-news/archive/story/104596/s-f-real-estate-agent-brokered-radio-show-host-sen

4 plead guilty in NorCal mortgage fraud scheme

Sun, 12 Feb 2012 07:25:05 +0000

DISCOVERY BAY, Calif. — Four people have pleaded guilty to charges in a $20 million mortgage scheme that involved more than a dozen Northern California properties.

Seventy-six-year-old Ronald Nelson and his wife, 53-year-old Edith Nelson, both of Discovery Bay, entered the pleas to federal charges of bank fraud and tax evasion last week.

Two San Francisco Bay area real estate agents, 49-year-old Cristeta Lagarejos and 68-year-old Nelda Asuncion, also pleaded guilty in the case.

Prosecutors say the defendants obtained loans for at least 20 properties – many of them care facilities – using fake buyers and false employment and earnings information between 2002 and 2007.

The Nelsons were barred from operating care facilities. But prosecutors said they used the straw buyers to skirt that restriction.

All four defendants are set to be sentenced on May 11.

Article source: http://www.sacbee.com/2012/02/08/4248689/4-plead-guilty-in-norcal-mortgage.html

Hells Angels accused of mortgage fraud

Wed, 28 Sep 2011 01:20:34 +0000

(09-27) 17:48 PDT SAN FRANCISCO — A Bay Area mortgage broker has been charged with conspiring to arrange more than $10 million in fraudulent home loans for clients who included two leaders of the Hells Angels, federal prosecutors said Tuesday.

A newly unsealed federal grand jury indictment accuses the motorcycle club leaders, mortgage broker and five other defendants of taking part in a scheme to defraud banks by falsifying loan applications for real estate in San Francisco and several North Bay communities in 2006 and 2007.

The applications misrepresented the borrowers’ incomes, bank balances and employment histories and falsely stated that they would live at the properties, some of which were later used for marijuana growing, the indictment said.

Seven defendants have pleaded not guilty. The eighth, Jerry Mays, 63, of San Pablo, an accountant and tax preparer, has not been apprehended, prosecutors said.

Among those charged was Jacob Moynihan, 30, of San Francisco, who owned a company called Xanadu Global Investments and also worked at several San Francisco mortgage brokerage firms, prosecutors said.

The indictment said Moynihan and his clients submitted fraudulent applications for loans, some for more than $1 million, to buy property in Santa Rosa, Petaluma and Healdsburg. The clients included two local Hells Angels leaders, Raymond Foakes, 48, of Rohnert Park and Josh Leo Johnson, 35, of Santa Rosa, prosecutors said.

Foakes is a former president of the Sonoma County Hells Angels and recently served a prison sentence for a 2002 brawl with a rival motorcycle gang at a casino in southern Nevada in which three people died. Prosecutors are seeking to keep him in jail until a trial on the mortgage charges.

His lawyer, Anthony Brass, said Foakes actually made mortgage payments on the Petaluma home that is the subject of the charges against him. Brass said he didn’t know whether Foakes’ loan application was accurate, but said overstating one’s income when seeking a home loan “was common practice at that time.”

The other defendants are Moynihan’s father, Gerald Moynihan, 51, of Santa Rosa; Desiree Maclean, 25, of Rohnert Park; John Greco, 38, of Rohnert Park; and Justin Batemon, 34, of Hayward.

E-mail Bob Egelko at begelko@sfchronicle.com.

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/09/27/BAL61LAD15.DTL&tsp=1

Tikal files for bankruptcy while on trial for fraud

Sun, 26 Jun 2011 07:33:31 +0000

ALAMEDA COUNTY, Calif. (KGO) —
Options are running out for homeowners in the Bay Area and across the country who feel victimized by a mortgage rescue scheme.

Alan David Tikal, a man on trial in the 29-count criminal indictment in Alameda County for real estate fraud, mortgage security fraud, and filing false documents. Tikal appeared in an Alameda County court room Thursday, but it’s what’s he did outside the court that has many people talking.

Tikal is being held at Santa Rita Jail in Dublin on $780,000 bail. He filed for Chapter 11 bankruptcy earlier this week for the business he runs, KATN Trust.