Tuesday, February 16, 2010

Hawaii Feds Win Conviction Of Man Who Used Straw Buyers In Sale Leaseback Foreclosure Rescue Ripoffs; Pocketed $430K+ In Two Equity Stripping Scams

In Honolulu, Hawaii, the Star Bulletin reports:

  • A Nevada businessman was convicted Wednesday of 22 felony counts, for swindling banks and two struggling homeowners on Oahu out of their homes and loan proceeds. A federal jury convicted John Gilbert Mendoza, 58, on one count of conspiracy, 10 counts of mail and wire fraud, two counts of loan fraud, six counts of money laundering and three counts of failure to file a tax return,(1) the U.S. Attorney's Office announced [last] week. Five others have pleaded guilty in connection with the scheme and are awaiting sentencing.

  • U.S. Attorney Florence Nakakuni said the evidence showed Mendoza, president of a Nevada corporation with bank accounts in Hawaii, had befriended Hawaii homeowners facing foreclosure. He told them he had a plan to stop foreclosure proceedings that would allow them to keep their homes.

  • But instead, Mendoza organized the sale of the homes to third-party straw buyers, who took out loans in their names and used falsified information concerning income, who was going to live in the home and who would make monthly payments. After obtaining the loans, Mendoza deposited the proceeds totaling more than $431,000 into his own accounts.
    When the loans were defaulted on, the properties were foreclosed on and sold.

For the story, see Swindler is convicted of 22 felony counts.

For an earlier post announcing the indictments in this case, see Hawaii Feds Indict Five In Alleged Straw Buyer Foreclosure Rescue Scam.

(1) The conviction on the Federal tax charges should serve as a reminder that, if you can't bag the perpetrators of these scams with proof beyond a reasonable doubt on the substantive criminal charges, you can generally count on them to fail to file their tax returns and pay the income tax on the illegal profits thereon. Accordingly, you can nail them for that, the same way the Feds put alleged gangster Al Capone out of commission.

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