Monday, February 20, 2012

Sacramento Feds Close Books On Mortgage Fraud Scam That Screwed Unwitting Investors, Lenders In Scheme Purporting To Assist Credit-Impaired Homebuyers

From the Office of the U.S. Attorney (Sacramento, California):

  • United States Attorney Benjamin B. Wagner announced [] that Gabriel Viramontes, 49, of Elk Grove, was sentenced [...] to four years and nine months in prison and ordered to pay restitution to his victims for a mortgage fraud scheme.

  • On March 31, 2011, a federal jury found Viramontes guilty of six counts of bank fraud and seven counts of mail fraud. Three co-defendants pleaded guilty to related charges before the trial.

  • According to testimony presented at trial, Viramontes and his co-defendants engaged in a Sacramento-area mortgage fraud scheme that involved at least 19 homes with loans of more than $8 million. From July 2006 through October 2006, they used VFM Investment Group, Esnian Mortgage Realty, and Freedom Capital Mortgage to engage in a mortgage fraud scheme.

  • They solicited people to purchase with no money down single-family homes on behalf of others with bad credit who wished to purchase homes. Those solicited were told they would benefit financially from the transactions.

  • The defendants then defrauded lenders such as Washington Mutual Bank, Long Beach Mortgage, and Fremont Investment and Loan by submitting fraudulent loan applications that inflated the buyers’ income, falsely stated that a buyer was employed at a specific job, and falsely stated that the properties would be owner-occupied.

  • The purpose of the scheme was to ensure that the home-purchase transactions closed, so that the defendants would receive substantial loan broker commissions and illegal kickbacks from real estate sales commissions.

  • Co-defendants James Roy Martin, 34, and Mario Fellini III, 42, who pleaded guilty and testified against Viramontes at trial(1) were also sentenced []. Martin was sentenced to 20.5 months in federal prison and Fellini was sentenced to six months prison and five months home detention. The fourth defendant, Joseph Salvatore Gallo, 38, was sentenced last month to five years probation. All are from the Sacramento area.

For the U.S. Attorney press release, see Elk Grove Man Sentenced In Mortgage Fraud Scheme.

See also, The Sacramento Bee: Elk Grove man sentenced in mortgage fraud.

Thanks to Tim McDaniel for the heads-up on the story.

(1) Another example of squealing defendants abandoning the conspiracy, not unlike rats jumping off a sinking ship, to win the race to the prosecutor's office and take a fellow co-defendant down by 'throwing him under the bus' to score a better break on a plea deal.

  • "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon phenomenon some refer to as the 'race to the courthouse' (or 'race to the prosecutor's office') that breaks out among participants in an 'about-to-collapse' criminal conspiracy).

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