Wednesday, May 16, 2012

Three Get Multi-Year Sentences In Hawai'ian Sale Leaseback Equity Stripping Foreclosure Rescue Racket

In Honolulu, Hawai'i, KHON-TV Channel 2 reports:

  • Three former Honolulu mortgage brokers have been sentenced to federal prison terms as a result of their participation in a mortgage fraud and money laundering scheme. The individuals and the sentences imposed were as follows:

    Welton Kalani, 49, was sentenced [] to a term of imprisonment of 70 months and ordered to pay total restitution of approximately $714,216.

    Stephen Balino, 51, was sentenced on April 30, 2012 to a term of imprisonment of 27 months.

    Bobby Wood, 51, was sentenced on February 2, 2012 to time served, which amounted to 32 months in jail, and ordered to pay restitution of approximately $740,000.

  • U.S. Attorney Florence Nakakuni said that, according to information produced in court, Kalani and Balino owned mortgage brokerage companies [Accel Mortgage, LLC, and New Horizons Financial, respectively] offering loans to the public. [...] According to evidence produced at trial, both individuals conspired with others to engage in fraudulent real estate transactions designed to pull equity out of properties about to go into foreclosure.

  • Kalani, Balino and others identified homeowners facing financial difficulties, and offered them the chance to stay in their homes, rent free, by transferring title to others temporarily. Kalani and Balino promised the homeowners that a "buyer" would purchase the property, and make mortgage payments until the homeowners were able to buy the property back.

  • Kalani and Balino then recruited persons to serve as "straw buyers" by promising them money to induce them to make false loan applications to fund the sham purchases. [...] Following each sale, the brokers were paid fees and commissions for procuring the loans.

  • The equity in the property was also diverted away from the seller, and channeled through third parties to Kalani, Balino or others working with them. In the sale of one property, Balino directed the deposit of $98,000 into the account of a third party, and then instructed the individual to divert $92,000 to Kalani. In a second sale, $78,000 was diverted to a company coowned by Wood. In the third sale, $51,000 was diverted into [his corporate] account.

  • After learning of the criminal investigation, Kalani contacted two witnesses, telling them to destroy documents and to lie to investigators. These acts formed the basis of two obstruction of justice convictions.

  • According to Nakakuni, eight other individuals pled guilty to charges arising out of the same transactions, and testified for the government during the trial.(1) Five of those individuals worked with Kalani at Accel Mortgage, which is no longer in business.(2)

(1) Another example of squealing schemers abandoning a 'sinking conspiratorial ship', winning the race to the prosecutor's office and seeking to take down fellow co-conspirators by 'throwing them under the bus' to score a better break on a plea deal. Vrooooom!!! As noted by one learned Federal judge in referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy:

  • "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).

(2) For more on this type of foreclosure rescue ripoff, see:

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