Criminal Prosecutions Of Foreclosure Rescue Operators, Refinancing & Other Deed & Equity Scams II
- Hundreds of homeowners lost the deeds to their houses and small fortunes in a scam that masqueraded as a strategy to help them avoid foreclosure, authorities said [...].
- All [five suspects] face multiple counts of conspiracy, grand theft and deceitful practices as foreclosure consultants, authorities said.
For the longer version of this blog entry, including links to media reports and some court documents, see California Authorities Bag Five Suspects In Alleged Foreclosure Rescue Scam That Bilked 100s Of SoCal Homeowners; Both Criminal, Civil Charges Brought.
Re: Forgery conviction of scam operator in foreclosure rescue scam where the homeowner's signature in question is authentic & genuine
In addressing the forgery conviction of the operator ("Defendant"), notwithstanding the fact that he didn't actually sign the homeowner's ("Michiel") name on the instruments and that the homeowner's signatures appeared genuine, the court made these comments:
- Defendant contends that there was insufficient evidence to support his conviction for forging Michiel’s signature, because there was no evidence that her signature was not genuine and no evidence that he used any affirmative misrepresentations concerning the nature of the trust deed to procure her genuine signature. We disagree; there was evidence that defendant did make affirmative misrepresentations concerning the nature of the trust deed. In any event, he could be convicted of forgery even in the absence of any such affirmative misrepresentations.
- Defendant contends that there was insufficient evidence to support his conviction for forgery of Michiel’s signature because there was no evidence that he affirmatively misrepresented the nature of the trust deed to Michiel. There was no evidence that Michiel’s signature on the La Villa trust deed was not genuine. Michiel admitted that it looked like hers. She also admitted that defendant had had her sign a number of documents. Nevertheless, a forgery conviction can be based on a document with a genuine signature. “[F]orgery is committed when a defendant, by fraud or trickery, causes another to execute a . . . document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature.” (People v. Parker (1967) 255 Cal.App.2d 664, 672.)
Case available online courtesy of FindLaw.com.
Editor's Note:
In this case, included in the foreclosure rescue operator's convictions in the trial court were a count of forgery relating to the trickery in obtaining the homeowner's signature on an instrument, and another count of forgery for forging the notary public's signature on the same instrument.
Because these two forgery convictions related to the same instrument, the court, on its own motion, in effect ruled that you are limited to one forgery conviction per forged instrument. Consequently, it found itself compelled to vacate one of the two convictions that arose out of the one instrument and therefore proceeded to vacate the conviction (not on substantive grounds and presumably arbitrarily) relating to the homeowner's signature and let stand the forgery of the notary public's signature.
In Washington State, The Bellingham Herald reports that criminal charges have been dropped against a Bellingham couple who were charged with felonies in April 2007 in connection with what state investigators called a “foreclosure rescue scheme.” In a criminal filing, the Washington Attorney General’s Office had accused Peter and Julia Torkild of:
- theft,
- forgery,
- money-laundering, and
- use of proceeds of criminal profiteering.
The Torkilds have maintained they are innocent. According to the story:
- Skagit County Superior Court Judge David Needy ruled that the Washington Department of Financial Institutions had exceeded its legal authority in using its civil regulatory powers to collect evidence in the case. Needy then threw out that evidence. Assistant Attorney General Scott Marlow, who acted as prosecutor, said Needy’s ruling eliminated the evidence that formed the basis of the criminal case. “With the suppression of that evidence, we were unable to proceed with the criminal charges,” Marlow said.
***
- The Torkilds entered not-guilty pleas in the criminal case, and have also denied wrongdoing in a civil lawsuit related to the same matter. In the civil case, the court has rejected plaintiffs Darcee and John Johnston’s efforts to get back the title to the home, but the Johnstons still seek civil damages in their pending lawsuit.
***
- David Allen, the Seattle attorney who represented Peter Torkild in the criminal case, said state investigators erred in using their regulatory subpoena powers instead of going to a judge to get a search warrant in the case.
For more, see Mortgage charges against Bellingham couple are dropped (Skagit judge says evidence was wrongly obtained).
- A Cincinnati police officer was arraigned in federal court [...] to answer to charges he swindled homeowners facing foreclosure. Adrian Mitchell, 35, faces 12 counts, including wire fraud, mail fraud and bank fraud. He is accused of operating a real estate business, R.I.C.H. Properties and/or R.I.C.H. Investments, which allegedly offered to help people in financial distress. Authorities say he [also] used a scheme to defraud the widow of a client out of $188,327.38 in benefits of a life insurance policy.
The foreclosure rescue deals were structured as sale leasbacks of the homes of financially strapped homeowners with the view that the homeowners would buy the homes back in the future.
Source: WKRC-TV Channel 12: Cincinnati Officer Pleads Not Guilty.
Regarding the charges related to the alleged fraudulently obtained mortgages in the foreclosure rescue deals, Mitchell was indicted for (see Indictment - Counts 5-12):
- bank fraud, and
- mail fraud (multiple counts).
To view the federal grand jury charges, see Indictment - U.S. v. Mitchell.
For other media reports:
- The Cincinnati Enquirer: Accused cop pleads not guilty (Suicide victim's insurance part of alleged take),
- WLWT-TV Channel 5: Police Officer Indicted On Federal Fraud Charges.
- Ten San Bernardino County residents face criminal charges of participating in a predatory lending scheme based in Rancho Cucamonga that generated more than $2 million in fraudulent mortgages. A lawsuit filed this week in San Bernardino County Superior Court alleges that the scam was headed by Andrew Whitaker, 52, of Alta Loma, who had a prior real estate-related felony conviction for which he served prison time.
- Targets of the scheme described by Deputy District Attorney Larry Roberts were homeowners desperately trying to save their homes from foreclosure who thought they were obtaining refinancing but wound up selling their houses to straw buyers. In the process the remaining equity in their houses allegedly was stolen through inflated commissions, escrow charges and other fees.
Those charged are Andrew Webb Whitaker, Karren Marian Whitaker, Katrina Michelle Whitaker, Heather Nicole Whitaker, Mojgan Cox, Jesse Sinclair Cox, Juleanne Le Brooks, Phillip Parker, Jason Vince Harvey, and Andre Thomas Silva.
The defendants have been variously charged with the following (in some cases, multiple) offenses:
- Conspiracy,
- Forgery of a Deed,
- Filing a False Document,
- Loan Fraud,
- Money Laundering,
- Forgery of a Check.
For more, see:
- 10 San Bernardino County residents accused of predatory mortgage fraud,
- San Bernardino County District Attorney Press Release:
DA Arrests Predatory Lenders Operating Throughout Southern California.
(Case #42 is a longer version of Case #24, appearing in Criminal Prosecutions Of Foreclosure Rescue Operators I.
In a December press release, Gregory A. White, United States Attorney for the Northern District of Ohio, announced that a federal Grand Jury in Cleveland returned a nine-count indictment charging three individuals and one property management company with various offenses involving fraud against the United States Department of Housing and Urban Development (HUD).
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Among the charges was a charge of equity skimming, in which, according to the press release:
- The indictment [...] alleges that the defendants defrauded HUD by failing to make timely payments on the HUD-insured mortgages for [two housing projects], resulting in additional multi-million dollar losses to HUD. Moreover, the defendants used project funds to pay personal expenses and other unauthorized expenditures in violation of regulatory agreements between the projects and HUD. The total loss to HUD was more than $5 million.Charged in the indictment were Martin L. Shulman, 54, his wife, Gail R. Shulman, 53, Keyetta L. Williams, 35, and S.B.G. Management, Inc., the management company that the Shulmans operated.
While the facts in this case did not occur in the context of a foreclosure rescue situation, the Federal equity skimming statute can also apply in foreclosure rescue situations in which a foreclosure rescue operator goes around aquiring low or no-equity homes from financially strapped homeowners in exchange for a promise to make the payments on the existing mortgage, only to lease out the home, pocket the rent without applying it to the house payments, and allowing the mortgage to go into foreclosure. The foregoing is illustrated in the three Federal appeals court decisions listed below.
For more, see the U.S. Attorney News Release.
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For those looking for some Federal case law applying the federal equity skimming statute in cases where Federal authorities have prosecuted landlords / property owners who collected rent from houses and stiffed FHA-insured or VA-guaranteed mortgage lenders, see:
- U.S. v. Weaver (9th Cir. 2002),
- U.S. v. Travers (11th Cir. 2000),
- U.S. v. Beckley (11th Cir. 1996).
For a California state appellate court case convicting a property owner for pocketing rent while stiffing mortgage lenders and allowing houses to go into foreclosure, in violation of the state's rent skimming statute, Section 890 through Section 894 of the California Civil Code, see People v. Lapcheske (Cal. App. Ct. 1999) (may require free registration).
Go here for Sample Indictment -- Equity Skimming, 18 U.S.C. § 157 (Source: U.S. Attorney Criminal Resource Manual - Title 9 - #882).
.- [The homeowner] says they [the foreclosure rescue operators] told her they would buy the house and let her live in it for a year rent free until she could rebuild her credit and buy it back. She says she signed off on their paperwork, but instead of honoring their agreement with Fowler, she says they sold the house to another party and Fowler was forced out. After the property was sold, Fowler says the mortgage company kept all the equity out of the home.
- As part of the FBI investigation into the scheme, a Virginia woman, Anna Essex Thorne, pleaded guilty to conspiracy to commit wire fraud in connection with the mortgage documents she executed to buy the home. [... The homeowner] hopes to someday see the restitution money the defendant in the case is supposed to pay her as part of the plea agreement.
For more, see 'Mortgage Rescue' Scams Hit Close to Home (Authorities Report a Spike in Scams Targeting Homeowners Facing Foreclosure). (read story) (watch video).
For additional background on the federal prosecution of Anna Essex Thorne for conspiracy to commit wire fraud in connection with a foreclosure rescue scam, see:
- Criminal Information - U.S. v. Thorne (sets forth the charges against Thorne),
- Plea Agreement - U.S v. Thorne,
- Summary of the [Admitted] Facts.
For the indictments, see:
- KNXV-TV Channel 15: Mesa elementary school teacher indicted for federal fraud,
- KCRA-TV Channel 3: 19 Accused Of Mortgage Scheme (Struggling Homeowners Victimized, Officials Say),
- U.S. Attorney's press release: Indictments Announced In Major Mortgage Fraud Scheme,
- The Sacramento Bee: FBI ties 19 to equity scam (Indictments allege massive mortgage fraud targeting homeowners near foreclosure),
- Press Enterprise: Calif. prosecutors indict 19 in mortgage fraud scheme,
- Los Angeles Times: Houses stolen in mortgage fraud, indictments allege.
Go here for earlier posts as well as available updates on the Head nationwide foreclosure rescue operation.
- grand theft,
- obtaining property under false pretenses,
- forgery, and
- making false financial statements.
There are 29 counts against Machado and 12 against Faustino. Machado also has a single count of embezzlement from an elder adult, her husband's mother, Mary Machado of Newman.
An excerpt from the story:
- According to an affidavit filed with the criminal complaint, Diolinda Machado started taking out loans in January 2003 using her mother-in-law's home as collateral. The loans were in Mary Machado's name. The home had been paid off since 1996, according to the affidavit, filed by Glenn Gulley, a criminal investigator with the district attorney's office.
- Diolinda Machado refinanced the January 2003 loan in May 2004, March 2005 and February 2006, and then got a reverse mortgage for the home in April 2007. Every refinancing, according to the affidavit, involved a different lender and title company. Mary Machado told Gulley that she approved the first loan to help her son Frank -- Diolinda's husband -- start a trucking business. She was unaware of the subsequent refinances, according to the affidavit, even though they had her signature.
For more, see Women charged in loan scheme.
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Case # 38 - Ohio State Court
(added 3-21-08)
In Licking County, Ohio, The Newark Advocate reports that a Newark man has been indicted for 30 felony counts related to his alleged making of criminally false promises to 15 homeowners facing foreclosure. The man, Harry W. Blausey, 66, was charged with:
- 10 counts of grand theft, a fourth-degree felony;
- 14 counts of securing writings by deception, a fourth-degree felony;
- five counts of theft, a fifth-degree felony; and
- one count of engaging in a pattern of corrupt activity, a second-degree felony.
An excerpt from the story:
- Licking County Prosecutor Ken Oswalt declined to discuss the specifics of Blausey’s alleged actions, but did say that the defendant preyed on their foreclosure concerns. “In most, if not all, of these (charges), he accepted from (the alleged victims) a quit claim deed,” he said. “They signed their property over to him based on the representations he was making. ... They would sign there property over to him thinking they would get a significant benefit in terms of avoiding foreclosure .. or walking away from the property.”
***
- In addition to the 30-count indictment, Blausey is involved in 17 civil cases in the Licking County Common Pleas Court. Six of those cases involve plaintiffs named in the indictment.
For more, see:
- Too good to be true (In a pinch, they trusted him; now he faces 30 charges in mortgage deal),
- Man indicted in foreclosure fraud scheme (Former real estate agent also facing civil court complaints),
- More area residents come forward about foreclosure case,
- Recorder raised suspicions 2 years ago (Licking County Recorder Bryan Long said his office was skeptical of documents submitted by Harry Blausey as far back as 2006).
See also, WBNS-TV Channel 10: Real Estate Agent Accused In Foreclosure Scheme.
Editor's Note:
A key point to be highlighted in this case is that, like many of the other cases in this post, there were multiple (presumably unrelated, unconnected) homeowners involving multiple properties that were allegedly screwed over. I think it's reasonable to presume that it's much easier for a prosecutor to present a case to a jury if there are multiple alleged victims prepared to testify essentially the same way in describing the conduct of one operator than if there is only one alleged victim testifying.
.- The Florida Office of Financial Regulation, the Ft. Lauderdale Police Department, and the Office of Statewide Prosecution announce the arrest of two individuals on charges of First Degree-Organized Scheme to Defraud over $1,000,000 from mortgage loan lenders. On Wednesday, March 5, 2008, Curt D. Francis, 37 and Tashina Latouche, 25 were arrested in Ft. Lauderdale, Florida.
- Curt Francis and Tashina Latouche allegedly participated in a scheme to defraud mortgage lenders by providing false mortgage loan applications that included fraudulent employment verification forms, financial statements, and bank records. The applications also included HUD-1 settlement statements that investigators allege falsely stated that the buyers were using their own money to cover the closings. Multiple properties were involved from Broward and Miami-Dade County.
- The scheme allegedly used people’s identity and good credit (ie. straw buyers) to obtain mortgages on properties facing foreclosure (ie. foreclosure rescue). Once the mortgages were approved, the properties were quit claimed back to the original owners .
For the press release, see see Two South Florida Residents Arrested For Mortgage Fraud.
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- Seeking a resolution to their mortgage troubles, [an elderly couple] eagerly paid attention to [Residential Resolve owner Jeff] Wangsgard's proposal. A short time later, Wangsgard then accompanied the couple to a bank and paid $13,000 toward their delinquent mortgage payments. After Wangsgard's grand gesture, the Mittons signed some documents on the spot without really reading over the fine print. What they didn't know was that one of the documents was an "assignment of beneficial interest and land trust" -- which essentially handed over the home and property to Wangsgard. Believing that the documents were merely an application for a new loan arrangement, the [elderly couple was] shocked when, days later, Wangsgard showed up at their home with a locksmith and demanded that they leave. "He said, 'I'm here to evict you,'" June recalled. "'I'll give you some time to pack some clothes, then we are changing the locks.'"
The foreclosure rescue operator recently appeared in Davis County, Utah court and was charged with five felonies stemming from his dealings with the elderly couple and other clients. The charges against Wangsgard include:
- communications fraud, and
- exploitation of a vulnerable adult.
One of the key factors in bringing the charges in this case appears to be that there was more than one homeowner who was allegedly screwed out of their home by the same outfit. In this case, there were three unrelated incidents of homeowners allegedly getting scammed by the foreclosure rescue operator. Another excerpt from the story:
- "Other people came forward," said assistant state attorney general Charlene Barlow. "If you have one occurrence, maybe someone is confused. But when you have two or three different people coming forward... it's a much easier case to present to a jury." The charges against Wangsgard are a direct result from the Mittons' case and two others that are similar in nature.
For the media report in this story, see How A Utah Couple Was Kicked Out Of Their Home By Mortgage "Helper." (read story) (watch video).
For an earlier blog post on this story, see Salt Lake City Foreclosure Rescue Operator Facing Five Felonies In Dubious Sale Leaseback Deals With Financially Strapped Homeowners.
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The defendant, identified as Shih Siang Shawn Liao, 31, of Manhattan, was arraigned on charges of:
- second-degree grand larceny,
- second-degree criminal possession of stolen property,
- second-degree criminal possession of a forged instrument,
- first-degree identity theft,
- first degree falsifying business records, and
- third-degree unlawful possession of personal identification information.
- Olympus Servicing, L.P. v Lee, 2007 NY Slip Op 50833(U), 15 Misc 3d 1124 (April 23, 2007),
and also by a New York intermediate appellate court in
- Ameriquest Mtge. Co. v Gaffney, 839 N.Y.S.2d 203, 41 A.D.3d 750 (App. Div. 2d Dept., 2007).
While over a century old, Marden v. Dorthy appears to still be valid precedent, based on the two recent cases citing it. Thanks to reader Jonathan Schloss for bringing the two 2007 cases to my attention.
For those outside New York State who are having problems with foreclosure rescue operators scamming trusting homeowners by slipping instruments of conveyance into "stacks of papers" and getting the homeowners to unwittingly sign those papers, you might want to check your state's criminal statutes and case law as it relates to forgery, criminal possession of forged instruments, securing writings by deception, and other similar sounding crimes to see if the law of your state is similar to that of New York in that an instrument containing an authentic signature can still be considered a forgery if the signer was somehow tricked into signing it.
- grand theft,
- identity theft, and
- forgery
involving many victims in Santa Clarita. James Anthony Rojas, 51, faced 82 counts, all but three of them felonies.
- second- and third-degree grand larceny and
- second- and third-degree criminal possession of stolen property.
- The Queens Courier: Brothers bilked elderly Cambria Heights man (Sold home out from under him),
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(added 2-26-08)
The three charged are Scott Steven Richardson, Thomas Sarantinos and Anthony Sarantinos. Each has been charged with theft from an at-risk adult. For the media reports on this story, see:
- Rocky Mountain News: Three face charges in mortgage scam,
- The Denver Post: Trio scams at-risk adult, DA says,
- CBS4, Denver: DA: Grandmother Hit By Mortgage Scam (read story) (watch video),
- Refinancing Scam Lands Trio In Jail; Leaves Elderly Woman Facing Foreclosure.
Moments before he was to be tried on fraud charges in connection with an alleged refinancing scam to cheat an elderly couple out of their home, Pennsylvania loan officer Constantine "Dean" Gekas pleaded guilty to:
- theft by unlawful taking, and
- two counts of false swearing
in exchange for a 2-year probation sentence. According to the prosecutor, the plea deal was designed to make the elderly couple's estate financially whole.
Gekas had the wife and husband, who were in their late 70s and early 80s, respectively, unwittingly sign the deed to their home over to him in what they thought was a home refinancing. Only later did the couple, who had to pay $500 a month on the loan, realize Gekas owned their house, according to the prosecutor. Investigators said the husband sent Gekas a $103,000 check to try to pay off the loan in April 2005, but Gekas refused to accept it. The couple stopped making the loan payments, and Gekas filed a landlord-tenant action to evict them.
For the earlier blog post on this story, see Loan Officer Cops Plea In Equity Stripping Of Unwitting Elderly Couple's Home.
For the original media report, see Man takes deal for probation in house theft (no longer available online).
See also, Former banker pleads guilty in fraud case (if link expires, try here).
Buried at the end of a recent mortgage fraud article in The Cleveland Plain Dealer is the story of one foreclosure rescue scam that ripped off approximately $56,000 from a Clevland-area homeowner and resulted in an attempt to evict the homeowner. The foreclosure rescue group, Sammy Quick, 29, of Brook Park and Brian Cicerchi, 29, of Middleburg Heights, partners in First Primary Mortgage Inc., and Lesley Loney, 34, of North Ridgeville were all arrested in the scam. According to the story, Loney pleaded guilty to unauthorized use of property and testified against Quick and Cicerchi. She was sentenced to 12 months probation and fined $1,000.
Quick and Cicerchi were convicted in a jury trial this month. Both were found guilty of:
- theft by deception,
- securing a writing by deception, and
- telecommunications fraud.
Quick was also found guilty of mortgage broker prohibitions and receiving stolen property. They are scheduled for sentencing next month.
Source: Loose lending rules gave criminals chance to flourish.
Case # 29 - Nevada State Court
(added 1-14-08)
He faces multiple felony counts of:
- offering a false document for filing or recording,
- theft of property by false pretenses,
- theft of property by false pretenses from victims over the age of 60, and
- forgery.
For local Las Vegas media reports, see:
- KVBC-TV Channel 3: Accused foreclosure scam artist behind bars (read story) (watch video),
- KLAS-TV Channel 8: Local Businessman Arrested in Massive Mortgage Fraud Case (read story) (watch video).
For blog post on this story, see Las Vegas Man Facing Multiple Felony Counts In Rent Skimming, Rent To Own Scam; Targeted Homeowners Facing Foreclosure & Unwitting Renters.
The Santa Clara district attorney obtained indictments against a Realtor and a broker with a now-defunct real estate brokerage for allegedly getting a financially strapped homeowner behind in his mortgage payments to unwittingly sign away his home in a straw buyer / refinancing scam.
According to a recent media report in the Silicon Valley / San Jose Business Journal:
- [Santa Clara County] Prosecutors have filed three cases, involving eight defendants, related to the subprime real estate scandal. Other cases are being investigated, involving 26 defendants. Four of the defendants have fled and are still at large. But these three cases are just the beginning. Assistant district attorney Stephen Gibbons, who heads up the district attorney's Economic Crimes Unit, says his office has 18 more cases under investigation, involving 23 possible suspects -- and 22 victims.
For the media report, see Santa Clara district attorney targets subprime loan scandal.
(added 1-14-08)
The Burlington County Times recently reported that, according to the Burlington County, NJ Prosecutor's Office:
- A New Jersey man is being accused of contacting individuals whose properties were in foreclosure and offered to help them save their homes through renegotiating, refinancing and reassignment of mortgages. The suspect was paid between $400 and $3,700 by each homeowner but did not do any work. As a result, the victims either lost their homes or declared bankruptcy. There are 77 victims, 55 of which were Burlington County residents.
As a result of the alleged theft from his customers, the suspect will reportedly face charges of:
- theft by deception,
- forgery, and
- securing execution of documents by deception.
See also, Two trials ordered in Mount Laurel fraud case (The Courier-Post Online).
For the blog post on this story, see South Jersey Upfront Fee Foreclosure Rescue Operator Facing Felony Charges.
