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P R E S S   R E L E A S E


Dec. 20, 2011


HONOLULU, HAWAII A jury found Welton Kalani, 48, and Stephen Balino, 51, guilty of various offenses arising out of a mortgage fraud and money laundering scheme on Friday, December 16, following a nine-day trial in United States District Court. Kalani was found guilty of 12 counts of conspiracy, mail and wire fraud, obstruction of justice and money laundering, and Balino was found guilty of seven counts of conspiracy, mail and wire fraud, making false statements on loan applications, and money laundering. United States District Judge Leslie E. Kobayashi set sentencing for April 26, 2012.

United States Attorney Florence T. Nakakuni said that at sentencing, Kalani faces maximum prison terms of 20 years on each charge of wire fraud (six counts), mail fraud (one), and obstruction of justice (two); ten years on each of two charges of money laundering, and five years for one charge of conspiracy. Balino will face the same maximum penalties for wire fraud (two), mail fraud (one), money laundering (one), and conspiracy (one), and can also receive up to 30 years in prison on each of two charges of making false statements.

According to information produced in court, Kalani and Balino owned mortgage brokerage companies offering loans to the public. Kalani was co-owner of Accel Mortgage, LLC, and Balino was owner of New Horizons Financial, both of which maintained offices in downtown Honolulu. Evidence produced at trial established that 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.

The trial evidence focused on three transactions involving the sale of two properties in Aiea and Mililani. In each case, Kalani, Balino or others working with them found an individual who served as a "straw buyer," or one who obtained loans by falsely claiming that he would live in the property, and by inflating his income. The false loan applications were supported by other false documents produced by others working in concert with Kalani and Balino, including several employees at Accel Mortgage.

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 three sales, the conspirators diverted $98,000, $78,000, and $51,000

Eight other individuals pled guilty to charges arising out of the same transactions, and testified for the government during the trial. Five of those individuals worked with Kalani at Accel Mortgage, which is no longer in business.

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Larry Tong.

Source: United States Attorney's Office for the District of Hawaii

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