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Jan. 22, 2013

Owner Of Liberty Mortgage Company In Elk Grove Convicted In Multimillion Dollar Mortgage Fraud Scheme

SACRAMENTO, Calif. After a 10-day trial, a federal jury found Hoda Samuel, 60, of Elk Grove, guilty of a conspiracy to commit mortgage fraud, and of 30 individual counts of mail fraud.

According to evidence presented at trial, Samuel, a licensed real estate broker, was the owner and principal operator of Liberty Real Estate & Investment Company, a real estate agency, and Liberty Mortgage Company, a mortgage brokerage business. Between April 5, 2006 and February 26, 2007, Samuel's companies facilitated 30 residential real estate transactions that defrauded the lending institutions that provided the financing. In all 30 of these transactions, Samuel served as the real estate broker for the purchaser. In at least 15 of them, she also represented the seller. In 29 of the transactions, Liberty Mortgage Company secured the financing for the purchaser. At least 28 of the properties went into foreclosure, resulting in a loss to lenders of more than $5.5 million.

As part of the scheme, Samuel's co-conspirators and employees at Liberty Mortgage prepared loan applications containing false information that misrepresented the buyers' ability to pay back loans, overstated or falsified their employment, income, assets, and liabilities. When a lender would attempt to verify the information by calling the purported employer, the phone number on the application led to a Liberty employee or associate who falsely verified the information.

The offers reflected in the purchase contracts prepared by Liberty Real Estate overstated the value of the properties, often exceeding the actual asking prices by $15,000 to $40,000. The excess amounts were paid back to the buyers out of escrow, disguised as payments for fictional repairs and remodeling to the properties. With respect to particular transactions, Samuel herself made misrepresentations to the effect that the property buyers had disabled family members and needed to remodel the properties to make them wheelchair accessible. The repairs and remodeling were seldom if ever done, and the lenders were unaware that the true purchase price for each property was below the total amount funded.

Eight of Samuel's associates in the scheme pleaded guilty prior to trial and are awaiting sentencing.

"Mortgage fraud schemes of the sort perpetrated by Hoda Samuel and her co-defendants wreaked havoc in this region," U.S. Attorney Wagner said. "As a result of this prosecution, she and her co-defendants are facing significant prison terms. Taking fraudsters out of the residential real estate industry and sending them to prison has been one of this office's top priorities. Last year we indicted more mortgage fraud defendants than any other U.S. Attorney's Office in the country, and we are not done yet."

This case is the product of an investigation by the FBI and IRS-Criminal Investigation. Assistant U.S. Attorneys Philip A. Ferrari and Todd A. Pickles are prosecuting the case.

Samuels is scheduled to be sentenced by United States District Judge John A. Mendez on April 30, 2013. She faces a maximum sentence of 20 years in prison for each count of mail fraud. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

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

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