A federal grand jury has indicted scores of people in an Ohio mortgage fraud scheme. Many Cleveland-area employees of a national net branch mortgage brokerage company were involved in the scam.
The U.S. Department of Justice recently announced that 83 individuals have been indicted by a Cleveland grand jury for participating in mortgage fraud schemes. The indictments are the result of a two-year federal investigation code named “Collateral Damage.” Among the charges are money laundering, bank fraud and false statements.
The defendants, including employees of some Cleveland-area franchise offices of American Home Loans, are accused of preparing and providing fraudulent loan files to wholesale mortgage lenders. Other defendants accused of being coconspirators include appraisers, underwriters and an accountant.
American Home Loans, based out of California, is a national net-branch mortgage operation. In many net-branch arrangements, mortgage loan originators operate in a quasi-self employed manner, generating loan applications themselves while benefiting from the clout generated by the collective production of all of the company’s other net branch offices. Net branch companies often pay a greater percentage of fees to the originator than lenders, mortgage bankers or mortgage brokers.
The announcement, which was from the U.S. Attorney’s office in Cleveland, said that 30 employees from six American Home Loan Cleveland-area franchise offices were implicated. Neither American Home Loan’s corporate office in California or other branches are implicated in the indictment.
The conspiracy started in early 1998 and continued until August 2001, according to the announcement. Mortgage loan files were submitted to wholesale lenders, including Firstar Bank and Star Bank, that included fake paystubs & W-2’s, fake social security numbers and fake deposit verifications. In addition, some of the defendants are accused of falsely verifying the employment of applicants when contacted by the lenders.
The defendants allegedly used phony invoices for property rehabilitation services to retain a substantial portion of loan proceeds.
Two defendants allegedly attempted to collect Section 8 rent subsidy payments from the Department of Housing and Urban Development on some of the properties.
American Home Loans did not respond to MortgageDaily.com’s request for a statement.
Other articles about mortgage fraud cases include:
- Former PinnFund CFO admitted to being a coconspirator in the $300+ million Ponzi scheme
- Three Peoria, Illinois women were sentenced for their involvement in a mortgage loan scam where they defrauded a bank of $1.7 million in a classic flip transaction scheme
- Shirley Harwood and her employee pled guilty to defrauding two lenders out of more than $6 million
- Loan originator Brian J. Wilkozek and two loan processors are among fifteen people indicted in a south side Chicago “flipping” scheme
- Edward Rostami was sentenced to a year in prison for using a fraudulently obtained property title to obtain a $1 million loan
- Rene Abreu was among 11 people indicted in a case involving The Mortgage Pros, Inc. in Guttenberg, New Jersey
- David Allan Van Velzer, Jr., was sentenced to more than 8 years in prison for wire fraud and money laundering
- Kenneth Bradford and Jo Ellen Bryant received 10+ year sentences in a Georgia flipping case
- Seven indicted in AppOnline.com mortgage fraud scheme
- Indian authorities apprehended Rajiv C. Shah, one of two brothers that allegedly sold loans with fraudulent documentation to 3 U.S. lenders
- Loans originated by originated by Chapel Creek Mortgage Banker, Inc. could cost Chase Manhattan Mortgage Corp. between $10 and $20 million
- Kent E. Baklor was sentenced for defrauding two lenders of over $8.5 million
- Tamira Smyth was sentenced in a Chicago ‘flipping’ scam involving twenty defendants
- Former Las Vegas mortgage broker David Ferradino was sentenced to five years’ probation and ordered to pay $4.2 million in restitution to 90 investors
- Michael Graham received a sentence of more than 12 years in prison and was ordered to pay $515 million in restitution for his role in the failure of The First National Bank of Keystone.
- Yehuda Shiv was charged by the SEC with overstating the value of his clients’ assets by more than $139 million
- Cheryl A. Swain pleaded guilty to a charge of mail fraud in connection with her conduct as the VP for Marketing Syndication of MCA
- Robert B. Herbert, Jr. of Raleigh allegedly “embezzled and misappropriated moneys from Stewart Title.
- Donald Lukens allegedly defrauded more than 100 investors — including popular sports figures — of at least $12.5 million in a number of schemes, including one involving mortgage backed securities
- Steven D. Mueffelman and John S. Lombardi charged in a 15-count indictment with mail and wire fraud
- Raymond T. Jackman, JR. was sentenced to two years’ probation
- GreatStone Mortgage in Florida is accused of fraud, sexual harassment.
- The government is pursuing mortgage fraud cases in Charlotte and Cleveland.
- Miami family allegedly ran a mortgage fraud ring that swindled lenders out of $3.8 million.
- Maryland is the state with the most instances of possible fraud, according to Affinity Corporation’s ‘Suspected Fraud Activity Index’ for the months of June, July and August.
- Thomas Eck and Zahra Gilak made as much as $15 million, and defrauded investors of $100 million in sham that included online mortgage brokerage
- Richard Wood, a Las Vegas mortgage broker accused of bilking millions of dollars from dozens of investors in a nationwide Ponzi scheme, was gunned down outside his home.
- FBI Investigating Massive Mortgage Fraud Case In Spokane
- Richard Michael McDowell, who through southern California-based Active Home Loans and M&M Loan Service admittedly swindled an estimated $7 million from about two dozen investors, was sentenced to 27 months in federal prison
