A $6 million mortgage fraud scheme will cost a southern California mortgage broker more than 10 years in prison.
James Davis Bennett, 52, was sentenced by a federal judge in Los Angeles to 121 months in prison and ordered to pay $715,050 in restitution and $12,500 in fines, according to a statement for the U.S. Attorney’s office for the Central District of California.
Bennett operated mortgage, realty and appraisal businesses. After a 14 day trial in January he was convicted of operating a financial crimes enterprise, four counts of wire fraud and six counts of bank fraud.
A jury found him guilty after deliberating for just one day, according to prosecutors.
Four others involved in the scheme — Bernardo Fernandez, Benny Ibarra, Steven Rogers and Ricardo Garcia — have pleaded guilty to wire fraud and bank fraud charges. They will be sentenced “in the coming months,” prosecutors said.
Prosecutors said Bennett ran his scheme by buying multiunit properties in distressed areas of Los Angeles and nearby Long Beach for fair market value. He paid cash and put the properties in the name of his wife, mother and stepson.
“Simultaneously, Bennett sold these properties to ‘straw’ buyers for inflated prices, usually approximately $100,000 more than the fair market value,” prosecutors said.
Bennett and his co-schemers recruited the buyers with the promise they would not have to make a down payment or put up a deposit, and then prepared mortgage loan applications loaded with phony information about the bogus buyers’ employment, income, down payment and credit information.
Lenders made the loans based on the false information provided by Bennett and his crew, prosecutors said.
Bennett, a licensed appraiser, prepared phony appraisals, duping lenders into making loans for $100,000 or more than he paid for the properties. He also acted as the escrow officer, providing more phony information so the lenders would “believe significant down payments were made by borrowers, when no such down payments existed,” prosecutors said.
“As a result of the scheme, lenders issued more than $6 million in mortgages to unqualified ‘straw’ purchasers, many of whom fell into bankruptcy,” they said.
