Ten people, including four from a Philadelphia-area mortgage company, have been indicted in an $11 million mortgage fraud case involving over 180 properties.
Patrick Meehan, U.S. Attorney for the Eastern District of Philadelphia, said that most of the properties bought and sold as part of the $11 million flipping caper will fall into foreclosure.
And that, Meehan said in a statement, impacts surrounding properties and entire neighborhoods.
“Foreclosures affect everyone in Philadelphia,” Meehan said. “A recent study The Reinvestment Institute estimates that for every foreclosure within a block of your house and within a year your house will lose one percent of its value.
“You can therefore imagine the impact that 180 foreclosures will have on our neighborhoods,” he said. “If we are to keep our neighborhoods intact, we must stop the kind of fraud that happened here.”
Meehan said that the alleged ringleader of the scam, a self-described real estate investor named Mahn Huu Doan, 38, “hit on a scheme to try and make money.”
Using fake or borrowed identities Doan, who also goes by Bruce Doan, and his crew would buy houses with government-backed loans, Meehan said.
One of Doan’s associates, Trung Tam Dang, 36, would create false documents including bank records, W-2 forms and pay stubs, and then apply for mortgages.
Meehan said most of the mortgages went through Encore Mortgage Services. Its owner, Vincent Sirolli, 64, was also indicted, as were his chief operating officer, Keith Lyon, 43, June Kodiak, 57, a loan originator, and Dana Siciliano, 44, a loan officer.
Sirolli and his employees,” Meehan said, “processed the applications and got Doan the money he needed.”
As in many flipping schemes this one had an appraiser on the inside who was inflating the value of properties, the indictment alleges.
“The scheme worked in part because Ciriaco Gatta … an appraiser, fraudulently inflated the appraisals on the houses,” Meehan said. “Those fraudulent appraisals allowed Doan, Sirolli and the others to wring excess profits from the deals, profits the schemers used to keep the fraud going and to line their own pockets.”
Gatta, 43, also known as Jack Gatta, was also named in the indictment.
When the deals were time to close two settlement agents allegedly in on the scam — Mary Diantonio, 49, and Anthony Giampietro, 52 — “prepared paperwork that falsely described the flow of money in the deals, thereby hiding the fraud from mortgage lenders and the government,” Meehan said.
Zu-Yun Kim, 27, also known as Andy Kim and described as an associate of Doan’s, often posed as a buy or seller at the closings, signing the paperwork using a false identity, prosecutors charge. Kim was also indicted.
Doan and his coconspirators wanted to hold the properties for a short time and then flip them at a profit. But they couldn’t move the properties quick enough, foreclosures started and the scheme fell apart.
“They had to pay the mortgages on the houses,” Meehan said. “They failed. As a result, nearly all of the houses will go info foreclosure.
If convicted, the defendants possible prison terms range from 82 years to 42 years; potential fines range from $1.5 million to $750,000.
