A former executive for Citigroup Inc.'s finance unit has denied charges that she embezzled $100,000 from the lender, while several recent guilty pleas have been received from former executives of Taylor, Bean and Whitaker Mortgage Corp. and its bank. Other mortgage crime cases to see recent activity involve a mortgage broker who pretended to be an attorney, defendants who were motivated to break the law because of gambling addictions and a hard-money lender who took hefty up-front fees and did nothing else.
Former CitiFinancial Inc. district manager Julie Phillips pleaded not guilty to embezzling around $100,000 from the company, the U.S. Department of Justice reported last month. Phillips, who oversaw several Vermont branches, faces up to three decades in prison if she is convicted.
According to the government, she defrauded CitiFinancial by presenting fake obligations using bogus documentation. After checks were generated, she was able to convert the proceeds for her personal use.
A guilty plea by the former chief executive officer of Taylor, Bean and Whitaker Mortgage Corp. was announced by the Department of Justice earlier this month. Paul Allen, who joined the company in 2003, admitted that he made false statements and conspired to commit bank and wire fraud.
Taylor Bean was undone by a $1.5 billion scheme to defraud its banker and cover up years of losses.
The government claims that when Allen failed to secure $50 million of $300 million needed to acquire Colonial Bank through the Troubled Asset Relief Program, Taylor Bean chairman Lee Farkas fraudulently moved $5 million into an escrow account set up in an investor's name and tried to portray it as a required 10 percent escrow deposit.
Allen also admitted that he lied to Ginnie Mae and the Department of Housing and Urban Development when he didn't disclose that a delay in submitting audited financial data was due to concerns raised by the auditor about the financing relationship between Taylor Bean and Colonial.
The plea by Allen, who faces up to five years in prison at his June 21 sentencing, came just in time for him to testify at Farkas' criminal trial, which is ongoing.
In March, former Taylor Bean senior financial analyst Sean W. Ragland pled guilty in U.S. District Court for the Eastern District of Virginia to conspiring to commit bank and wire fraud, the Justice Department announced. Ragland was responsible for tracking and reporting at Taylor Bean subsidiary Ocala Funding.
Ragland reportedly learned of inadequate assets at Ocala to back up commercial paper shortly after the unit was created, so he covered up the deficiency by providing false information to financial institution investors, other third parties and an outside audit firm. He faces up to five years in prison at his sentencing on June 21.
Also last month, Teresa Kelly, who was the operations supervisor for Colonial Bank's warehouse lending division, pleaded guilty in U.S. District Court for the Eastern District of Virginia, a Justice Department statement said. Kelly, who also was hit with civil charges filed by the Securities and Exchange Commission in the same district, faces up to five years in jail. Kelly enabled the bank to buy $400 million in bad loans.
In addition, former Taylor Bean president Raymond Bowman pled guilty on March 14, while former Taylor Bean treasurer Desiree Brown and former Colonial Bank warehouse lending executive Catherine L. Kissick both pled guilty in February.
An indictment was handed down by a grand jury last month charging Jerry J. Williams with conspiracy to commit bank fraud and deceive federal and state bank examiners; two counts of misapplication of bank funds; two counts of making false entries in the reports of Orion Bank; mail fraud; wire fraud; and money laundering, the Justice Department announced. Williams was the president, chief executive officer and chairman of the Naples, Fla., bank -- which failed in November 2009 -- and parent Orion Bancorp Inc.
The government claims that Orion lent its directors and executives money to purchase company stock beginning in May 2009 -- a move prohibited by banking laws and regulations. The maneuver gave the false impression to bank regulators that the bank was better-capitalized than it actually was.
The bank created $82 million in fraudulent loans to co-defendant Francesco "Frank" Mileto, a straw borrower. Mileto used fake documents and claimed income was from an Italian family trust. At Williams urging, bank executives looked the other way when the fraud was discovered in June 2009. Others to be charged in the case include Thomas Hebble and Angel Guerzon.
Orion failed in November 2009.
New Jersey mortgage broker Joseph Kohen was sentenced to 30 months in prison for his role in a $25 million fraud scheme against PNC Bank, the Justice Department announced in February. Kohen misrepresented himself as an attorney for PNC borrower Solomon Dwek and provided a copy of a fraudulent $25 million check. The deception enabled Dwek to complete another transaction and ultimately cost the bank more than $20 million in losses.
Michael Lee Wilson, owner of Pacific Coast Mortgage, was arrested in 2009 over allegations that he deceived elderly investors and committed mortgage fraud. He allegedly stole as much as $14 million.
In February, Wilson was sentenced to 20 years behind bars, KSBY News reported.
Leonid Shifrin, a mortgage broker in Aurora, Colo., who operated under the brand Consumer Mortgage Group, admitted that he hid more than $4.7 million in loan commissions from the Internal Revenue Service, the U.S. Attorneys Office in Colorado announced on March 14. Shifrin created a Nevada company, Mark Shifrin Inc., and had all of his checks made out to that firm or to "Mark Shifrin," the name of his father. He could be sentenced to as many as three years in prison.
A 63-month sentence was handed down to Kenneth A. Schneider by a judge for U.S. District Court for the District of Montana, a U.S. Attorney's Office statement said. Schneider was also ordered to pay restitution of $1.8 million.
Schneider promoted commercial real estate bridge loans through American Bridge Funding Inc. and charged between $7,500 and $10,000 up front for an application fee. The hard-money lender then provided a commitment letter that required an up-front 1 percent commitment fee. But once the fees were in-hand, Schneider was nowhere to be found.
In all, the government claims that Schneider collected around $1.5 million from around 130 victims. The funds went towards a payment for a Connecticut home, a New York apartment and other personal expenses.
Joseph Yorkus and James Bartczak were arrested for trying to steal mortgage payments from Nevada borrowers, the Nevada Attorney General's office announced on March 4. Through Great Western Business Services, the defendants allegedly sent letters to the borrowers falsely claiming to have acquired their mortgages from Bank of America.
Former mortgage broker Michael Hoskisson was sentenced to five years of probation after admitting that he deceived Lester Carroll into signing over a power of attorney to him, KRDO News Channel 13 reported. Hoskisson won't be able to take out any loans, work in a financial position of trust or be involved with any real estate transactions.
In Pikesville, Md., Edward Scott Hanson pleaded guilty to tricking a borrower into taking out a reverse mortgage from Live Well Financial, his employer at the time, then collecting the payments himself, according to an article from The Gazette. He allegedly collected 143 checks for $274,000 from 80-year-old Martha Cunningham during 2008 and used the funds for gambling.
Angelena Pena, a former branch manager at Nickeloid Employees Credit Union, pled guilty to one count of financial institution fraud, a Class 1 felony, the News Tribune reported. Pena admitted that although she was approved in 2009 for an $86,900 home-equity loan from her employer, she altered documents and inflated the HEL to $250,000 to support a gambling problem.
United States v. Raymond Bowman.
Court Docket Number: 1:11-cr-118-LMB (U.S. District Court for the Eastern District of Virginia.
United States v. Lee Bentley Farkas.