Although crimes against mortgage lenders are frequently related to mortgage fraud -- including one case involving a former federal bank examiner -- the latest rage is real estate investors conspiring in bid-rigging schemes. But mortgage firms aren't the only victims in mortgage-related crimes.
Former Federal Deposit Insurance Corp. bank examiner Rodney Foster was found guilty of mortgage fraud by a jury on July 20, the U.S. Attorney for the Western District of Missouri announced. Foster allegedly used names, birth dates and social security numbers of unknowing victims in the sale of a property owned by his ex-wife and him. He served as the mortgage broker in the transaction.
The property sales price was $280,000. Other co-conspirators in the case weren't charged in Foster's indictment but have been convicted in separate cases related to the property and other similar schemes.
David R. Bradley pled guilty on Tuesday to participating in a foreclosure bid-rigging scheme in Southern Alabama, according to the Department of Justice. Bradley, who was charged on June 25 with one count of bid rigging and one count of conspiracy to commit mail fraud, agreed to cooperate in an ongoing investigation.
As is typical in such cases, Bradley and other participants conspired from June 2003 until at least September 2008 not to bid against designated bidders at public auctions. Then second secret auctions would be held, and the properties were sold to the winning bidders.
The losers in such schemes are the lenders or borrowers who received less proceeds as a result of the artificially low sales price.
Bid-rigging cases are typically prosecuted by the Justice Department's Antitrust Division. Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.
Also in Alabama, father and son Robert M. Brannon and Jason R. Brannon were indicted in June along with their company J & R Properties LLC, the Justice Department said in a news release. The defendants were charged with bid rigging and conspiring to use the U.S. mail to carry out the scheme. The alleged crimes occurred from October 2004 until at least August 2007.
Douglas Ditmer and Keith Slipper agreed to a guilty plea in a bid-rigging case that has so far yielded 24 plea agreements, the Justice Department said. Felony charges were filed against the pair on June 7 in U.S. District Court for the Northern District of California. The foreclosure auctions at issue were held between June 2007 and January 2011 in Contra Costa and Alameda counties, Calif.
Investors and banks were defrauded out of more than $21 million in connection with real estate development projects, according to an indictment filed in U.S. District Court for the Northern District of California on May 23. The scheme was operated from 2006 until 2009 through S3 Partners. Named in the indictment are Melvin Russell Shields, Michael Sims and Sam Stafford. Elderly investors were allegedly encouraged to cash out of their retirement accounts and were promised low risk and high rates of return.
A March 28 federal indictment against Don Walter Williams Jr. charged the owner of defunct Covenant Mortgage Co. with failing to file tax returns for the years 2005 through 2009, the U.S. Attorney for the Northern District of Alabama announced. Williams allegedly earned $838,180 during the period. The Justice Department announced that Williams, 54, pled guilty on Tuesday. He faces up to five years in prison.
A 97-month sentence was handed down to former Citigroup Inc. vice president Gary Foster on June 29, a statement from the U.S. Attorney for the Eastern District of New York said. Foster, who worked in Citi's treasury finance department, allegedly embezzled more than $22 million by transferring money to Citigroup's cash account and then wiring it to his personal account at another bank. He made false accounting entries to cover up his crimes. Among the real estate and automobiles he acquired with the illicit proceeds were a Ferrari and a Maserati.
Timothy J. Tanana was sentenced to 11 to 23 months for unlicensed loan originations during 2009 and 2010, The Scranton Times Tribune reported Wednesday. Tanana, who collected $53,138 in fees in addition to a $160,000 salary while working at WF&K Mortgage Inc., was turned down for a license in early 2009 due to a prior felony conviction.
Anthony Paglione, a mortgage broker in Pueblo, Colo., was convicted earlier this year of bilking Vincent Gagliano for at least $160,000 through a complicated series of loan swaps between two residential properties. On July 2, Paglione was sentenced to five years' probation, though he could spend three months in jail pending an appeal, The Pueblo Chieftain reported.