The foreclosure crisis spawned a shadow industry of foreclosure-rescue firms that collected huge fees and provided little if any help to distressed borrowers -- many who lost their homes anyway. While much of the activity has been stomped out by state attorneys general, courtrooms are still filled with civil and criminal cases against many of the players. One recent case involves a counselor with a gambling problem, while another had a pastor luring his parishioners.
Using direct mail, the Internet and telemarketing, U.S. Mortgage Funding Inc. caused delinquent borrowers to lose more than $19 million, according to the Federal Trade Commission -- which obtained a judgment on Feb. 2 against the Florida corporation. The defendants promised foreclosure relief -- even to borrowers who had previously been denied loan modifications or received foreclosure notices.
Also named in the FTC's lawsuit as defendants are Debt Remedy Partners Inc., Lower My Debts.com LLC, David Mahler, James Lachs, John Incandela, Jr. and Louis Gendason.
Luis Giancarlo Belevan, who pled guilty during October in connection with the operation of a mortgage-rescue scheme through The Guardian Group, was sentenced on Feb. 27 in a Phoenix federal court to 60 months in prison and ordered to pay $2,870,984 in restitution to 1,787 victims. Co-defendant Brian Prehoda was scheduled to plead guilty on Oct. 31.
On April 15, 2010, the Santa Clara County Criminal Grand Jury indicted Rene Alvarez and Mariano Ortega, according to an announcement from the district attorney in Santa Clara County, Calif. The two were charged with stealing more than $2 million in up-front fees from over 400 delinquent borrowers -- many who were Hispanic -- in seven states through the companies M & R Contemporary Solutions Inc, West Coast Mortgage and Horizon Property Holdings. But no homeowners were ever helped.
The San Jose Mercury News reported that Alvarez and Ortega both pled guilty on March 19.
On March 20, Michael Noreski was sentenced to 90 months in prison for allegedly bilking investors out of $1.4 million in a short-sale scheme operated through Gibbsboro, N.J.-based 4 Solutions LLC, the U.S. Attorney's Office for the District of New Jersey announced. He allegedly lied about having previously facilitated hundreds of short-sale transaction. Noreski also admitted to forging $195,000 in checks and moving the business to North Carolina in 2008 to evade law enforcement.
A consent judgment was filed on March 20 in a Denver federal court against Bella Homes LLC, Mark Stephen Diamond, Daniel David Delpiano, Michael Terrell, David Delpiano and Laura C. Tabrizipour, a joint statement from the U.S. Department of Justice and Colorado's attorney general said. The alleged foreclosure-rescue scheme was started from the basement of a convicted felon in Georgia and operated nationally. Recovery in the case is expected to reach around $1.2 million.
Investors in Cornerstone Financial Holdings LLC were promised returns of as much as 25 percent, though the business was a sham, according to the U.S. Attorney for the District of Arizona. The owner, Gerald Lee Kelly, said he would use the capital to fund short-term, high-interest loans to distressed homeowners secured by promissory notes, second deeds of trust, home-equity lines of credit, contracts or some other form of documentation. But the investments were actually worthless, and the company was incapable of generating such returns.
Kelly was indicted on Jan. 10.
Five people were charged on March 2 with defrauding hundreds of borrowers by charging up-front fees ranging from $3,500 to $4,500 through CSFA Home Solutions, falsely promising money-back guarantees and fraudulently touting a 100 percent success rate -- though at least a hundred victims complained that the defendants didn't follow through. Among those charged are Jacob J. Cunningham, Justin D. Koelle, Andrew M. Phalen, Dominic A. Nolan and John D. Silva. Four of the defendants were arrested a day before the charges were announced by the Office of the Special Inspector General for the Troubled Asset Relief Program -- which oversees crimes tied to the Home Affordable Modification Program.
A final order granting judgment was issued by a superior court judge in Hudson County, N.J., against Property Solutions of N.J., PSRE Holding Co., Edward Toledo and Raymond Vega, the state's attorney general announced on Feb. 23. The defendants, who were accused of defrauding distressed homeowners through a variety of deceptive mortgage foreclosure-rescue practices, were ordered to pay $280,000 in civil penalties and $189,500 in restitution
Notices of violation were issued by the New Jersey Division of Consumer Affairs against Secure Property Solutions LLC and Joseph A. Gembala III and Associates LLC; Fresh Start Home Modifications LLC and Thomas R. Mansell Jr.; and Financial Investigators of America LLC and Michael Quellman. A March 9 news release indicated that $398,059 was collected from a combined 270 consumers who were all unable to obtain loan modifications from the unlicensed entities.
John Marcus Desenberg pled guilty to operating a foreclosure rescue scheme through his company, Creative Lending Solutions, according to a March 7 statement from the U.S. Attorney for the Eastern District of California. Through a program marketed as "Fresh Start," distressed borrowers were induced to turn over their properties to investors who were supposed to make house payments until the borrowers repurchased the properties a year later. But most of the homes wound up in foreclosure, and victims lost more than $300,000.
Lori J. Macakanja was a housing counselor for HomeFront Inc. But Macakanja had a gambling problem which was funded through up-front fees inappropriately collected from borrowers for loan modifications and foreclosure prevention. As a result of the crimes, borrowers lost $298,639. The U.S. Attorney for the Western District of New York said on Feb. 2 that Macakanja was sentenced to 72 months in prison and ordered to pay restitution to the victims.
Nine borrowers were defrauded out of more than $105,000 by Rodney Getlan, according to charges filed by Baltimore County State's Attorney's Office. Getlan, who was arrested on March 20, allegedly offered loan modification services and provided clients with fake modification approvals from lenders then kept the subsequent loan payments -- resulting in foreclosures. He changed contact information with the lenders in order to hide the scam from the borrowers.
The Baltimore County Police Department said that Getlan's case was "one of the most extensive fraud cases committed by one individual that our agency has investigated."
Gloria Becerra and Hector Menendez were arrested after a felony complaint was filed by the Ventura County District Attorney's Real Estate Fraud Unit in California, a statement last Thursday said. The charges of grand theft and foreclosure consultant fraud followed a seven-month investigation of Sunset Beach Management, Financial Wellness for Homeowners L.A. and California Sky Premiers -- firms operated by the defendants. The pair allegedly collected thousands of dollars in fees from a victim that received no actual services and lost her home to foreclosure anyway. A disposition conference is scheduled for April 16.
Another felony complaint was filed against four defendants in connection with a foreclosure rescue scheme operated through USA Home Recovery Service, the Ventura County District Attorney announced on Jan. 13. The firm's owner, Maria Victoria Santos, along with Felipe Carlos Segovia Castro, Laura Cecilia Carlson and Margie Joanna Vargas, are accused of collecting thousands of dollars in up-front fees from predominantly Spanish-speaking borrowers for loan modification services -- though none were actually provided. A judge heard testimony this month in the case.
Rodney Andrews was a pastor at the Comeback Christian Church who solicited his parishioners to obtain modification services through his company, Andrews Investment Group, according to the district attorney in Sacramento County, Calif. He allegedly collected illegal up-front fees for services he never delivered. Andrews pled guilty in February and was sentenced on March 1 to four years in prison.
The Nevada Department of Business and Industry's Division of Mortgage Lending ordered Majestic Group LLC and Nevada Sky Premier LLC to cease operating, the Las Vegas Sun reported on March 26. The two unlicensed firms, headed by Jose Benjamin Rodriguez, have been ordered to return $24,721 in fees collected from distressed borrowers.
FEDERAL TRADE COMMISSION, Plaintiff, vs. U.S. MORTGAGE FUNDING, INC., a Florida corporation, et al., Defendants.
Case No. 9:11-cv-80155-JIC, FTC File No. 102 3146, Feb. 7, 2011 (U.S. District Court for the Southern District of Florida).
United States of America v. Luis Giancarlo Belevan.
Case No. 2:11-cr-02025-JAT (U.S. District Court for the District of Arizona).
UNITED STATES OF AMERICA, and STATE OF COLORADO, ex rel. John W. Suthers, Attorney General, Plaintiffs, v. BELLA HOMES, LLC, a Delaware limited liability company, MARK STEPHEN DIAMOND, an individual, DANIEL DAVID DELPIANO, an individual, MICHAEL TERRELL, an individual, and DAVID DELPIANO, an individual, Defendants, LAURA C. TABRIZIPOUR, an individual, Relief-Defendant.
Case 1:12-cv-00390-JLK-MEH, Feb. 14, 2012 (U.S. District Court for the District of Colorado).
In re. John Marcus Desenberg.
Docket #: 1:11CR-00406-LJO (U.S. District Court for the Eastern District of California).