It's a scenario that happens again and again. Delinquent borrowers are convinced by a foreclosure-rescue company to hand over the titles to their properties, and they can remain as tenants until their financial situations improve -- at which point they can buy back their homes. Instead, however, the operators use mortgage fraud to extract any remaining equity, and the borrowers are eventually evicted anyway.
A guilty plea was made on March 20 by former REI Inc. owner Anthony J. DeMarco III, the U.S. Attorney for the Eastern District of Pennsylvania reported. In 2008, DeMarco allegedly solicited delinquent borrowers identified from public records to sell him their homes and lease the properties back from him until they could afford to buy the homes back.
Instead, he solicited straw buyers and obtained more than $30 million in fraudulent mortgages to extract all of the equity from the properties. Only one couple was able to afford to buy their property back from DeMarco, but when they wired him $245,000 for the purchase -- he used the funds to buy a Ferrari.
DeMarco is scheduled for sentencing on June 27. Three other defendants in the case -- Michael Richard Roberts, title agent Sean Ryan McBride and Eric Bascove -- previously pleaded guilty.
Michael Prieto went before a New Hampshire judge on Tuesday on charges he earned $13 million by convincing distressed borrowers to transfer their title to them with the hope of buying back the properties two years later when times were better, a story from WMUR indicated. But Prieto allegedly used straw buyers -- including his family and friends -- to strip the equity from the properties and leave the borrowers with nothing.
A similar scheme was allegedly operated by Charles Donaldson, who was sentenced to 41 months in prison on March 8, the U.S. Attorney for the District of Maryland announced.
Beginning in 2005, Donaldson extracted more than $1.2 million in equity from distressed borrowers' homes by obtaining more than $4.7 million in fraudulent mortgages that were used to pay fake second liens. Donaldson ran the bogus loans through Mary Anne Dean and her company Sunset Mortgage Co. Dean previously pled guilty and was scheduled to be sentenced on Thursday.
Illinois Attorney General Lisa Madigan announced on Jan. 20 the arrests of Warren Jackson and Yolanda King, both who were indicted earlier in the month. The pair allegedly earned more than $350,000 by either collecting fees from delinquent borrowers but failing to negotiate with lenders, or obtaining title to properties then using mortgage fraud to strip any remaining equity from the properties.
The U.S. Attorney for the Eastern District of Virginia announced that Philip Villasis pled guilty on March 13 to operating a foreclosure-rescue scheme that utilized mortgage fraud to deceive distressed homeowners into signing over the titles to their homes with the hope of acquiring them back when they were in a better financial position. But Villasis, along with Ray D. Gata, instead stole $170,000 in equity and eventually evicted the homeowners.
Gata pled guilty on Feb. 28.
The U.S. Attorney for the Southern District of Florida announced that Marlon Baugh was sentenced on Jan. 27 to a year in prison. Baugh, a licensed mortgage broker, was also a partner at National Foreclosure Center. Along with other defendants, he allegedly used straw buyers and mortgage fraud to finance homes.
Through her businesses New Beginnings Group LLC and IMAK Group LLC, Kathleen Harps allegedly provided foreclosure-rescue services. She promised homeowners that if they sold their homes to her or a designated straw buyer, they could remain in the houses and buy the properties back after a year.
Instead, however, Harps used mortgage fraud to steal any remaining equity -- leading to foreclosure.
The U.S. Attorney for the Eastern District of Virginia reported that Harps, who pled guilty in August 2011, was sentenced to 54 months in prison on Jan. 26.