Alleged victims of mortgage fraud, including mortgage lenders deceived into granting loan approvals and consumers who lost their homes, are using the civil courts to pursue reparations. The government, however, tends to use criminal courts to pursue defendants.
Former Pierce Commercial Bank senior vice president, Shawn L. Portmann, was sentenced in U.S. District Court for the Western District of Washington to 10 years in prison for helping to bring down his employer through a mortgage fraud scheme that caused $10 million in losses, the U.S. Department of Justice announced Monday.
The Tacoma, Wash., financial institution was closed by the Washington Department of Financial Institutions in November 2010.
Portmann, who pled guilty on Sept. 18, 2012, allegedly submitted false documents through PC Bank Home Loans in loan packages in order to secure more than 300 loan approvals between 2004 and 2008. Among seven other former employees who have been sentenced in the case are former vice president Sonja Lightfoot, Portmann’s former personal assistant Alice Barney and underwriter Jeanette Salsi, who were sentenced earlier this month; and Jill Reding, originator and underwriter Tonya Ruf, and loan processor Katherine Friske, who were sentenced in December.
Joseph Witkowski was one of 10 people charged in August 2012 with executing a $40 million mortgage fraud scheme, the U.S. Attorney’s Office for the District of New Jersey announced. The defendants allegedly used straw buyers and targeted condos at the Jersey Shore and resort destinations in South Carolina and Georgia.
Witkowski was one of nine people arrested, while guilty pleas were previously extracted from Charles Harvath, Stephen F. Corba Jr., William Brown, John Siuszko, and Michael Williams. Other defendants include Robert Serao, Catherine Pearson, Isatu Tejan-Sie, Crystal Brame, George Lachenmayr Jr., Aku I. Muhammad, Mark Kreischer and Marc Jacobs.
TotalBank, Banco Popular Espanol and several bank executives were sued in Miami-Dade Circuit Court over allegations that loan officers falsified several key documents in John Herrera’s commercial mortgage application package. Herrera, a “prominent” lawyer in South Florida, also alleges that the bank refused to release additional property used as collateral in the deal. Herrera claims he is pursuing the litigation because his 79-year-old mother lives in the property.
TotalBank loan officer and defendant Renato Salazar allegedly “doctored” documents on a $1.6 million loan backed by the Small Business Administration. Then, after Herrera met conditions to have the property released from the loan, the bank refused to release it.
Charlene Williams sued mortgage Fidelity First Home Mortgage Company Inc., and former Fidelity employees James Fox and James Dan. She claims she was duped into a fraudulent foreclosure rescue scheme that cost Williams her home. After she agreed to dismiss Fox and Dan as defendants, she was awarded $70,000 in compensatory damages and $150,000 in punitive damages by a jury, while the circuit court judge awarded her $80,036 in fees and $3,903 in costs.
Fidelity First filed an appeal, which was denied on Nov. 27 by the Court of Special Appeals of Maryland.
The U.S. Court of Appeals for the Seventh Circuit on Dec. 7, 2012, agreed to re-hear a case on the issue of whether Lacey Phillips and Erin Hall, defendants who are facing federal charges for misstating their income, can introduce testimony that their mortgage broker said it wasn’t illegal to do so, The National Law Journal reported. The order vacated an Aug. 2 panel ruling affirming a ruling from U.S. District Court for the Western District of Wisconsin barring such testimony.
Mortgage broker The Lending Co. illegally obtained down payment assistance for borrowers seeking mortgages insured by the Federal Housing Administration, according to a federal class action filed by lead plaintiff Margarte Galas and reported by Courthouse News. Charities were allegedly paid kickbacks and administrative fees from yield spread premiums in violation of federal law.
