State and federal prosecutors have been busy with criminal cases involving foreclosure rescue and modification schemes. Their work has yielded guilty pleas, convictions and prison sentences.
The Financial Crimes Enforcement Network reported Wednesday that financial institutions filed 2,360 suspicious activity reports related to foreclosure rescue in the first half of 2012. This year’s activity puts 2012 on pace to blow past the 2,782 SARs filed in all of 2011. FinCEN said this year’s filings have been disproportionately concentrated in California. The federal agency said the increase was likely the result of growing awareness of foreclosure rescue scams and increased opportunity for crimes in a distressed real estate market. In addition, a recent rule change requiring non-bank lenders to file SARs will likely lead to even more filings.
Cathy Saffer and certified public accountant Barrington Coombs were convicted on Aug. 2, the Department of Justice said. The Florida residents were accused of using their company, Foreclosure Solution Specialists, to persuade distressed borrowers to transfer title to their homes to investors while they remained in their properties with the eventual opportunity to buy back the homes. Instead, according to the government, straw buyers were used to deceive lenders into making new loans to steal any remaining equity.
As much as $2.5 million in losses was suffered by mortgage lenders as a result of a scheme operated by Carline M. Charles, who pled guilty on July 26. according to the U.S. Attorney for the District of Columbia. Her plea agreement calls for the forfeiture of an $838,978 money judgment. Charles signed a statement of offense admitting to operating a foreclosure rescue scheme through C & O Property Solutions LLC involving $4 million in fraudulent mortgages on 12 properties where borrowers thought they were refinancing instead of handing over title to their homes.
In Michigan, Attorney General Bill Schuette announced that Rickey White was handed down a prison sentence by Judge Michael Warren in Oakland County Sixth Circuit Court of between 23 and 40 years on Oct. 3 for allegedly scamming as many as 400 distressed borrowers. White, who was ordered to pay $283,245 in restitution, admitted collecting up-front fees and impersonating a mortgage modification company from December 2009 through May 2011 through his firms, Braunstein & Associates and Expert Financial. He promised full money-back guarantees — though they weren’t given.
An initial court appearance was made on Sept. 14 by David and Minerva Chaidez Young who were charged and arrested for allegedly collecting up-front fees of as much as $3,000 for foreclosure rescue services they never performed, Nevada’s attorney general announced. A preliminary hearing is scheduled for Jan. 14, 2013, in Las Vegas Justice Court 5.
On Aug. 28, Alex P. Soria pled guilty in U.S. District Court for the District of Nevada to charges that he lied to borrowers about his affiliation with lenders in a foreclosure rescue scheme that targeted negative equity borrowers, the Justice Department said. Soria admitted he charged illegal up-front fees, lied about past his past successes and didn’t disclose that he was banned from the mortgage industry.
Up-front fees of between $3,495 and $3,895 were collected by Gary Dimattia and Lawrence Bateman through their business, Financial Link Services, which offered a balance-reduction program that didn’t exist, Nevada’s attorney general announced. Both men were indicted on Aug. 15. The initial court appearance was scheduled for the 15th of last month.
Vito Grippo convinced 12 distressed borrowers to transfer title for their homes based on the premise that they would retain 80 to 90 percent of their interest and Grippo along with other investors would get the remaining interest, according to New Jersey’s attorney general. Borrowers were told to make payments to Grippo’s company, Mortgage Financial Equity Shares Inc., which would then forward the payments to the lenders. Instead, he used the identities of unsuspecting investors to obtain $4.5 million in fraudulent mortgages with the help of his son, mortgage broker Frederick Grippo, and steal $1.3 million in equity. John Pereless is accused of participated in mortgage fraud on four of the transactions. Both Grippos were charged on Sept. 27, while Pereless pled guilty on July 2.
Brynell Jones, Shardonya Fletcher, Gerri Britton, Candice McGraw, Sherece Payne, Deborah Boshears, Ashely Cain, Luna Noncent, Dianne Jaichon and Kevin Chenevare were among 32 defendants charged by a grand jury on July 10, according to the U.S. Attorney’s Office for the Western District of New York. Among more than 2,000 victims targeted in the cross-border scheme were some at risk of losing their home to foreclosure. The defendants allegedly lured consumers to multiple websites with offers of unsecured loans for up-front fees. But once the fees were paid, the websites were taken down and no loans were granted.
A 25-year sentence was handed down on Oct. 1 to Anthony J. DeMarco III, the U.S. Attorney for the Eastern District of Pennsylvania announced. DeMarco pled guilty in March to a $30 million sale-leaseback scheme operated through his company, DeMarco REI Inc., where equity was stripped from victims’ properties and the properties were left to fall into foreclosure. Around $245,000 was received from the only couple to come up with enough money to execute the re-purchase, but that money was used to purchase a Ferrari for DeMarco, jewelry for his girlfriend and other miscellaneous expenses. Other defendants in the case include Michael Richard Roberts, who was sentenced to 10 years; Sean Ryan McBride, who was sentenced to 63 months; and Eric Bascove, who received a 41-month sentence.
The U.S. Attorney’s Office for the Middle District of Pennsylvania said on July 20 that Joanne M. Seeley was sentenced to 238 months in prison for defrauding 36 homeowners out of $2,470,666 between 2006 and 2008. Through her company S&D Property Solutions, The licensed Realtor is accused of deceiving borrowers into transferring the titles to their homes based on the premise that they would lease back the homes until they could buy them back. Instead, Seeley deceived dozens of mortgage lenders to obtain loans where she stole equity in the properties.
Frederic Alan Gladle earned $1.6 million from more than 1,100 distressed borrowers by using bankruptcy fraud to delay their foreclosures, a statement from the Office of the Special Inspector General for the Troubled Asset Relief Program said. Gladle, who was sentenced in U.S. District Court for the Central District of California on May 4 to 61 months in prison, pled guilty in January. He charged $750 a month for his services.