Two Virginia men are accused of using a Virginia title insurance agency to illegally divert loan proceeds for their own benefit. Some of the diverted funds are suspected of having been wired to oversees bank accounts as one of the men was planning to escape.
According to a copy of the affidavit attached to the Criminal Complaint provided by the Department of Justice to MortgageDaily.com, Fernando Damaia and James R. Niblock used a title agency owned by Niblock, First National Title and Escrow (First National), to improperly divert settlement funds to payees other than those listed on the HUD-1 settlement statement.
The two allegedly also own, control and supervise the activities of Advantage Investors (Virginia), Americas Mortgage, AmericasBank Mortgage, First Fidelity Title and Escrow, Pacific Guarantee Mortgage and Gresco Financial.
The Advantage Investors entity involved is franchise of Advantage Investors Mortgage Corporation, a national net-branch organization based in Dallas, Texas. A spokeswoman for the company, which is not accused in the complaint, said they have cooperated with all agencies involved in the investigation.
The FBI cited two confidential inside sources as providing much of the information used in the investigation. One of the confidential sources previously worked as a loan broker for Niblock, according to the affidavit. The second source is employed as a closing representative at Advantage Investors Mortgage.
In this case, the FBI reviewed a Chevy Chase Bank account that was utilized by First National for escrow disbursements. In his “Affidavit In Support of Arrest Warrant,” FBI special agent Andrew Carlie said Niblock often delayed the disbursement of funds up to thirty days — during which he spent the money on personal expenditures such as day trading, auto payments and vacations.
The float — or the amount that should have been disbursed but wasn’t — has ranged from $1.7 million to $3.5 million, the affidavit said. The float cycle was typically completed with proceeds from another loan.
No funds have been disbursed since April, according to the affidavit, and an estimated sixty-nine settlements are currently awaiting disbursement. Some disbursement checks were sent out, but returned for insufficient funds. While the FBI investigation indicates that at least $7.8 million was wired into the escrow account on behalf of borrowers during a recent two month period, only $3.20 remained in that account.
Niblock is suspected of having moved $6.8 million offshore. Damaia was suspected of intending to flee the country.
The FBI obtained a search warrant, which enabled the search of two offices and Damaia’s home and yielded handwritten notes — apparently made by Niblock — in which he appeared to admit defrauding individuals. Also found, according to the affidavit, were written instructions from Niblock to his wife on how to hide the money.
The Advantage Investors Mortgage Corporation spokeswoman said that the company has filed a civil lawsuit in Fairfax County, Virginia, against several individuals including Damaia and Niblock.
The Other Side of Fraud
As a senior manager for America’s Mortgage, a net branch of Advantage Investor’s Mortgage, I handled the daily operations of the company, but had no financial control.