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Fake Gift Funds, Income Cited in Massachusetts Fraud Case

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A Virginia man has been accused by the government of duping mortgage lenders in a Massachusetts flip scheme that used fake down payment and income verification.

Angel L. Serrano Jr., 41, of Potomac Falls, Va., was charged with wire fraud and false statements. The U.S. Department of Justice alleges that between 1996 and 1997, he purchased and sold distressed properties in Massachusetts the same day without informing the lenders.

The indictment states that Serrano hid the land-flips from the original sellers and the lending institutions and deceived low-income buyers into submitting fraudulent loan applications to the lender.

The indictment specifically alleges that Serrano persuaded owners of residential properties to enter into purchase and sales agreements by concealing from the sellers that the properties were to be immediately resold for a higher price. Serrano then induced low-income, first-time home buyers to pay inflated prices for the properties, telling the buyers they had to go through him to buy the properties. He also concealed that he was purchasing the property the same day for a lower price, the indictment states.

Some of the transactions used Federal Housing Administration or Veterans Administration loans. First-time home buyers typically were involved.

A fraudulent $67,965 application allegedly was submitted by Serrano to Countrywide Home Loan, Inc., in early 1997. In addition to fake rental income, $3,500 in gift funds from a sister were falsely listed as the source of the down payment. Countrywide was not informed that the property, which had a $68,000 purchase price, was purchased by a co-conspirator the same day for $58,000

In another transaction funded by Countrywide, Serrano allegedly used an alias name — Edwin Arce — to hide the fact that he was the seller and his sister, Evelyn Serrano, was the buyer. The government said he bought that property for $69,000 before closing on the sale to his sister for $75,000 that same day.

Another fraudulent loan application, for almost $100,000, was submitted to Countrywide on a property selling at $100,000. That property had already been purchased for $60,000 the same day, the indictment states. Serrano is accused of listing a fake gift as the down payment and falsely representing to the purchaser that he would refund $30,000 from the sales proceeds for property repair costs.

Serrano also allegedly duped National Mortgage Corporation, selling a property for $107,000 that he bought earlier in the day for $75,000. The down payment was falsely listed as cash for $12,000.

Another property financed by National was sold for $112,000 the same day Serrano purchased it for $55,000.

Other fraudulent loan packages allegedly included more fake down payments and inflated or fake income.

If convicted, Serrano faces up to five years imprisonment, in addition to a $25,000 fine for each of the three counts of the indictment.

Articles about mortgage fraud cases include:

  • Fraud Flips National Phenomenon: A look at mortgage fraud schemes.
  • Atlanta fraud network responsible for more than $100 million in losses.
  • Several southern California individuals have been charged for defrauding lenders and HUD of millions.
  • The Provident Bank has reportedly filed a civil lawsuit against Community Home Mortgage Corp., accusing the company of fraud.
  • Todd H. Charske and Gregory B. Romer of Kemper Financial Inc. are accused by the FBI of operating a flipping scheme and defrauding Meritage Mortgage Corporation
  • According to the Suspected Fraud Activity Index for August of this year, the state showing the most deterioration in the Fraud Index combined with the higher activity levels is Texas.
  • Two Virginia men are accused of using a Virginia title insurance agency to illegally divert loan proceeds for their own benefit.
  • 83 individuals have been indicted by a Cleveland grand jury for participating in mortgage fraud schemes.
  • Former PinnFund CFO admitted to being a coconspirator in the $300+ million Ponzi scheme
  • Three Peoria, Illinois women were sentenced for their involvement in a mortgage loan scam where they defrauded a bank of $1.7 million in a classic flip transaction scheme
  • Shirley Harwood and her employee pled guilty to defrauding two lenders out of more than $6 million
  • Loan originator Brian J. Wilkozek and two loan processors are among fifteen people indicted in a south side Chicago “flipping” scheme
  • Edward Rostami was sentenced to a year in prison for using a fraudulently obtained property title to obtain a $1 million loan
  • Rene Abreu was among 11 people indicted in a case involving The Mortgage Pros, Inc. in Guttenberg, New Jersey
  • David Allan Van Velzer, Jr., was sentenced to more than 8 years in prison for wire fraud and money laundering
  • Kenneth Bradford and Jo Ellen Bryant received 10+ year sentences in a Georgia flipping case
  • Seven indicted in AppOnline.com mortgage fraud scheme
  • Indian authorities apprehended Rajiv C. Shah, one of two brothers that allegedly sold loans with fraudulent documentation to 3 U.S. lenders
  • Loans originated by originated by Chapel Creek Mortgage Banker, Inc. could cost Chase Manhattan Mortgage Corp. between $10 and $20 million
  • Kent E. Baklor was sentenced for defrauding two lenders of over $8.5 million
  • Tamira Smyth was sentenced in a Chicago ‘flipping’ scam involving twenty defendants
  • Former Las Vegas mortgage broker David Ferradino was sentenced to five years’ probation and ordered to pay $4.2 million in restitution to 90 investors
  • Michael Graham received a sentence of more than 12 years in prison and was ordered to pay $515 million in restitution for his role in the failure of The First National Bank of Keystone.
  • Yehuda Shiv was charged by the SEC with overstating the value of his clients’ assets by more than $139 million
  • Cheryl A. Swain pleaded guilty to a charge of mail fraud in connection with her conduct as the VP for Marketing Syndication of MCA
  • Robert B. Herbert, Jr. of Raleigh allegedly “embezzled and misappropriated moneys from Stewart Title.
  • Donald Lukens allegedly defrauded more than 100 investors — including popular sports figures — of at least $12.5 million in a number of schemes, including one involving mortgage backed securities
  • Steven D. Mueffelman and John S. Lombardi charged in a 15-count indictment with mail and wire fraud
  • Raymond T. Jackman, JR. was sentenced to two years’ probation
  • GreatStone Mortgage in Florida is accused of fraud, sexual harassment.
  • The government is pursuing mortgage fraud cases in Charlotte and Cleveland.
  • Miami family allegedly ran a mortgage fraud ring that swindled lenders out of $3.8 million.
  • Maryland is the state with the most instances of possible fraud, according to Affinity Corporation’s ‘Suspected Fraud Activity Index’ for the months of June, July and August.
  • Thomas Eck and Zahra Gilak made as much as $15 million, and defrauded investors of $100 million in sham that included online mortgage brokerage
  • Richard Wood, a Las Vegas mortgage broker accused of bilking millions of dollars from dozens of investors in a nationwide Ponzi scheme, was gunned down outside his home.
  • FBI Investigating Massive Mortgage Fraud Case In Spokane
  • Richard Michael McDowell, who through southern California-based Active Home Loans and M&M Loan Service admittedly swindled an estimated $7 million from about two dozen investors, was sentenced to 27 months in federal prison.

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