Among the recent indictments, arrests and convictions of mortgage criminals — many involve foreclosure-rescue and modification schemes. But Ponzi schemes also seem to be prevalent.
Kurt Branham Barton was convicted by a jury of operating a Ponzi scheme that cost 300 individuals more than $50 million, the Department of Justice announced last week. Barton was the founder, president and chief executive officer of Triton Financial LLC.
The government claims that Barton — who targeted his own family members, Mormons and business leaders as well as professional football players — promised investors that he was using the capital to purchase real estate, businesses and other assets. But instead, he used the money on other ventures and to pay quarterly dividends or redemptions to prior investors.
The U.S. Attorneys Office in Nevada announced last week that Marcilin Anne Benvin was indicted on 50 counts over allegations that she defrauded investors between 2004 and 2008. Benvin was the was the owner of Cetus Mortgage Ltd., a hard-money lender founded in 1987 that went bankrupt in 2008 and was seized by the Nevada Division of Mortgage Lending. The company had collected $35 million from 150 investors and had a loan portfolio of 70 loans for $60 million at the time of its demise.
The government is pursuing the former Nevada resident because she allegedly deceived investors about the conditions and purposes of the loans and provided fraudulent documents so that she could collect roughly 3 percent in origination fees as a mortgage broker. She promised investors that their investments would be secured by first deeds of trust — though many of the loans defaulted. She also allegedly stole from an employee benefit plan.
Benvin, who faces arraignment on Sept. 1, was terminated from her job as a mortgage loan officer at Alaska Pacific Mortgage in Jeneau, Alaska, once the company learned of the indictment, the Juneau Empire reported.
More than 260 investors lost more than $17 million in a Ponzi scheme operated by Robert Stinson Jr., according to the U.S. Attorneys Office for the Eastern District of Pennsylvania. In an Aug. 15 announcement, the government said Stinson pleaded guilty to the charges outlined in a 26-count indictment.
Through Life’s Good Inc., Stinson allegedly solicited investors with promises of returns between 10 and 16 percent and claims that he graduated from the Massachusetts Institute of Technology. They weren’t told, however, that he had been convicted of fraud multiple times and had previously been enjoined from committing securities fraud by the Securities and Exchange Commission.
Stinson is scheduled for sentencing on Dec. 13.
More than $3 million was collected from thousands of borrowers by Home Owners Protection Economics Inc. — leading to the arrest of the company’s president, Christopher S. Godfrey, a news release said. Also arrested were defendants and HOPE employees Dennis Fischer, Vernell Burris Jr. and Brian M. Kelly.
An indictment against the HOPE defendants alleges that the told employees to mislead borrowers about the Home Affordable Modification Program in an attempt to collect between $400 and $900 in up-front fees for loan modifications.
“In exchange for these up-front fees, HOPE allegedly sent its customers, including homeowners in Massachusetts, a do-it-yourself application package that was nearly identical to the application the U.S. government provides free of charge,” the government said.
Among the alleged misrepresentations were the claims that the modifications were virtually guaranteed, refunds would be given when modifications were unsuccessful and the company was a nonprofit organization affiliated with the borrowers’ servicers. Borrowers were also advised to stop making mortgage payments.
HOPE was among two loan modification firms sued by Florida’s attorney general in May.
Another four defendants — Ronald Rodriguez, Zoar Rodriguez, Berta M. Cabrera and Kellyd Rodriguez — were arrested last week for allegedly collecting modification fees through their company Best Value Homes Inc. but not delivering promised loan modifications services. Their 500 victims reportedly lost $750,000 in the scam.
Best Value operated in 2008 and 2009 — generating business through telemarketing. Clients were charged between $1,500 and $1,750 in up-front fees — which are prohibited in Florida. Violations of the Racketeer Influenced and Corrupt Organizations Act are alleged.
On Aug. 16, the Nevada attorney general’s office reported that Joseph Yorkus was sentenced to 48 months in state prison and ordered to pay restitution of $346,155. However, Yorkus will serve his sentence concurrently with another prison term of between 24 and 102 months for a separate case involving mortgage fraud.
Yorkus, along with co-defendant James Bartczak, is accused of charging for loan modification services through several businesses but not providing any services. Bartczak was only sentenced to probation and ordered to pay $37,021 in restitution.
The pair was arrested on Feb. 3 for allegedly sending fake transfer-of-servicing notices to some Bank of America’s Nevada borrowers so that they could collect the payments themselves through a sham company, Great Western Business Services. Another company they operated, BAC Collections, sounds very similar to BofA’s servicing unit’s name, BAC Home Loans Servicing LP.
The U.S. Attorney’s Office for the Eastern District of Missouri announced on Aug. 8 that an indictment was handed down on Marien Brown, who was also known as “Marien White.” Brown operated 1st Financial Resource LLC and 1st Federal Resource, LLC — using a UPS store for the address.
By targeting distressed borrowers in Hawaii, she promised more than 80 clients that she would use her foreclosure-rescue service to help them avoid foreclosure. But when clients wired funds to her, expecting that she would pass on the payments to the servicers, Brown spent the money on personal expenses. None of the funds made it to the lenders.
When clients started calling their servicers, they were told that no payments had been made, no modifications had been negotiated and no relationship existed with Brown’s companies.
“Clients then attempted to reach Marien Brown and repeatedly left messages for her,” the announcement stated. “The only way clients were able to get her to return calls, was to leave a message expressing a desire to wire her additional funds.”
Howard R. Shmuckler was charged by a federal grand jury with operating The Shmuckler Group, a fraudulent mortgage-rescue business, the Department of Justice announced last month. An arrest at his Virginia Beach, Va., residence followed. In addition to allegedly promising a 97 percent success rate in securing loan modifications, Shmuckler falsely claimed that he was a licensed attorney. Fees charged ranged from $2,500 to $25,000.
The company was touted as the “largest, most successful group of professionals … coming together to help home owners keep their homes in a manageable and affordable manner.” Once on board, clients were advised to stop talking with their servicers and to stop making payments. An FBI investigation found that no modifications were ever facilitated.
Newsday reported that John Rutigliano and Kenneth Kiefer were arrested this month over allegations they convinced distressed borrowers to sign over their titles only to be swindled out of their properties. The scheme resulted in 14 borrowers losing $1.5 million.