Mortgage Daily

Published On: January 5, 2002
Two More Plead Guilty In PinnFund Scam

Former CFO admits to role in fraud financials

September 5, 2002

By SAM GARCIA

Two additional defendants have plead guilty in one of the largest fraud cases in Southern California history.The U.S. Attorney’s office recently announced that the former Chief Financial Officer of PinnFund admitted to being a coconspirator in the $300+ million Ponzi scheme. In his admission, John D. Garitta, 43, acknowledged preparing and disseminating false financial statements. Garitta also admitted to participating in a scheme to deceive auditors.

“This case is another example where personal greed led to the evasion of taxes and the failure of a corporation,” said Denise L. Rubin, Internal Revenue Service (IRS) Criminal Investigation Special Agent. “The heightened awareness of corporate fraud in America has made the public more aware of the financial ruin caused by these types of crimes.”

Michael Fanghella, PinnFund’s former chief executive officer who was the primary conspirator in the case, pled guilty to one count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, three counts of tax evasion, and once count of filing a false entry with HUD earlier this year. Fanghella is awaiting sentencing in November.

John C. Bykowski, 25, also plead guilty according to the announcement. Bykowski, who was an administrative assistant at the company, admitted participating in the conspiracy by making cash withdrawals from PinnFund for the benefits of the conspirators with the intent of hiding the cash from the IRS.

“This serious crime reveals how devastating a major fraud can be to all parties involved,” said FBI Special Agent William D. Gore. “The investors lost hundreds of millions, while the innocent employees lost their jobs and retirement funds.”

Other articles about mortgage fraud cases include:

  • 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

Sam Garcia has been in mortgage lending since 1980, and is managing editor of MortgageDaily.com. He also owns and operates CloseNow.com, a real estate portal site.

email: [email protected]

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