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Loan Officer, 2 Processors Indicted In $5.7 Mil Scheme

Loan Officer, 2 Processors Indicted In $5.7 Mil SchemeKey figure in south side Chicago case is a fugitive at large

June 17, 2002

By SAM GARCIA

A loan officer and two loan processors are among fifteen people indicted in a south side Chicago “flipping” scheme, according to an announcement from the Department of Justice (DOJ). Brian J. Wilkozek, acting as an agent for a lender, and two loan processors, Shah Siddiqui and Neeraj Mody, allegedly used false documentation to secure mortgage loans on second purchasers in the scheme, the DOJ said.The defendants are accused of using false and misleading documentation to verify down payments, credit, employment and financial histories. Illegal profits from each transaction ranged from around $20,000 to as much as $70,000.

The case centers around Share Development Company, Inc., which the indictment says was in the business of buying, developing and selling real estate. The company was owned and operated by defendant Theresa L. Holt, 55, who also took loan applications as a paid independent contractor for Challenge Mortgage, a mortgage brokerage.

Wilkozek, the loan officer, worked for JVS Financial, Inc., a Chicago area mortgage loan originating and brokering company. One processor worked for Challenge Mortgage and the other worked for Share Development.

The indictment said around June 1996, Holt, the owner of Share Development, devised a scheme where she would purchase up to 200 Chicago properties directly, or through Share Development, from one individual (or entities related to him) for $25,000 each. During 1997, Holt purchased 99 of these properties. After the agreement ran out, another unnamed company purchased 12 properties from the same seller, which in turn were purchased by Holt for $30,000 to $37,000 each.

Holt, whose whereabouts are currently unknown, then sought out buyers for the properties, offering transactions with no down payments and cash back at closing. Sales of the homes at inflated prices occurred beginning in 1997. While the transactions were typically cash, the properties were usually resold in a flip transaction on the same day they were purchased. Holt allegedly paid the purchaser-defendants each between $3,000 and $4,000, undisclosed to the lenders.

In all, 111 properties were involved, with $5.7 million in mortgage loans made that would not have been approved with accurate and true documentation. Second mortgages carried by Holt as the seller in the amount of 10% to 15% of the purchase price were typically used, with an alleged verbal agreement between Holt and the buyers that she never had any intention of enforcing repayment.

Duped lenders, whose losses were estimated at more than $2.5 million, include:

Defendants in the case will be ordered to appear at a later date for arraignment. Each faces up to 5 years in prison for each count of mail and wire fraud, and up to 20 years for each count of money laundering. Not all defendants are listed in each of the 79 counts. Holt was charged with 57 counts of money laundering.

MortgageDaily.com           
Other articles about mortgage fraud cases include:

  • 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
  • Former PinnFund Chief Michael Fanghella pleads guilty
  • 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 the Publisher of MortgageDaily.com. He also owns and operates CloseNow.com, a consumer real estate portal site.email: SamGarcia@MortgageDaily.com

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