Over the last two years I’ve noticed a bevy of mortgage scam artist heading to prison. Many of these scams ran into the millions, and involved hundreds of homes and phony loans.

The most common scam is known as a “straw mortgage” or “straw buyer” scam. As detailed in the featured story involving Julian Cauvin, fictitious jobs, accounts, and net worth are created in order for a lenders client to purchase a home they cannot afford.

The lender, acting as the middle man, pockets tens of thousands of dollars on each home by using the straw buyer. The buyer is usually paid ten to twenty thousand for their participation and the use of their credit.

The homes are often sold several times within the ring (inflating the price each time). Eventually the homes are abandoned after being stripped bare. These scams involve real estate agents, lenders, appraisers, and escrow companies (or lawyers).

The prevalence of such lending scams played a significant role in the implosion of the financial markets.

February 20, 2009   

Samuel Morejon was sentenced yesterday by U.S. District Court Judge Marcia Cooke to 27 months in federal prison, to be followed by three years of supervised release, for his participation in a mortgage fraud scheme. 

Judge Cooke further ordered a hearing to determine the restitution to be paid by Morejon; the hearing is scheduled for March 18, 2009 at 10:00 a.m.

Morejon pled guilty in December 2008 to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. §1349, and two counts of wire fraud, in violation of 18 U.S.C. §1343.  Morejon was arrested in November 2008 for participating in the fraudulent sale of residential property located in Coral Gables and Miami, Florida. 

According to documents filed with court, the Coral Gables property was flipped three times within about two years, more than doubling the price of the property from $550,000 to $1,200,000. 

Morejon served as the straw buyer in the second sale of this property and submitted false loan applications to obtain $850,000 in financing to purchase the property. 

Once the final sale closed, the individual posing as the buyer in the third sale, co-defendant Jose Martinez, failed to make a single payment on the mortgage, and the property ultimately went into foreclosure resulting in a significant loss to the lender. 

According to court records, on the same date Morejon posed as a buyer for the Coral Gables property, he served as a straw buyer in the purchase of another residential property in Miami, Florida. 

Based on fraudulent misrepresentations in the loan application, Morejon obtained $835,000 of financing to purchase this property.  He never made a single payment on the mortgage, and the property went into foreclosure resulting in a significant loss to the lender.

SCHEME TO ALTER CREDIT DATA ON RESIDENTIAL MORTGAGE LOANS

Steven Gordon, 49, of Miami, pled guilty today to wire fraud charges related to a five-year scheme to inflate the value of mortgage loans to increase his commission compensation. 

Sentencing has been scheduled for April 23, 2009 at 9:00 a.m. Prior to his dismissal in 2006, Gordon was a principal at Bayview Financial, LP (Bayview Financial),a Coral Gables-based finance company that buys portfolios of loans from lending institutions. Bayview Financial pooled these loans into newly formed business entities, called “special purpose entities,” and then issued securities backed by those loans to the investing public. 

During fiscal years 2006, 2005 and 2004, respectively, Bayview Financial and its affiliates securitized approximately $2.056 billion, $0.954 billion and $1.428 billion, in offerings of residential and commercial mortgage loans, including $1.989 billion, $0.884 billion and $1.243 billion of residential mortgage loans.

While employed at Bayview Financial, defendant Gordon held the title of “Director of Residential Acquisitions.”  One of Gordon’s primary duties was to negotiate the purchase of thousands of loans for Bayview Financial’s residential mortgage securitization program.  Gordon’s incentive compensation was based, in part, on his ability to buy those loans at a low cost.

Today, Gordon admitted that between 2001 and 2006, he engaged in a scheme to defraud Bayview Financial, in which he regularly altered credit information affecting the value of more than 2,800 loans acquired for Bayview Financial’s residential mortgage securitization program.  Gordon’s fraudulent scheme caused Bayview Financial to pay him more than $2.8 million in excessive and undeserved bonuses. 

December 23, 2008 

TWO BANK INSIDERS AND SIX OTHERS CHARGED IN BANK FRAUD SCHEME TO
DEFRAUD BANK OF AMERICA AND WACHOVIA OF $1 MILLION

A federal grand jury returned a five count indictment charging Bienvenido "Benny" Benach, Jr., Ramon Puentes, Danny Flores, Rolando Alfonso, Jorge Nobrega, Jorge Arrieta, Sebastian Kishinevsky, and Adriana Cruz, with a bank fraud scheme that resulted in the approval and disbursement of two home equity loans, totaling approximately $1 million.

As alleged in the indictment, the scheme was directed at Bank of America and Wachovia. The defendants have been charged with conspiracy to commit bank fraud, bank fraud, and aggravated identity theft, in violation of Title 18, United States Code, Sections 1349, 1344 and 1028A. All of the defendants have made their initial appearances before a Magistrate Judge and the case will be set for trial by the District Court Judge presiding over the matter.

According to the indictment, Benach, Puentes, Flores and Alfonso decided to submit simultaneous applications for fraudulent home equity lines of credit ("HELOCs") to Bank of America and Wachovia for the total amount of $1 million, requesting $500,000 from each bank.

Each HELOC application listed Benach's mother-in-law as the purported borrower, and a home owned by Benach's mother-in-law as the collateral. To prepare and process the HELOC applications, Benach's mother-in-law's name and social security number were used without her knowledge, input or authority.

Flores and Alfonso submitted the fraudulent Bank of America HELOC application to Arrieta, a personal banker at Bank of America, and gave the fraudulent Wachovia HELOC application to Kishinevsky, a financial specialist at Wachovia. For a fee, each bank insider agreed to process the fraudulent HELOC.

At the time of the submission of the fraudulent HELOC applications, neither bank was made aware of the other pending HELOC application. After the HELOC at each bank was funded and the funds were made available, the defendants disbursed and shared the fraudulently obtained loan proceeds, receiving in total approximately $800,000.

December 19, 2008

John Mohan, 38, of Delray Beach, FL, was sentenced today to 33 months' imprisonment. In September, Mohan pled guilty to a one-count Information charging him with wire fraud in connection with a scheme to misappropriate more than $1.2 million in client funds purportedly held in escrow for authorized real estate transactions and related expenses. Restitution will be determined in 90 days.

According to the Information, court documents, and statements made in court, Mohan worked as a mortgage broker and closing agent who assisted buyers in real estate transactions.

As the closing agent, Mohan would collect funds from buyers and lenders, and would represent to the parties engaged in the transaction that these funds were being held in escrow to be disbursed for various specified purposes, including the satisfaction of pre-existing mortgages. In fact, Mohan misappropriated the escrowed funds for his personal use and to make additional personal investments.

Over the course of the scheme, Mohan misappropriated more than $1.2 million in client funds. In an effort conceal the fraud and prevent immediate foreclosure of the property, Mohan would sometimes make some payments on the homeowner's original mortgage.

December 16, 2008

Joseph J. Weisenfeld, a local real estate attorney, was sentenced on December 15, 2008 by U.S. District Court Judge Alan Gold to 63 months in prison based, following his guilty plea to wire fraud charges. 

The charges stemmed from Weisenfeld's misappropriation of more than $3 million in client funds purportedly held in escrow for authorized real estate transactions and related expenses. No fine was imposed, and a restitution hearing is scheduled for January 24, 2009 at 4:30 p.m.

According to the Information and statements made during the plea hearing, Weisenfeld, a licensed attorney, represented individuals and/or entities (mostly buyers) in real estate transactions.

As the closing agent in many of these transactions, Weisenfeld would collect funds from buyers and lenders, and would represent to the parties engaged in the transaction that these funds were being held in escrow to be disbursed for various specified purposes, including the satisfaction of pre-existing mortgages.

In fact, however, Weisenfeld misappropriated the escrowed funds for his use and benefit. Over the course of the scheme, Weisenfeld misappropriated over $3 million in client funds from his attorney trust account.

December 11, 2008

Steven Gordon, 49, of Miami, with wire fraud in connection with a scheme to inflate the value of mortgage loans and increase his commission compensation.

Gordon was a principal at Bayview Financial, LP (Bayview Financial), a Coral Gables-based finance company that buys portfolios of loans from lending institutions. Bayview Financial pools these loans into newly formed business entities, called “special purpose entities,” and then issues securities backed by those loans to the investing public.

During fiscal years 2006, 2005 and 2004, respectively, Bayview Financial and its affiliates securitized approximately $2.056 billion, $0.954 billion and $1.428 billion, in offerings of residential and commercial mortgage loans, including $1.989 billion, $0.884 billion and $1.243 billion of residential mortgage loans.

The Information alleges that defendant Gordon was a principal of Bayview Financial and held the title of “Director of Residential Acquisitions.” One of Gordon’s primary duties was to negotiate the purchase of thousands of loans for Bayview Financial’s mortgage securitization program. Gordon’s incentive compensation was based on his ability to buy those loans at a low cost.

The charges filed today allege that Gordon defrauded Bayview Financial by altering credit information affecting the value of more than 2800 loans he acquired. According to the Information, Gordon falsified this credit data to increase his compensation, causing Bayview Financial to pay him more than $2.8 million in additional commissions. Some of the fraudulent credit data was incorporated into Bayview Financial’s securitization program.

December 4, 2008

United States Attorney for the Southern District of Florida, announced the sentencing of three Palm Beach County residents for their participation in a mortgage fraud scheme totaling more than $6.5 million. 

Defendant Lauren Jasky , 30, was sentenced today by U.S. District Court Judge Donald M. Middlebrooks to 36 months’ imprisonment, to be followed by 5 years of supervised release.  On December 1, 2008, Judge Middlebrooks sentenced defendant Ralph Michel, a/k/a Ralph Duverneau, 36, to 30 months’ imprisonment, to be followed by 4 years of supervised release. 

On November 19, 2008, Judge Middlebrooks sentenced defendant Berry Louidort , 27, to 37 months’ imprisonment, to be followed by 5 years of supervised release.  All three defendants previously pled guilty to conspiracy to commit bank fraud and mail fraud.  Defendants Michel and Louidort also pled guilty to a money laundering charge. 

According to court documents and court testimony, this investigation began with an audit conducted by the Florida Office of Financial Regulation into 24 sub-prime mortgage loans initiated by Compass Mortgage Service, Inc. (“Compass Mortgage”), located at 7015 Beracasa Way, Ste 104, Boca Raton, FL. 

The initial audit revealed that the loans included excessively large fees paid to defendants Berry Louidort and Ralph Michel.  The fees, ranging from $29,000 to $650,000, were described as marketing and/or assignment fees.  In fact, however, the fees were kickbacks to defendants Louidort and Michel based on inflated sales prices.  The audit also revealed that the majority of the suspect loans were originated by defendant Lauren Jasky, Senior Vice President of Compass Mortgage. 

To execute the scheme, the defendants fraudulently bought and sold residential property in Palm Beach County, FL.  Defendants Louidort and Michel received large assignment and marketing fees and Jasky received mortgage brokerage fees. The defendants prepared fraudulent loan applications for the purchasers and submitted them to the lenders. The applications included materially false information about the borrowers’ employment verification, income, funds on deposit, and rent history. 

November 7, 2008

United States Attorney for the Southern District of Florida, announced today the unsealing of an Indictment against defendant Linda Castre Gosman, a.k.a. Lin Gosman, a.k.a. Linda Castre, 59, currently of West Palm Beach, Florida. 

The Indictment charges the defendant with five counts of bankruptcy fraud, in violation of 18 U.S.C. §152; two counts of mortgage fraud, in violation of 18 U.S.C. §1014; nine counts of structuring, in violation of Title 31, United States Code, Section 5324; and related forfeiture. 

As set forth in the Indictment, on March 1, 2005, a judgment in the amount of $66,539,181.01 was issued against defendant Linda Gosman, stemming from her husband’s bankruptcy.  Gosman was deposed on April 25, 2005 and was asked about storage units she used. 

During the deposition, Gosman falsely testified that she used only certain storage units and did not disclose information about another storage facility she used.  Gosman was deposed again on June 10, 2005, and was again asked about storage units she used.  Once again, she falsely testified that she used only certain storage units when, in fact, she used at least one other storage facility. 

Gosman was also asked whether she owned any furniture, artwork or jewelry other than what was already in possession the trustee that had been appointed in her husband’s bankruptcy and claimed she did not. 

The indictment alleges that on June 22, 2005, a “break order” issued by the United States Bankruptcy Court was executed at a storage unit at Public Storage, Inc., rented by Gosman.  The “break order” allowed the bankruptcy trustee, accompanied by United States Marshals, to enter the storage unit without Gosman’s knowledge or permission. 

Upon entering the storage unit, the bankruptcy trustee found valuable furniture, artwork, and other significant items.  On July 1, 2005, another “break order” was executed at Villa Jasmine, a luxury unit within the Colony Hotel, located in Palm Beach, FL, where Gosman resided.  A locked safe was found at the residence. 

On July 22, 2005, a third “break order”  was executed on the safe found at Villa Jasmine.  A triple strand Tahitian pearl necklace with a diamond encrusted clasp and a pair of pave and baguette diamond earrings were discovered in the safe.

In addition , the indictment also alleges that Gosman made a false statement on her December 29, 2004 application for a  $1,140,000.00 mortgage loan for property located on South Flagler Drive, West Palm Beach, FL.  Specifically, Gosman allegedly failed to disclose that she was a party to the ongoing litigation against her in her husband’s bankruptcy. 

She is also charged with failing to disclose the $66 million March 1, 2005 judgment against her in a March 30, 2005 mortgage application for a $350,000  refinancing cash back mortgage loan on property located on Sea Steppes Court, Jupiter, FL.

Lastly, Gosman is charged with nine counts of structuring cash withdrawals from domestic bank accounts she had opened.  The indictment alleges that, between September 26, 2005 and March 15, 2007, approximately $419,306.11 from overseas accounts was deposited into her domestic accounts. 

The indictment alleges that, of this money, Gosman structured the withdrawal of approximately $343,999.00 in cash.  In addition to the criminal charges, the indictment seeks to forfeit $693,999.00 representing proceeds Gosman received from the Sea Steppes mortgage fraud and from the structuring. 

If convicted, each bankruptcy fraud count carries a statutory maximum penalty of five (5) years’ imprisonment; each mortgage fraud count carries a statutory maximum penalty of thirty (30) years’ imprisonment; and the structuring counts each carry a maximum penalty of ten (10) years’ imprisonment, substantial fines, and court ordered restitution.

October 30, 2008

United States Attorney for the Southern District of Florida, announced today that defendant Gregory Claude Brown, of Palm Beach County, was sentenced by U.S. District Court Judge Donald M. Middlebrooks to 240 months’ imprisonment, to be followed by three (3) years of supervised release.  Brown was also ordered to pay restitution of over $2 million to the financial institutions and other victims of the fraud.  

On June 5, 2008, at the conclusion of a three week trial in West Palm Beach, FL, Brown was found guilty on an eighteen count indictment.  Specifically, Brown was convicted of conspiracy, wire fraud and mail fraud arising from a scheme to obtain more than $9 million in home mortgages by submitting false information to banks regarding the purchase of more than 10 homes. 

Brown was also convicted of failure to timely file his federal income tax returns for the 2001 through 2005 tax years and of income tax evasion with regard to his 1998, 1999, and 2001 through 2005 taxes.

According to the superseding indictment and evidence presented at trial, Brown failed to pay his 1998, 1999, and 2001 through 2005 income tax liabilities, which totaled approximately $214,299, and engaged in affirmative acts of evasion, including concealing his income and assets, filing false documents with the Internal Revenue Service, and placing funds and property in the names of nominees. 

According to evidence presented during the trial, Brown and others created false income tax returns to justify the false income information on the mortgage applications. 

Brown filed these false returns well after the filing dates required and failed to pay any taxes due and owing despite buying more houses, buying a 40 foot go-fast boat, traveling to foreign countries, leasing high end motor vehicles, and buying luxury items. 

Co-defendant Monica Martinez, defendant Brown’s girlfriend, pled guilty to filing a false tax return in connection with the scheme to obtain mortgages fraudulently.  On July 28, 2008, defendant Monica Martinez was sentenced to three (3) years of probation. 

Co-defendant Wilfredo Martinez pled guilty to one count of wire fraud resulting from his submission of false information on a mortgage application for a property in North Palm Beach, Florida.  On August 25, 2008, defendant Wilfredo Martinez was sentenced to twelve (12) months of probation. 

October 21, 2008

Antony Dehaney, 56, of Lauderhill and Coral Springs, FL, pled guilty today before U.S. District Court Judge William P. Dimitrouleas to one count of conspiracy to commit mail fraud and wire fraud.

Co-defendants Marcia Mestre and Angela Manalaysay pled guilty on September 3, 2008 and are scheduled to be sentenced on December 12, 2008. Defendant Dehaney is scheduled to be sentenced on December 30, 2008 at 9:15a.m. in Fort Lauderdale.

At sentencing, Dehaney faces up to 5 years in prison on the mail and wire fraud conspiracy, up to 20 years in prison on the substantive mail fraud count, and up to 5 years in prison on the bankruptcy fraud count. The remaining defendants Howard Gaines, Beverly Ireland and Donna Patricia Grant are scheduled to go trial on November 17, 2008 at the Fort Lauderdale Federal Courthouse.

Dehaney admitted during his plea to engaging in a scheme to submit fraudulent mortgage applications, false verifications of employment, false verification of deposits, false earning statements and IRS-W-2 Forms to lenders in the name of straw buyers and defrauded purchasers.

Peter Affatati, 39 of Coral Springs, FL, Anthony Affatati, 36, of Parkland, FL, Anthony Louis Cuomo, 30, of Coral Springs, FL, and Brian Schlitz, 39, of Boca Raton, FL, have been charged in separate Criminal Complaints for their participation in various fraudulent mortgage fraud and investment schemes.

The defendants made their initial appearances in federal court in West Palm Beach and Fort Lauderdale earlier today. More specifically, the four separate Complaints charge the defendants as follows. Defendant Peter Affatati is charged with:

(1) conspiracy to commit false statements on loan applications, wire fraud, mail fraud, and bank fraud in relation to the mortgage fraud scheme, in violation of 18 U.S.C. §371

(2) conspiracy to commit mail and wire fraud in relation to the fraudulent securities scheme, in violation of 18 U.S.C. §371

(3) misprision of a felony, in violation of 18 U.S.C. §4. Defendant Anthony Affatati is charged with:

        (1) conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §1349

        (2) conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §1349

Defendant Anthony Louis Cuomo is charged with:

(1) conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §1349

(2) conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §1349

Defendant Brian Schlitz is charged with:

(1) conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §1349

(2) conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. §1349

Peter Affatati is charged in a 3-count Complaint.

Count 1 charges defendant Peter Affatati with orchestrating a $40 million mortgage fraud scheme involving more than 50 residential mortgages, mostly in South Florida. According to the Information, Peter Affatati used nominee purchasers, commonly called "straw buyers," to buy residential properties.

Peter Affatati would use his company, Assurance Title, to create false supporting documents for the straw buyers, including employment records, income forms and asset statements, in order to qualify them for mortgages from institutional lenders. Once a mortgage was obtained, Peter Affatati would use a large portion of the funds for his personal benefit.

Count 2 charges Peter Affatati with conspiracy to commit investment fraud by selling to a North Carolina victim approximately $390,000 in fictitious securities. Lastly, Count 3 charges Peter Affatati with misprison of a felony by helping to conceal the wire fraud in Count 2.

By separate Information, defendant Anthony Affatati is charged with one count of conspiracy to commit foreign exchange fraud and mortgage fraud, and one count of conspiracy to commit investment fraud.

Count 1 alleges that Anthony Affatati operated various foreign exchange companies, and through brokers, called "introducing brokers," solicited and handled orders for the purchase and sale of foreign currency option contracts.

The introducing brokers for foreign currency option contracts operated under the names Standard FX, Superior FX, Superior 4X, and Hamilton Edwards, and were located in Coral Springs and Plantation FL. Employees of these companies allegedly called prospective clients and falsely promised them high returns on their investments if they invested in options to purchase Euros.

In these sales pitches, the sales teams minimized or entirely failed to disclose large up-front commissions, the companies' poor performance history, and made other material misrepresentations and factual omissions. As a result of these misrepresentations, clients suffered approximately $2.5 million in investment losses.

Count 1 also alleges that Anthony Affatati was involved in mortgage fraud, and purchased his Parkland home through a straw buyer. Count 2 of the Information charges Anthony Affatati with conspiracy to sell fraudulent securities to the public.

In this second conspiracy, Anthony Affatati, together with co-defendants Cuomo and Schlitz, allegedly sold securities of Hema Diagnostics Systems, a privately held company in Miami-Dade County, FL, without knowledge or permission from the company by making their own promotional literature for Hema Diagnostics Systems. Defendants Anthony Affatati, Cuomo, and Schlitz kept the investors' monies for their own use and investors did not receive any stock in Hema Diagnostics.

Defendant Anthony Louis Cuomo was separately charged in a 2-count Information with one count of conspiracy to commit foreign exchange fraud and mortgage fraud, and one count of conspiracy to commit investment fraud. Cuomo is alleged to have participated in the $2.5 million foreign exchange fraud scheme operated by co-defendant Anthony Affatati.

Defendant Brian Schlitz was charged in a one-count Information with running a mortgage fraud scheme similar to Peter Affatati's mortgage fraud scheme, but on a smaller scale.

Through this scheme, Schlitz used straw buyers with falsified employment records, income forms, and asset statements in order to qualify them for mortgages, and then kept a significant amount of the mortgage funds for his own use and benefit.

.

September 19, 2008

DELRAY BEACH MORTGAGE BROKER PLEADS GUILTY TO FRAUD

R. Alexander Acosta, United States Attorney for the Southern District of Florida  and Jonathon I. Solomon, Special Agent in Charge, Federal Bureau Investigation, announced that defendant John Mohan, 38, of Delray Beach, FL, pled guilty to a one-count Information charging him with wire fraud in connection with a scheme to misappropriate more than $1.2 million in client funds purportedly held in escrow for authorized real estate transactions and related expenses. 

The wire fraud charge carries a statutory maximum sentence of 20 years’ imprisonment and the payment of a fine.  Sentencing is scheduled for Friday, December 19, 2008, before the Honorable James I. Cohn.  

According to the Information, court documents, and statements made in court, Mohan worked as a mortgage broker and closing agent who assisted buyers in real estate transactions. 

As the closing agent, Mohan would collect funds from buyers and lenders, and would represent to the parties engaged in the transaction that these funds were being held in escrow to be disbursed for various specified purposes, including the satisfaction of pre-existing mortgages. 

In fact, Mohan misappropriated the escrowed funds for his personal use and to make additional personal investments.  Over the course of the scheme, Mohan misappropriated more than $1.2 million in client funds.  In an effort conceal the fraud and prevent immediate foreclosure of the property, Mohan would sometimes make some payments on the homeowner’s original mortgage.

WELLINGTON MAN SURRENDERS TO FACE MORTGAGE FRAUD CHARGES

September 12, 2008

More specifically, Gonzalez was charged in a four count Information with two counts of wire fraud involving one property and more than $3.6 million obtained in fraudulent mortgages in Wellington, FL, resulting in a loss of nearly $400,000 to National City Bank. In addition, Gonzalez is charged with stealing the identity of another person to obtain an American Express credit account and then using that credit account to obtain more than $33,000 in money, merchandise and services.

According to the Information, the defendant engaged in a scheme to obtain mortgages from lenders using straw purchasers and through the submission of false documentation, including false loan applications, false employment information, false salary statements, and false rental income.

He then stole the identity of one of the straw purchasers to obtain the American Express credit account. Gonzalez used the American Express credit account to obtain cash, merchandise and services without the permission of the person whose name appeared on the account.

September 4, 2008

TWO DEFENDANTS PLEAD GUILTY IN BROWARD COUNTY MORTGAGE FRAUD SCHEME

R. Alexander Acosta, United States Attorney for the Southern District of Florida, Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, Donald B. Saxon, Commissioner, Florida Department of Financial Regulation, and Henry Gutierrez, Postal Inspector in Charge, United States Postal Inspection Service, announce today that Marcia Mestre, age 51, of Wilton Manors, Florida, and Angela Manalaysay, age 35 of Plantation, Florida plead guilty on September 3, 2008 before United States District Court Judge William P. Dimitrouleas to charges related to a mortgage fraud scheme.

Mestre, pled guilty to one Count of Conspiracy to commit mail and wire fraud in violation of Title 18 United States Code, Section 371 and faces up to 5 years in prison and up to a $250,000 fine. 

Manalaysay,  pled guilty to one Count of Mail Fraud in violation of Title 18, United States Code, Section 1341 and faces up to 20 years in prison and up to a $250,000 fine.  Both are to be sentenced on November 12, 2008. 

The remaining four defendants are scheduled to begin trial on November 17, 2008. The Indictment charges conspiracy to commit mail and wire fraud, mail fraud, wire fraud, money laundering and  filing false Chapter 13 petitions in the Bankruptcy Court, involved over 25 properties and $10,000,000 in fraudulent mortgages in Broward County.

According to the Indictment, the defendants engaged in a scheme to obtain mortgages from lenders using straw purchasers and through the submission of false documentation, including false loan applications, false employment verification forms, false salary statements, and false bank account statements reflecting high account balances.   

SEVEN BROWARD RESIDENTS CHARGED IN $10 MILLION MORTGAGE FRAUD INDICTMENT
 

In Spokane Washington a jury that convicted a mortgage-company owner and a real-estate agent of conspiring to defraud home buyers and lenders will consider if the case warrants more severe sentences.

U.S. District Court Judge Robert Whaley took the unusual step of ordering the jury to remain impaneled after it convicted Dale D. "Sage" Gibbons and Sally L. Gibson of conspiracy and multiple counts of wire fraud. Gibbons was co-owner of Century Mortgage, and Gibson is a Spokane real-estate saleswoman who worked with him.

Gibbons could be sentenced to eight years, but Assistant U.S. Attorney George Jacobs may ask the jury to increase that to more than 11 years. Gibson faces a possible seven-year sentence, which could be increased to nine years.

The scam ran from July 1997 through November 2000, promised potential home buyers $100 if Century Mortgage couldn't qualify them to buy a home, according to testimony.

The scam put many first-time home buyers and others with bad credit in positions where they owed more for mortgages than their homes were worth.

Gibbons, Gibson and three others — Ronald Lee Burger, Cathy M. Patrick and John T. Hansen, were indicted in August 2008 after a two-year investigation by FBI agents.

The FBI investigation alleged the defendants tricked mortgage lenders by drafting phony documents, including fraudulent "gifting letters" suggesting the buyers were either being given or inheriting funds. The scheme also involved falsified documents and exaggerated appraisals of homes that misled out-of-state lenders.

A grand jury in Seattle has indicted the owners of two Bellevue mortgage loan companies and an escrow company, in a forty count indictment alleging mortgage, bank and wire fraud totaling more than $47 million.

"The defendants caused the loan application for the straw buyers and otherwise unqualified buyers to be prepared based upon fraudulent representations related to gross income, employment status, assets and liabilities, and whether the property would be used as a primary residence," according to the indictment.

The indictments allege the companies conspired to fraudulently purchase Seattle and Eastside homes at falsely inflated prices using "straw buyers". Straw buyers are people that allow you to “use their credit” to make the home purchase while they pose as the actual buyer. They have no intention of actually living in the home, or making the mortgage payments. They are typically paid a fee for their role in the purchase.

The indictment alleges they would "divert a significant portion of the loan proceeds from escrow accounts for their personal benefits."

The indictment lists 12 "representative" loans, totaling more than $6 million. One such property in Medina was sold to a straw buyer for $775,000 and within six months was sold to a second straw buyer for $1.2 million, according to the U.S. Attorney's Office.

The falsified loan application submitted by the defendants on behalf of the second buyer reported a monthly income of $45,000 with assets of more than $800,000, the U.S. Attorney's Office said. However, the buyer was actually a house cleaner making between $18,000 and $20,000 a year.

Named in the 29-page indictment are:

The co-founders of Kobay Financial Corp. in Bellevue

• Vladislav Baydovskiy (31) of Bellevue
• Victor Kobzar (32) of Federal Way

The owner of Nationwide Home Lending

o        Alla Sobol (28) of Renton AKA Alla PyatetskayDavid Sobol (40) of Issaquah

The founders of Emerald City Escrow

o        Donata Baydovskiy, 28, of Bellevue

o        Camie Byron, 28, of Renton, an employee at Kobay and Nationwide;

o       Sandra Thorpe (55) of Shoreline

The indictment also seeks forfeiture of items purchased with money allegedly obtained through the fraud. These include two 2004 Lamborghini Gallardo sports cars registered to Kobzar and Vladislav Baydovskiy, who also stands to lose a pair of BMWs; a 31-foot Bayliner boat; a 2008 Range Rover and 2007 Lexus registered to the Sobols; and more than $2.4 million in cash.

Eric Rulack Farrington, Jr., 55, Irving, Texas, President of Prestige Capital Corporation, which did business as Farrington Mortgage Group, Farco Construction, Inc., and EFC Investments, LLC, which also did business as EFC Management Company. Farrington was also the principal of Eric Farrington Seminars, Inc.;

Regis Lamont Williams, 43, Dallas, Texas, a Texas certified real estate appraiser who did business as Executive Certified Appraisal;

Kevin Ray Sanderson, 33, Irving, Texas, Vice President of Farco Construction, Inc., Dallas, who worked under the direction of Farrington;

Tony Earl Anderson, 51, Dallas, Texas, business associate of Farrington;

James Edward Jones, 42, Dallas, Texas, business associate of Farrington;

Edwin Terrence Bell, 41, Fort Worth, Texas, principal of The Togetherness Group, Inc., a/k/a TTG, Inc.;

Robert John Mason, 53, Oak Leaf, Texas, employee of Prestige Capital Corporation who worked under the direction of Farrington; and

Christopher N. Williams, 41, Flower Mound, Texas, business associate of Farrington, were charges in a 51-count indictment returned by a federal grand jury in Dallas on May 21, 2008, and unsealed June 17, 2008.  These defendants, along with three additional defendants named in the Indictment who were not arrested with the above eight defenants, face various charges related to a mortgage fraud scheme they allegedly operated in the Dallas, Texas area from March 2002 to January 2006.

The three defendants who were not yet arrested are:

Marcus Allen Parker, 33, Rowlett, Texas, business associate of Farrington;

Micheal (sic) Lewis Andrews, 48, Plano, Texas, did business as Second Chance Mortgage; and

Janice Little Shepherd, 50, Irving, Texas, a mortgage broker who did business as EFC Capital Mortgage, Dallas.

All defendants who were arrested have made their initial appearance before U.S. Magistrate Judge Irma C. Ramirez. The government does not anticipate moving to detain any of the named defendants and expects that all will be released on conditions pending trial. It is anticipated that the remaining three defendants will surrender to federal officials within the week.

All 11 defendants are charged with conspiracy to commit wire fraud and all are charged with criminal forfeitures. All are charged in various substantive counts, including wire fraud, bank fraud, money laundering and engaging in a monetary transaction with criminally derived property.

The maximum penalties for conspiracy to commit wire fraud and the wire fraud and aiding and abetting counts are 20 years in prison and a $250,000 fine per count. The maximum penalty for bank fraud and aiding and betting is 30 years in prison and a $1 million fine per count. The maximum penalty for money laundering and aiding and abetting is 20 years in prison and a $500,000 fine per count. The maximum penalty for engaging in a monetary transaction with criminally derived property and aiding and abetting is 10 years in prison and a $250,000 fine per count.

Eric Rulack Farrington, Jr. is charged with one count of conspiracy to commit wire fraud, one count of bank fraud and aiding and abetting, 15 counts of wire fraud and aiding and abetting, 10 counts of money laundering and aiding and abetting, and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, he faces a maximum statutory sentence of 600 years in prison, a $13.75 million fine and restitution.*

Janice Little Shepherd, is charged with one count of conspiracy to commit wire fraud, 13 counts of wire fraud and aiding and abetting, and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, she faces a maximum statutory sentence of 330 years in prison, a $4.75 million fine and restitution.*

Rejis Lamont Williams is charged with one count of conspiracy to commit wire fraud, one count of bank fraud and aiding and abetting, nine counts of wire fraud and aiding and abetting, and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, he faces a maximum statutory sentence of 280 years in prison, a $4.725 million fine and restitution.*

Kevin Ray Sanderson is charged with one count of conspiracy to commit wire fraud, one count of bank fraud, seven counts of wire fraud and aiding and abetting, and one count of money laundering. If convicted, he faces a maximum statutory sentence of 210 years in prison, a $3.5 million fine and restitution.*

Tony Earl Anderson is charged with one count of conspiracy to commit wire fraud, seven counts of wire fraud and aiding and abetting, and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, he faces a maximum statutory sentence of 210 years in prison, a $3.25 million fine and restitution.*

James Edward Jones is charged with one count of conspiracy to commit wire fraud and ten counts of wire fraud and aiding and abetting. If convicted, he faces a maximum statutory sentence of 220 years in prison, a $2.75 million fine and restitution.*

Edwin Terrence Bell is charged with one count of conspiracy to commit wire fraud, five counts of wire fraud and aiding and abetting, and two counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, he faces a maximum statutory sentence of 140 years in prison, a $2 million fine and restitution.*

Marcus Allen Parker is charged with one count of conspiracy to commit wire fraud, one count of bank fraud and aiding and abetting, and three counts of wire fraud and aiding and abetting. If convicted, he faces a maximum statutory sentence of 110 years in prison, a $2 million fine and restitution.*

Micheal Lewis Andrews, Robert John Mason, and Christopher N. Williams are each charged with one count of conspiracy to commit wire fraud and two counts of wire fraud and aiding and abetting. If convicted, each would face a maximum statutory sentence of 60 years in prison, a $750,000 fine and restitution.*

According to the indictment, the defendants ran a scheme in which they located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence. In some cases, they would create a bogus outstanding mortgage lien to be discharged.

They recruited individuals to act as nominee or straw purchasers or straw borrowers and falsely represented to them that the property would be managed by the defendants and rented by a suitable tenant; that the mortgage, interest, taxes, insurance and property maintenance would be paid from the rental income; and the straw purchasers/borrowers would have no expenses. The straw purchasers/borrowers had no intention to live in the property and did not have sufficient income to repay the loans.

The indictment also alleges that the defendants prepared and submitted fraudulent loan documents in the names of the straw purchasers/borrowers and obtained loans in inflated amounts based on these fraudulent loan documents. Then they used the fraudulently obtained surplus loan proceeds to pay the sellers kickbacks, to conceal the fraud, and distributed the bulk of the proceeds among themselves. They would then allow the loan to go into foreclosure after a few payments were made on the loan.

Residences listed in the indictment that were used in the scheme are:

1420 Travis Circle South, Irving, Texas

6231 Azalea Lane, Dallas

7730 Cliffbrook Drive, Dallas

10907 Cinderella Lane, Dallas

7617 Arborgate Drive, Dallas

13735 Ashridge Drive, Dallas

6824 Winterwood Lane, Dallas

6840 Winterwood Lane, Dallas

6915 Winterwood Lane, Dallas

7012 Creek Bend Road, Dallas

1509 Appalachian Drive, Allen, Texas.

While the indictment doesn’t indicate the total amount of the fraud, Count 51 of the indictment, the criminal forfeiture allegation, requires the defendants to forfeit $4,500,070 to the U.S. should they be convicted on Count One, the conspiracy count. The forfeiture allegation also requires the defendants, upon conviction of any of Counts Two through 17, to forfeit various sums of money, that total $3,909,539, as listed in Count 51 of the indictment.

An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty.

U.S. Attorney Roper praised the investigative efforts of the FBI and Internal Revenue Service - Criminal Investigation. Assistant U.S. Attorney Joseph Revesz is prosecuting the case.

A former Suffolk County legislator was among five suspects arrested Wednesday on grand larceny charges by fraudulently obtaining more than $50 million dollars in mortgages on dozens of homes in Southampton Town, including several a few miles from Sag Harbor in and around Noyac and Water Mill.

In a second scheme, an East Islip man and a Farmingville suspect are charged with attempted mortgage fraud for filing bogus paperwork to attain mortgages for homes in Deer Park, Amityville, Jamaica, Queens and Brooklyn.

District Attorney Thomas Spota said the alleged frauds employed the use of straw purchasers to victimize lenders by filing false loan applications that claimed the homebuyers were employed by various corporations owned or controlled by the scheme’s participants.

Another scheme, alleged to have been used to secure money, District Attorney Spota said, involved “mortgage stacking”; the creation of bogus title reports that concealed outstanding mortgages on properties and showed the homes to be owned “free and clear” and unencumbered by existing liens. 

Arraigned Wednesday in Southampton Justice Court on three counts of first degree grand larceny and first degree scheme to defraud are former Suffolk County Legislator George O. Guldi of 44 Brushy Neck Lane Westhampton Beach and Ethan E. Ellner, 54 Sagamore Drive Plainview.

Guldi, 55, an attorney who served two terms in the county legislature, and Ellner, 49, an attorney and operator of Suburban Abstract, a title company in Stony Brook, allegedly defrauded lending institutions of millions of dollars by using forged documents, false employment and income information on applications, straw buyers, false powers of attorney, deed flipping, and mortgage stacking, said the district attorney in a press release Wednesday.

Codefendants Donald C. MacPherson, 65, and Carrie Coakley of New York and Dustin J. Dente of Roslyn pled not guilty at their arraignments today in Southampton Justice Court.  MacPherson is charged with two counts of first degree grand larceny and one charge of first degree scheme to defraud.  Macpherson’s wife, Carrie Coakley is charged with first degree scheme to defraud.  Dente, 37, an attorney, is charged with two counts of first degree grand larceny.

 “The damage these defendants single-handedly caused to our local economy is simply appalling,” Spota said.  The district attorney said the defendants engaged in “a seven-year mortgage fraud spree” involving dozens of several east end homes, including a house at 1106 North Sea Road in Southampton, and two Water Mill homes at 982 Noyac Path and 2027 Deerfield Road.

The alleged scheme to defraud involved three basic forms of fraud:

Use of “straw buyers”:

Evidence gathered during the course of the investigation, said Spota, found the defendants used straw buyers (or as they called them “investors”) with fictitious employment and income information for use on mortgage applications to make the mortgage applicants appear far wealthier and thusly, a much lower risk for lenders.

Specifically straw buyers in the scheme charged Wednesday were falsely listed as having incomes as high as $45,000 per month as employees of companies the defendants owned.

One of these companies was Arena Studios, Inc. located at 407 Broome Street in Manhattan; a business that at one time provided dominatrix services. This club was also used by the defendants to successfully solicit straw buyers.

Another source of straw buyers for the scheme to defraud was Maximum Restraint Films and McPherson’s publication, The Soho Journal, said the district attorney, who added publication also promoted Hamptons rental properties fraudulently purchased and used as summer rentals by the defendants. 

Another MacPherson firm, the Hamptons Consulting Group, he said, was used as the employer for a straw buyer to falsely report an annual salary of $325,000 per year on a mortgage application.

Fraud by Mortgage Stacking and Title Washing:

Mortgage stacking involves the acquisition of a second and in some cases a third mortgage on a house through the use of a bogus title report that falsely reports to the lending institution that no first mortgage exists on the property.

A 2004 mortgage disappeared from the title history of 982 Noyac Path, Water Mill facilitating a fraud in which the name and credit of a person was used to purchase and obtain a first and second mortgage on the property totaling approximately $1.7million dollars, said the district attorney.

The mortgage applicant, on paper, was fraudulently portrayed to have been employed at the SoHo Journal for 10 years as the Director of Sales earning $36,000 a month. In truth, the applicant was not an employee of the publication and had no knowledge that their name and credit was being used to purchase and mortgage a house in the Hamptons, the district attorney said. In 2007, the house went into foreclosure.

While in foreclosure, a straw buyer purportedly employed by Maximum Restraint Films with a monthly income of $45,000 was used in January 2008 to purchase and mortgage the Noyac Path property for another $2 million. The Noyac Path title report was again altered to falsely report to the lender that the first and second mortgage, totaling $1.5 million (and pending in foreclosure), had been satisfied, the release said.

 The mortgage stacking fraud and a straw buyer were also used by some of the defendants to illicitly obtain a loan for a house at 1106 North Sea Road, Water Mill.

The investigation established the title report falsely cleared an original $1.25 million dollar mortgage after a new $1.8 million dollar mortgage was obtained.  The evidence found the proceeds of the new mortgage flowed into the accounts of defendants Ellner, Guldi and Dente, claimed the release.

A home at 2027 Deerfield Road in Water Mill, originally titled to Walter Guldi, the father of defendant George Guldi, with an outstanding mortgage of approximately $1.5 million dollars went into foreclosure in 2005. George Guldi acted as the attorney representing the estate in the foreclosure action. 

In May 2008, the defendants are alleged to have washed the title of 2027 Deerfield Path of the original mortgage to receive a new $1.8 million dollar mortgage obtained in the name of a straw purchaser.  Proceeds of the stacked mortgage flowed into accounts controlled by Defendants Ellner, Guldi and Dente, the release said.

All three houses are or have been in foreclosure.

“We found the defendants repeatedly ignored the obligation to pay off existing mortgages and instead funneled the money into their personal accounts to finance their businesses and lifestyles,” District Attorney Spota noted.

Arrested by Mortgage Fraud Unit detective investigators Wednesday for alleged mortgage fraud involving homes in western Suffolk and New York City are Ellner, Gary Small, 41, 9 Greentree Avenue in Farmingville and Victor Jinete, 34, of 35 Starlight Drive in East Islip.

Ellner, Small and Jinete pleaded not guilty in first district court in Central Islip today on four charges of Attempted Mortgage Fraud second degree.  Jinete also pleaded not guilty to one count of first degree scheme to defraud.

The alleged schemes involve the use of straw buyers and title washing resulting in fraudulent mortgages being issued by duped lenders for properties at 64 Duke Street, Deer Park, 130-25 Inwood Street, Jamaica, 891 Glenmore Avenue, Brooklyn NY and 40 Darerka Street, Amityville.

Five individuals face conspiracy and grand theft charges in a sprawling 2006 Lee County mortgage fraud that involves nearly $370,000 in fees skimmed from roughly $3 million in loans.

An affidavit from a state investigator alleges that Trinity Ruffino, also known as Trinity Hansen; Brian Chili; James Dalonzo; Jeremy Hatlee; and Paul Bosnyak worked alongside a Fort Myers mortgage brokerage to use straw buyers to defraud lenders and “rent-to-own” tenants in 15 Lee and Charlotte County home purchases.

All but Dalonzo have been arrested, following charges filed by the State Attorney’s Office in the 20th Judicial Circuit.

The case comes nearly three years after prosecutors targeted three corporate officers of the now-defunct company, Alternative Home Financing, as well as seven alleged straw buyers, referred to as “nominees” in the affidavit.

Federal Department of Law Enforcement Special Agent Tracy Maurer wrote the following account in the affidavit:

Nominees were paid to falsify their employment and income on applications for at least 15 homes in Fort Myers, Cape Coral and Port Charlotte between November 2003 and February 2004.

Once the loans were secured, tenants with poor credit were placed in each home and told they could buy the house after making a $5,000 down payment and a year of monthly payments to improve their credit. The company told applicants it would manage each home and forward rent monies as mortgage payments.

But defendants didn’t make the mortgage payments, Maurer wrote, and the homes were eventually foreclosed upon. The tenants lost their down payments, as well as a potential home.

With the closing of each deal, Alternative Home Financing pocketed financing fees ranging from $14,000 to $52,000, well above the standard range of $50 to $500, the affidavit states. The affidavit details a total of nearly $370,000 in fees.

The State Attorney’s Office filed each warrant on January 23. Ruffino, Chili and Hatlee, who all live in the Fort Myers area, were arrested the same day. Bosnyak was recently arrested by Miami-Dade Police in Miami, and Dalonzo has yet to be arrested.

Cordell said his clients, who are no longer employed with the mortgage broker, were unaware of the alleged fraud.

“They were just low level employees of Florida Home Loans,” he said. “They were basically just paper processors and had no idea of this grander scheme that was going on.”

In March 2006, prosecutors levied conspiracy and theft charges against Alternative Home Financing officers: Christopher Kim Jack, the president; Erich Michael Heckler, the vice president; and Erling David Hall, a director.

Seven of the alleged straw buyers were also charged with grand theft and mortgage fraud. Yet, in the spring of 2008, the state dropped charges against all but one of the alleged straw buyers, Carlon Dover.

Cases for each of the officers remain open, but Heckler hasn’t been seen since May 2008, and a bench warrant for his arrest remains active.

The most recent defendants are charged with racketeering, a first-degree felony under the state Racketeering Influenced and Corrupt Organizations Act, as well as felony grand theft counts. Ruffino faces the most charges, with 15 counts of grand theft. Chili faces five counts, Bosnyak faces four; Hatlee, three, and Dalonzo, two.

The racketeering charge carries a maximum 25-year prison sentence, as does each grand theft charge.

According to the Florida Department of Law Enforcment (FDLE) a  three-year joint investigation has led to the arrests of five defendants charged with racketeering, conspiracy to commit racketeering, obtaining of a mortgage by false representation, and second-degree grand theft by fraudulently obtaining mortgages in the names of victims solicited for home improvement projects and for obtaining fraudulent loans on their own personal properties.  The individuals arrested include Scott Almeida, Orson Benn, Adrienne White, Frank Giffone, and Samuel Green.

Almeida, Giffone and White, are all former owners, principals or employees of the Hillsborough County mortgage broker companies Advanced Mortgage Solutions and Consumer Lending Resources. In addition to the mortgage brokerage businesses, the defendants operated two home improvement companies: Premier Quality Renovations and Florida Beautiful Construction.

The other two defendants charged, Benn and Green, are former high-ranking employees of Argent’s White Plains, New York office. Benn and Green were instrumental in the fraud as they subverted Argent policies and approved fraudulent documents and loan packages submitted by brokers.  The fraudulent loans were funded and the proceeds were distributed to the defendants.  Benn received bribes or kickbacks from Almeida, Giffone and others associated with submitting the fraudulent loan packages for approval.

“The allegations brought against these individuals are unspeakable. To prey on the hopes and dreams of these people who were simply trying to improve their homes is a terrible scheme and my office is committed to prosecuting those involved to the fullest extent of the law,” said Attorney General Bill McCollum. “I commend the cooperation exhibited by this investigation and look forward to a positive resolution for the citizens who were victimized.”

The investigation began in 2004 when some of the victims filed complaints about incomplete and substantial construction work.  The Tampa Police Department and Hillsborough County Consumer Protection Agency initiated separate investigations that quickly grew from construction fraud and theft to a sophisticated mortgage fraud by a criminal enterprise.  As the investigations expanded to Pinellas and Polk counties, and statewide, the FDLE and the Florida Attorney General’s Office of Statewide Prosecution joined to form a task force.  The task force investigators conducted hundreds of interviews, issued approximately 250 subpoenas, and reviewed tens of thousands of documents. 

The majority of the fraudulent loans were submitted through and funded by Argent Mortgage Company, one of the nation’s largest wholesale “sub-prime” mortgage companies where Benn and Green worked.  Thirty-one of these fraudulent residential mortgage loans totaling nearly $3 million are outlined in a 150-page arrest affidavit.

In addition to the construction-related mortgage fraud cases, Almeida submitted fraudulent documents in support of at least two mortgages for his own personal property and for close associates of the criminal enterprise. In addition to Argent, fraudulent loans were also submitted by Almeida and processed and approved by Pinnacle Mortgage Company, Decision One Mortgage Company and Mortgage Lenders Network USA.

In total, Almeida and his associates, through various mortgage broker businesses, have submitted approximately 180 loans through Argent Mortgage Company totaling nearly $18 million.  At least 129 of these loans were funded in the amount of approximately $13 million.

Argent executives and their outside legal counsel have cooperated with investigators and have provided information and documents to support the investigation.  Argent made swift personnel decisions and conducted their own internal investigation to help prevent similar activity in the future.  Argent has also communicated with and assisted the victims in this case, many of which were facing potential foreclosure actions.

The investigation is ongoing and additional charges are anticipated against other associates related to these five defendants and their criminal enterprise.

"This case is an excellent example of a specialized County level Consumer Protection Agency looking beyond the initial consumer complaints about shoddy and unfinished construction work,” said Director James L. Sudberry. “This multi agency team of experienced investigators worked tirelessly uncovering a major mortgage fraud scheme that would have likely gone undetected costing citizens hundreds of thousands of dollars and, in some cases, their homes.  We still feel this may just be the tip of the iceberg."

The Palm Beach County Mortgage Fraud Task Force arrested 55-year-old Orlando Gonzales on suspicion of using a string of "straw buyers" to take equity from an Wellington home.

Federal documents show that Gonzales used his mother-in-law's good credit, then his mother's, and finally a couple of friends' credit as well. Prosecutors said he also made up fictitious jobs, salary information and rental income.

In this case, prosecutors said National City Bank lost $400,000 when the third straw buyer defaulted. Poulos said legitimate buyers are losing out as well.  "Now, you've got quality borrowers who can't qualify for a loan because each file is so heavily scrutinized and the guidelines are so tight. (They) end up paying higher rates because of it," Poulos said.

If convicted, Gonzales faces as many as 20 years in prison.

Suffolk County District Attorney Thomas Spota has announced the arrests of 27 suspects thus far in an ongoing investigation of mortgage fraud that has found $9 million in fraudulent mortgages and equity thefts secured with non-existent and overstated assets by scammers to obtain fraudulent mortgages.

 Spota said prosecutors in the Mortgage Fraud Unit of the Economic Crimes Bureau have secured nine indictments this year and are currently working 30 mortgage fraud investigations.  

 “What we’re seeing in Suffolk County is an explosion of fraud involving, depending on the scheme, every facet of the mortgage process; from applicants to the mortgage brokers to bank employees to appraisers,” Spota said.

.Arraigned in Suffolk County court on a 13-count indictment Thursday, Louis LaDonna of 98 Wagstaff Lane in West Islip is charged with scheming to defraud lenders out of approximately two and a half million dollars from the late fall of 2006 through the spring of 2007.  Judge James Hudson set bail for LaDonna at $75,000 cash or $250,000 bond.

 LaDonna, operating out of his home as LaDonna Properties, allegedly inflated the value of single family houses in West Islip, Lindenhurst and North Babylon and procured “straw buyers” with fake documentation overstating their incomes to qualify for no down payment mortgages. LaDonna’s buyers made two or three payments to the lender before walking away and leaving each home in foreclosure.

 Marie Poulard, 50, of East Quogue and Frank Spindel, 49, of Miller Place were arrested by district attorney detectives Monday and Tuesday, Dec. 8 and 9 respectively, and charged with first degree grand larceny, a class B felony.  According to District Attorney Spota, the couple swindled a now-defunct mortgage lender, American Brokers Conduit of Melville, into $1.2 million dollars in loans (a first mortgage of $927,000 and a second mortgage of $247,000) to buy a 1.4 acre property in East Quogue with a pool and tennis court. 

 “The investigation has found Poulard and Spindel used a straw purchaser – a man who earned $20,000 a year parking cars in New York City –who filed false documentation with American Brokers Conduit mortgage company that he earned $23,000 A MONTH as a regional sales manager for a Lindenhurst company selling high end boats”, said Spota.  The district attorney noted Spindel was paid over $25,000 in commissions for the deal.

 The mortgage fraud investigation also uncovered a scheme involving mortgage brokers John Tuozzo, 43, of Merrick, and Steven Winick, 40, of Syosset and former Citibank employee Yvonne Rojas, 30, of Brentwood.           

Tuozzo and Winick are alleged to have used false documents provided by Rojas, including phony verifications of bank balances, to get their clients qualified for mortgages. 

To date, DA Spota said, mortgage fraud unit detectives have found evidence involving Rojas in 96 fraudulent mortgage schemes and the issuance of false verifications of deposit for over a dozen different mortgage brokers. Rojas, Winnick and Tuozzo are charged with falsifying business records in the first degree and issuing false financial statements.