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Mortgage Industry Fraud Insights from Patrick Crowley

Archives June 5, 2005



June 5, 2005

An Illinois lawyer has been suspended for three years after admitting he forged a mortgage application.

Anthony Harmon, 38, of Batavia, Ill., reportedly forged U.S. Army officials' signatures on his mortgage application in order to get preferential treatment, according to The Beacon News.

The suspension was handed down by the Illinois Attorney Registration and Disciplinary Commission, which slapped Harmon for "unprofessional conduct." According to the agency Harmon sent a letter to a mortgage lender in 2003 indicating that if he got a bad score on his credit report he would sick the U.S. Attorney on the lender.

He also listed his address as "Operation Enduring Freedom" on documents, when in fact he was living and working in the Chicago area.

Harmon was a captain in the Army.

read story from The Geneva Sun

read case information from the Supreme Court of Illinois

A former mortgage broker woman from Greece is going to jail after admitting in federal court to fraud.

Denise Strollo, 47, who worked at Professional Mortgage Group in the Rochester, N.Y., area, has pleaded guilty to inflating closing costs and forging customers' signatures on mortgage statements sent to banks.

The Associated Press reported that Strollo was working with two people in the title business. They would bump up the closing costs on mortgage documents that were signed by clients, and then create duplicate documents with forged client signatures that were forwarded to mortgage banks.

About 100 people were defrauded out of more than $400,000, according to the Rochester Democrat and Chronicle.

In her guilty plea Strollo said she was working with Janet Faticone, the owner of Pogal Title Agency, and Ronald DiPonzio, who was also in the title business. But DiPonzio's lawyer reportedly told the paper that Strollo is not being "candid" about his client.

But Faticone and DiPonzio have also been named by the feds as part of their investigation, court documents show.

read story from the Rochestor Democrat and Chronicle

read Associated Press story

read announcement from the Department of Justice

The authorities have finally caught up with The Dorean Group.

The Sacramento-based company that promises to eliminate a homeowners mortgage for $3,000 has been raided by the FBI and drawn the scrutiny of regulators and consumer watchdogs in Wisconsin, Ohio, Florida, North Carolina, South Carolina and Colorado.

Now in Utah the attorney general's office has filed criminal fraud charges against Dorean partners Dale Scott Heineman and Kurt F. Johnson. Heineman has been arrested in California. The cops can't find Johnson, but was defiant in what The Sacramento Bee described as a "profanity-laced" e-mail to the paper.

"I will have this case settled within the week," Johnson reportedly wrote. "What's next?"

Apparently a criminal trial is next. About 50 Utah homeowners signed up for Dorean's service, but many are now facing foreclosure for not making payments.

Heineman has said he will fight extradition to Utah.

Dorean operates like this, regulators have said:

They tell homeowners that for $3,000 they can eliminate the mortgage on their home. What Heineman and Johnson allegedly do is get control of the property by filing a quitclaim, which turns the home over to a trust controlled by Heineman and Johnson.

Dorean then refinances the mortgage, gets the money and leaves the homeowner saddled with two mortgages. That's because despite their claims, they aren't eliminating the mortgages.

read story from the Sacramento Bee

read about the Dorean Group at MortgageDaily.com
(subscription required)

June 3, 2005

A new federal unit designed to crack down on mortgage fraud is targeting Kansas City. And they're getting help from three real estate investors who have pleaded guilty for running a $6 million mortgage fraud scam.

Nathan Brinkle, Jonathan Jennings and Adam Kerr -- who worked as a mortgage broker -- are facing 30 years in prison and fines of as much as $500,000 for running what federal prosecutors called a "no money down" investment scheme, according to the Kansas City Business Journal.

Nearly 100 properties were involved in the scheme. The trio bought, renovated and resold houses, helping investors avoid down payments by putting phony information on loan apps and other docs. U.S. Attorney Todd Graves reportedly said that lenders made loans based on the bad info.

The three are now helping several federal agencies that are going after mortgage and real estate fraud in Kansas City. The FBI, HUD, and the IRS have come together in a Mortgage Fraud Working Group that will target similar cases, the FBI said.

read story in The Business Journal of Kansas City

For the last four years Ellen Day has contended that she couldn't serve prison time for ripping off a Chicago area mortgage broker because she was dying of cancer.

After being arrested in 2001 and charged with forgery and theft of about $25,000 Day missed 26 straight court appearances because, her attorney reportedly said, she was sick.

A story in the Chicago Tribune indicates that Illinois prosecutors were going to drop the charges against her.

Until they checked out her story and discovered that she wasn't sick and she wasn't dying. But she was adept at forgery.

Documents sent to the court indicating that Day was being treated for liver, lung, breast and colon cancer were phony. So was the Social Security number she allegedly used to receive credit cards, a house and a car loan.

She'll now do two years in prison for obstruction of justice and producing false credit reports.

"I thought she was dying," DuPage County Assistant State's Attorney Ken Tatarelis said in the paper. "The state was preparing to drop the charges."

read story at the Chicago Tribune

June 2, 2005

Thanks to a U.S. District Judge in San Diego there's a new term for somebody convicted of fraud -- "economic predator."

That's what Judge Jeffrey Miller called Antonio Simon, who has been sentenced to two years in federal prison for running a bankruptcy and foreclosure scandal in southern California.

Miller said Simon "set up his victims emotionally for his financial kill" and described his scheme as a "shell game where the pea was the victims' homes and the shells were the bankruptcy court and bankruptcy petitions," according to a statement from the U.S. Attorney's office in San Diego.

Prosecutors say Simon preyed on homeowners who were about to lose their homes. For a fee, he said he could save their homes by contacting lenders to renegotiate the mortgage, help them in arranging refinancing and take a portion of his fee and apply it to the mortgage payments.

But all he really did was keep the money and talk the homeowners into filing bankruptcy, the feds alleged. And he failed to contact the mortgage companies involved or try to help arrange a refinancing of the home.

Simon was also ordered to pay about $23,000 in restitution. His co-defendant, Raul Allen of San Diego, was sentenced 10 months in prison.

read announcement from Department of Justice

read story from the Associated Press

June 1, 2005

Four people are going to be charged under Georgia's tough new mortgage fraud law.

Gwinnett County police say the four -- including a mortgage broker – tried to rip off a bank of $60,000 by using phony liens to inflate a piece of property in the Atlanta area, The Atlanta Journal Constitution is reporting. Also in on the deal were the buyer of the property and a real estate agent, police say.

Georgia has become a hot bed of mortgage fraud. Earlier this year the state legislature enacted a new law that makes it a felony to illegally flip a piece of property. First time offenders face up to 10 years in prison and a $5,000 fine.

Those charged are Tara Shemail Webb, 33; Charlie Reed Smith Jr.; James Reuben; and Jason Edward Brenner. All live in or around Atlanta.

The four were arrested by Gwinnett County Police and are being held without bond.

read story from The Atlanta Journal-Constitution

read about Georgia Fraud law at MortgageDaily.com
(subscription required)

May 31, 2005

First Alaska, now Jamaica; mortgage fraud knows no boundaries.

Peter Thomas, the head of the Jamaica Mortgage Bank, a government agency on the island nation, has resigned after an audit raised questions about purchases of cars and homes the bank made, the Jamaica Observer Business Reporter has written.

The government has also fired Everton Hanson, the bank's managing director, after he refused to resign. Hanson's firing was related to the investigation into the bank's activities, the paper reported.

The Jamaica Mortgage Bank provides funds for loans to public and private housing developers, operates a secondary mortgage market and provides insurance.

"Both the internal audit and the auditor-general's report indicated breaches of procedure in relation to the purchase of motor vehicles and the procedures relating to the acquisition and disposal of housing units," Genefa Hibbert, secretary of the Water and Housing Ministry, reportedly said in a statement.

read story from The Jamaica Observer

read story from The Jamaica Observer

read story from the Jamaica Gleaner

We've never had a fraud case out of Alaska. But thanks to Dean Beaulieu, we do now.

Beaulieu, according to the Anchorage Daily News, is a developer who used an out of state company and a shell game to bilk a long-time client out of $270,000. He's pleaded guilty to fraud charges in U.S. District Court and is facing two years in prison and restitution of $150,000.

Beaulieu allegedly bought a piece of property for $2 million through his shell company, which was registered in Nevada. He then quickly sold the land to his client at a markup of $270,000. The client reportedly was not aware that Beaulieu was actually in control of the property when the purchase agreement was signed.

The paper reported that Beaulieu signed the purchase agreement with a hard to read "little squiggle" so he wouldn't tip off his client to the scam.

read story from the Anchorage Daily News

May 30, 2005

If you can't trust a cop, who can you trust?

Chester J. Ardolino, 37, a former police officer in Springfield, Mass., and Michael J. Hutchinson, 35, a former police investigator, have been ordered by a federal judge to pay back $31,000 they made in a mortgage scheme the feds busted last year.

The pair of former law enforcement officers was convicted last year of mortgage fraud and money laundering in a federal court. Prosecutors said they used Hutchinson's sister as a straw buyer and bogus financial records to make money on a phony transaction.

The men were also accused of taking an $18,000 kickback as part of the scheme.

Ardolino was sentenced to six months house arrest; Hutchinson is serving his six months in a halfway house.

"It's up to these two individuals to fight over who has to pay the money," U.S. Attorney William Welch reportedly said during a recent forfeiture hearing, according to Boston.com.

The defendants' lawyers tried to argue that the men should have to pay nothing since the repaid the mortgage and other outstanding debts.

The judge didn't agree and ordered the men to pay restitution.

read Associated Press story at Boston.com

read story from The Republican

Flipping lands two more cons in jail, this time in northern Ohio.

Gregory J. Geig, 34, and David M. Watson, 28, have been sentenced to federal prison for running a scheme to illegally flip houses, according to a story in the Akron Beacon Journal.

Geig owned Property Enhancements, also know as Global Real Estate Group. Watson was the office manager and a salesman. The company bought foreclosed or distressed houses and quickly resold, or "flipped", them at higher prices.

Problem was, the feds say, is that they were using inflated appraisals and false mortgage applications. The phony appraisals were used to mislead the investors, prosecutors said.

The volume of sales was pretty high for a flipping operation -- 82 people who bought 230 homes between 1987 and 2000. Many were taken advantage of and fell for the scheme.

Geig and Watson must pay restitution of $250,000. Geig will serve 20 months in prison; Watson will be in jail for 16 months.

read story from The Beacon Journal

Patrick Crowley is fraud journalist for MortgageDaily.com and a reporter and columnist for The Cincinnati Enquirer.

Email Patrick at: PatCrowley@FraudBlogger.com
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