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Insights from Patrick Crowley

Archives June 19, 2005



July 1, 2005

Leading subprime lender ABN AMRO Mortgage Inc. is throwing around some tough accusations in a federal racketeering lawsuit filed in against 17 people and businesses in Kansas City.

According to the Kansas City Star, ABN has accused the group of being "mortgage hustlers" who ran a "massive scheme of fraudulent real estate transactions" costing the lender millions of dollars.

The group of defendants includes mortgage companies, title firms, appraisers, and real estate agents. None commented for the story.

ABN claims the ring used phony appraisals to pump up the price of houses, and then made money by overcharging fees when the houses sold.

In the suit ABN said the loans approved as a result of the fraud were "egregiously" inflated.

read story from The Kansas City Star

A member of big mortgage fraud ring in Georgia has drawn a stiff prison sentence.

Marcus Malcolm, who owned Agape Properties, has been sentenced to 20 years in prison for his role in the $1.23 million mortgage fraud case, according to the Macon Telegraph. He was also fined $50,000.

Prosecutors said Malcolm made more than $200,000 on the scheme in Bibb County, Georgia. A total of 13 people were involved in the ring. Malcolm's sentence is by far the longest of any of the others who have been convicted and sentenced.

A prosecutor told the paper that Malcolm received the stiff sentence because he did not cooperate with the investigation.

"He did not make a deal with the state, he did not cooperate and he did not pay back the money," Assistant District Attorney Sharell Lewis reportedly told the paper. "The state will still try to recover the money during a civil suit. His troubles are still not over."

Prosecutors say the ring was run by Soloman Williams, a real estate agent. He will do a year in prison and agreed to pay $215,000 as part of a plea bargain.

The ring used inflated appraisals, phony loan applications and other fake documents to defraud mortgage companies in the sales of 22 properties.

read story from the Macon Telegraph

June 30, 2005

An Oxnard, Calif., man will do a year behind bars for using a friend's identity to buy two homes.

Angel Velasco, 29, forged deeds of trust and other documents to get the mortgages in a friend's name, according to a report in the Ventura County Star. The ruse unraveled when Velasco fell behind on the payments.

Velasco was ordered to pay $342,000 in restitution and received probation on convictions of identity theft, grand theft and forgery. He is serving the time on the loan fraud conviction.

Velasco's father in law, Vidal Maldonado, 65, was also charged and is awaiting trial in Ventura County Superior Court.

read story from the Ventura County Star

An Arab activist in Milwaukee already serving prison time for mortgage fraud has been convicted of misusing federal grant funds.

Mhammad Abu-Shawish was convicted in February of mortgage and bank fraud after he obtained a house using phony information. He did not have sufficient credit to get a home, so he lied, according to federal prosecutors.

Abu-Shawish got eight months for the mortgage fraud conviction, but is appealing. He's been in jail being held without bail since being arrested in October of 2003, according to the Milwaukee Journal Sentinel.

The most recent conviction is for allegedly misusing $75,000 in federal money that was supposed to be used to spruce up a Milwaukee neighborhood.

And next week he goes to trail on charges he allegedly helped more than 20 Jordanians illegally enter the country.

Abu-Shawish is known in the community as the former organizer of Arabian Fest. But he won't be doing anything festive from a prison cell.

read story from the Milwaukee Journal Sentinel

June 29, 2005

A legal bout with former heavyweight boxing champion Riddick "Big Daddy" Bowe and charges of mortgage fraud has cost a Virginia lawyer his license to practice law.

Jimmie Ray Lawson II, who is also facing criminal embezzlement charges, lost his license among other alleged offenses he "wrongfully obtained mortgage funds through a series of fraudulent mortgages", according to a posting on the Virginia State Bar Web site.

According to the Roanoke Times Bowe had given Lawson his power of attorney over a trust account. Lawson is accused of receiving $625,000 from the account to buy Big Daddy a house, but then spent the money on personal investments.

In the embezzlement case filed in Henry County Circuit Court Lawson is accused of taking a $28,000 check for closing costs and not turning it over to a client.

The Virginia bar said Lawson "repeatedly lied to clients, employees and the bar; repeatedly stole client funds; unsuccessfully invested client funds in businesses he was involved with without client consent...and forged documents."

read story from The Roanoke Times

read disciplinary actions from Virgina State Bar

June 28, 2005

Here's a first for us -- an alleged mortgage fraud out of Pittsburgh.

Five men in the Pittsburgh area have been indicted by a federal grand jury for running an alleged fraud ring that targeted poor neighborhoods and resulted in $1.8 million in phony loans. More than 20 properties were involved.

The straw buyers were given kickbacks for allowing their identities to be used.

According to press reports, the ring used a common flipping scheme -- using straw buyers to purchase rundown homes at inflated prices with fraudulently obtained loans.

One of the five -- David C. Jackson, 44, of New Kensington, Penn. -- was identified in the Pittsburgh Post Gazette as a mortgage broker who ran Comvest Enterprises. He is reportedly accused of processing the phony loans and commissioning appraisals based on the faux sales.

Authorities said the investigation is continuing with more arrests expected.

read story at the Pittsburgh Tribune Review

read story from the Pittsburgh Post-Gazette

June 27, 2005

Here's another case of an alleged criminal claiming to have a relationship with a mortgage company and using that lie to rip people off.

A man who has been identified in media reports as Glenn Malone is being investigated for stealing nearly $2,500 after promising to refinance two homes in the Knoxville, Tenn., area.

Police say Malone told people he worked as a mortgage broker for First Knoxville Mortgage. Two homeowners who met him through friends gave him money to refinance their homes.

But when contacted the mortgage company said while Malone had worked at the company as a subcontractor it had no records of the refinancings, according to the Maryville Daily Times.

"The best advice I can give," Maryville Police Chief Tony Crisp reportedly told the paper, "is that when dealing with someone you met through a friend and haven't done business before with, to check out the individual."

read story form The Daily TImes

Always read the fine print.

That's the lesson from a northern California case where a man has been arrested after operating as a mortgage broker without a license.

As many as 129 homeowners were stung by Altaf Shaikh, 44, who is also known as Zak Khan, according to the Mercury News. He was picked up by cops in Santa Cruz and charged with felony counts of burglary, theft, impersonating a notary and using forged documents in his scam.

Shaikh reportedly worked for Secure Financial in Union City and also ran a telemarketing firm called Bay Area Marketing. He used both jobs to find victims.

He reportedly told people he was a mortgage broker, but he is not licensed. Homeowners who agreed to refinance their home with Shaikh were being ripped off when he forged documents they had signed.

A homeowner discovered the ruse after adding up the closing costs on the loan and discovering that some parts of the loan application had been "whitted out", according to the paper. Fees were also listed as being paid to Bay Area Marketing, which also tipped off the homeowner.

read story from The Mercury News

read story from the Santa Cruz Sentinel

An Ohio man is going to federal prison for more than two years for ripping off mortgage lenders of nearly $300,000.

Donald E. Simmons also has to pay restitution of $148,000 after he reached a plea agreement with federal prosecutors and admitted to charges of mortgage fraud, tax evasion and illegal possession of a guns.

The U.S. Attorney's office in northern Ohio says Simmons ran a scheme where he and others were getting mortgage loans based on the inflated value of properties.

The loans were jacked up to include costs of repairs that were to be made to the homes.

Simmons Construction Co., which Simmons owned and operated, was supposed to do repair work on the homes. But it was all a scam with Simmons and his crew pocketing the money after doing only minor work on the homes, the feds say.

Simmons wasn't reporting the income to the IRS. And when IRS agents served a search warrant on his home they found guns and ammunition that Simmons was not authorized to have.

read Department of Justice announcement

Authorities in Miami have busted a house stealing ring involving the leader of a Florida mosque.

Sameer Muhammad, also known as Simmie Lee Ford, 48, was arrested at the Nation of Islam's Caribbean headquarters in Miami. Police are still looking for his alleged partner, Carolyn Murphy, 47. She also reportedly has an alias, Ceceila Martin.

So far just two homes were involved, but hundreds of mortgage transactions in south Florida. More arrests are expected, the Miami-Dade Inspector General's office said in a statement.

Cops say the pair went after elderly residents who were having financial problems and had liens on their homes, according to the Miami Herald. They would forge documents to show they owned the property, pay off the liens, sell the house and pocket the profit.

Muhammad ran a real estate investment firm, Bar None Properties, which handled the sale. And actual notaries were used to make the forged documents look more authentic.

The Inspector General's office said it was "stunned" by the pair's "brazenness in manipulating the County Recorder's office to carry out their schemes to victimize helpless and disadvantaged property owners at the time they were most vulnerable."

read story at the Miami Herald

read announcement from Miami-Dade Country Inspector General

A Michigan mortgage company's direct mail ad solicitation touched of a mini-panic among some Tampa, Fla., area homeowners who were told they were behind on their taxes.

The Hilllsborough County Tax Collector's Office was forced to hold a press conference after receiving more than 100 phone calls from concerned homeowners. All had received a letter from Cranbrook Mortgage Corp. urging them to refinance their homes to pay their delinquent property taxes.

But none of the homeowners were actually behind and officials are now trying to determine in any legal or other type of action should be taken against the company, which reportedly mailed about 1,000 of the letters.

"Right now, the most you got is misleading advertising," Kevin Jackson, chief investigator of the Hillsborough County Consumer Protection Agency reportedly told the media. "It is a crime, but you have to prove some intent. If you have folks losing money because of this, you might have something more in the line with fraud and theft. But right now, we just have angry consumers."

Cranbrook has not commented on the incident.

read story from Tampa Bay's 10 News

read story from the St. Petersburg Times

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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