Larry "Rocky" Hensley, who operated Creekview Investments, has been indicted on 21 federal charges as part of a larger probe into mortgage fraud by the U.S. Attorney's office in Cincinnati.
The Cincinnati Enquirer reported that Hensley and "unnamed conspirators" used newspaper ads to recruit buyers and then submitted false loan applications on five properties.
Closing statements claimed the buyers put money down, but prosecutors allege that Hensley actually provided the down payments, which is against the law.
If convicted Hensley is looking at up to 30 years in jail.
The feds may a point of saying in the indictment that Hensley is just the first person charged, an indication more indictments are coming.
read story from The Cincinnati Enquirer
Here is a strange story out of Miami that involves the Angler Hotel, an offshore account and a jury award of nearly $4 million.
A Miami jury has ordered businessman Angelo Pizzuto to pay $3.75 million in punitive damages for fraudulently representing himself as of the owner of the South Beach hotel and then selling it, according to a Law.com posting at Yahoo.com. Pizzuto will appeal, his lawyer reportedly said.
In a lawsuit filed in 2001 Pianeta Miami, an Italian company, alleged that Pizzuto allegedly sold the hotel to Alan Lieberman -- described in the story as a "Miami Beach hotel mogul" -- for $2.75 million.
The lawsuit also named Lieberman and SunTrust Bank, which held the mortgage on the hotel.
When questioned by police in 2001 Pizzuto turned over records indicating he had $3.6 million in an offshore account. But in 2002 a judge held Pizzuto in contempt when the money from the hotel sale and the offshore bank accounts could not be located.
In 2002 a jury ordered Pizzuto to return the hotel title to Pianeta and canceled SunTrust's mortgage.
Pizzuto had also been accused of fraudulently of presenting himself as a lawyer.
read Law.com story
July 6, 2005
A city councilman in Middletown, Conn., who works as a lawyer has been slapped with a complaint that he misappropriated nearly 100 grand in money he handled from a real estate sale.
Gionfriddo, who is also a former mayor of Middletown, has been named in a complaint filed in state Superior Court by the Office of the Chief Disciplinary Counsel, according to a story in the Hartford Courant.
Instead of paying off a mortgage with money from the sale of a house Gionfriddo is accused of putting $98,000 in his own account, though he did continue to make the monthly mortgage and insurance payments.
The sellers of the house thought the mortgage had been paid off. They only found out what allegedly happened while going through a credit check, the paper reported.
"As far as the lender was concerned, the mortgage was being paid," the owners' lawyer reportedly told the paper. "We do not know what he may have done with the money while he had access to it."
The Courant reported that Gionfriddo has not commented on the allegations.
read story from the Hartford Courant
Pennsylvania Attorney General Tom Corbett has outright rejected an offer to settle a $10.2 million lawsuit against a home builder accused of bilking about 170 home buyers.
Gene Percudani, a home builder in Monroe County, Penn., was sued by the state in 2002 along with his former partner, Gerald Powell, and appraiser Dominick Stranieri. The state wants $8.3 million in damages, $1.8 million in civil penalties and $130,000 in costs, the Allentown Morning Call is reporting.
The trio has denied wrongdoing; the state says they were conspiring to sell homes at inflated prices.
A separate civil suit filed in federal court by more than 100 home buyers also makes the same accusation against Percudani and Chase Manhattan Mortgage Corp. Chase has denied the allegations and filed a counter suit against Percudani and Stranieri.
Corbett reportedly spurned the offer to settle because "clearly nothing that (Percudani's attorney) has brought to the attorney general's office has adequately addressed the harm suffered by the consumers in this case," a spokeswoman reportedly told the paper.
read story from The Morning Call
July 4, 2005
A North Carolina real estate lawyer and two business associates have been arrested for operating a mortgage fraud ring that used "double closings" to make money.
According to a story in the Greensboro News-Record double closings work like this.
A person arranges to get a mortgage for more than a house is worth. This is usually done with phony documentation
Once the loan is approved, the person who arranged the loan buys the house at the true price, sells to a straw buyer for the phony price and then pockets the illegal profit. The straw buyer receives a kickback of up to $5,000.
That's reportedly how the alleged fraud worked that involved lawyer Rick Franklin Shumate in Greensboro and two other people -- Charles Richardson and Phillip Wayne Middlebrooks.
The three have been charged by federal prosecutors with bank, wire and mail fraud. The scheme operated between 1999 and 2001, the paper reported.
Richardson was also charged with bilking investors out of thousands of dollars. He allegedly did not invest money given to him, spending it instead on personal and business expenses.
read story from the Greensboro News-Record
An alleged mortgage fraud ring operating out of Houston offered up a $5,000 bounty for houses that could be used in the scheme.
That information has come out of the U.S. Attorney's office in Houston, where six people have been indicted for their roles in a fraud that investigators say included nearly $7 million in illegal funds wired to title companies for closings.
Among the six people is Peter Gibson Kolo, 49, who was identified as a real estate agent. He was still at large as of late last week.
Prosecutors say the ring paid $5,000 to the buyers of 12 homes. The buyers then helped in the fraud by allowing their homes to be used in the scheme, which included falsely inflating the incomes and work histories of buyers; creating false documents; making false statements to lenders; making up references; and telling lenders they were going to live in the houses when the sales were completed.
The government wants members of the ring to forfeit about $1 million in money they made on the scam.
The defendants would use the phony information to get a mortgage on a home for more than it was worth, pocketing the difference after paying off the $5,000 bounty. Kolo allegedly brokered the transactions through his company, AMH Enterprises, prosecutors say.
read story from the Houston Chronicle
read Department of Justice announcement
Federal authorities in New York have broken up a fraud ring that was being run out of a title company.
The scheme cost the 100 or so customers bilked in the scheme about $400,000, prosecutors said.
Janet Faticone, 41, owned Pogal Title Agency in Webster, N.Y. She and another woman, Denise Strollo of Greece, have pleaded guilty to the federal fraud charges. They are accused of inflating closing costs and other fees, and then pocketing the money. Another Pogal employee, Ronald DiPonzio, is awaiting trial on similar fraud charges.
"This scheme resulted in (the defendants) receiving much more profit from the mortgage transactions than they should have," prosecutors from the U.S. Attorney's office said in a statement.
Jail sentences in the case could total five years; fines may reach as high as $250,000.
read story from the Rochester Democrat and Chronicle
read Department of Justice announcement
The owner of an Indiana mortgage company is going to jail for trying to rip off the federal government.
Bradley A. White, 40, who owned Regal Mortgage, was sentenced to five months in federal prison and five months of home incarceration for his role in a scheme to defraud the U.S. Department of Housing and Urban Development. White was also ordered to repay HUD $84,000 and pay a fine of $169,000, the Indianapolis Star is reporting.
Also sentenced was loan officer Mark Arkenau, 36. He was given two years probation, six months home incarceration and must pay restitution of $38,000 and a $2,000 fine.
The pair pleaded guilty to illegally trying to obtain federally insured loans for Regal clients, according to federal prosecutors. White confessed to making false statements on two loans that totaled more than 130 grand. HUD lost $80,000 on the loans.
Arkenau made lied about a $75,000 loan, costing HUD nearly $40,000, prosecutors said.
read story from The Indianapolis Star
read announcement from Department of Justice
The home of former Major League Baseball slugger Ron Gant was the target of an alleged mortgage fraud scheme that was busted by Georgia authorities in an undercover sting.
Six people, including two lawyers, are facing charges they tried to illegally flip Gant's home to make a quick $2.1 million, according to a story in the Atlanta Journal Constitution.
Investigators from the Georgia Bureau of Investigation said Harry "Duke" Fagler closed on Gant's home for $2.8 million. But just a few hours after the closing the lawyers involved in the sale tried to sell the home for $4.9 million using a phony inflated appraisal and other forged documents prepared by another lawyer.
A mortgage company tip led FBI agents to pose as lawyer for Gant, who was not involved in the scam, and a closing agent. They were able to bust the fraud by going undercover.
Gant was a power hitting outfielder who played from 1987 until 2003 for several teams, including the Atlanta Braves, Cincinnati Reds and Oakland A's.
read story from the Atlanta Journal Constitution
