August 5, 2005
Remember what your mother said? If it's too good to be true, then it can't be good true.
I would say investment returns of 200 to 1,200 percent on an "offshore rent/mortgage free" program would qualify.
So did federal authorities in Denver, another growing hot bed of mortgage fraud, though this is more like an old fashioned Ponzi scheme.
Kenneth Roy Weare, 58, reportedly a former preacher, will do three years in prison and ordered to pay $1.2 million in restitution, according to federal prosecutors.
Weare was convicted of defrauding about 23,000 investors by offering them a chance to pay a $375 "membership fee" to his program. After six months, they would receive payments of $375 a month and eventually receive up to $1,500 a month.
Weare was also reportedly promising returns of up to 1,200 percent a month.
He collected $9 million from investors. Some money was paid out but he also kept some for himself, prosecutor said.
read announcement from the SEC
read story from The Denver Business Journal
read story from the Rocky Mountain News
read Department of Justice's announcement
Here's another case out of Georgia, which seems to lead the world in mortgage fraud.
Actually, the FBI has said Georgia and Florida have the worse mortgage fraud problems in the country. Its cases like this, reported by the Gwinnett Daily Post, that is giving Georgia such a dubious reputation.
Police arrested three people after a closing at a lawyer's office in Duluth, Ga. They were allegedly trying to get their hands on $135,000 in disbursement checks on a property that carried a mortgage of $525,000, the paper reported. Details of how the fraud worked weren't reported.
Charged were mortgage broker Philip Lynn Delaney, 58; loan officer Rodney Smith, 44; and Tasha L. Williams, 34, who police identified as a straw buyer.
Williams reportedly confessed and then told police about another mortgage scam that totaled $1.3 million.
At least Georgia is dealing with fraud. Earlier this year the state enacted one of the toughest fraud laws in the nation. Gwinnett County, a suburb of Atlanta, is a "hotbed" of mortgage fraud, according to the hometown paper.
read article from the Gwinnett Daily Post
August 4, 2005
Did a U.S. Senator who is running for governor of New Jersey give a sweat heart mortgage deal to the head of a state employees union?
The New York Times is reporting that Sen. Jon Corzine, a Democrat millionaire financing his own run for governor, gave a $470,000 mortgage loan two years ago to Carla Katz. At the time Katz, the head of the union that represents New Jersey sat workers, was Corzine's girlfriend.
Corzine told the paper he gave Katz the mortgage through an investment company he owns. Two years after giving her the loan Corzine forgave the debt a few months after they stopped dating.
The loan is legal, but questions have been raised about how Katz and Corzine will interact if he is elected governor this fall.
Corzine and Katz each reportedly said they were confident that their financial dealings would not compromise their ability to represent their constituencies in negotiations. Corzine's constituents would be the people of New Jersey; Katz's are the 9,000 state workers she represents.
Corzine defended the loan, saying it was a gift to help out a friend who was having financial problems.
"I'm a public official but I also have a private life," he reportedly said. "I had a serious relationship with Carla that ended, but certainly at the time when the mortgage was let, it was serious and at the time I thought I had the possibility of being in a long-term relationship."
read story from the New York Times
August 3, 2005
Here's another case of identity theft that involves a woman using someone else's name to get money from, among others, a mortgage broker.
Isabel Meija-Cruz, 39, of Aurora, Ill., has been sentenced to three years probation and 140 days in jail for using the ID to get lines of credit and money from a mortgage broker, credit union, stores and a furniture store. The Daily Herald reports that she racked up $116,000 in bills under her alias.
Meija-Cruz allegedly stole the ID of a woman from the Bronx, N.Y., who got on to the scheme after receiving a tax statement indicating she had a job in Batavia, Ill. The woman made a smart move by checking her credit. After discovering the theft she contacted the cops in Illinois.
read story from the Chicago Daily Herald
An Ohio mortgage broker has reportedly pleaded guilty in a federal court mortgage fraud case that included more than $6 million in losses.
Ronald Trester is among more than 20 people who have pleaded guilty in the federal probe of a southwest Ohio property flipping mortgage fraud ring, The Cincinnati Enquirer is reporting. He has not yet been sentenced.
Meanwhile, the first indictment has been handed down in the case. All of the others -- including mortgage brokers and real estate investors -- have pleaded guilty before their cases reached a grand jury.
Larry D. Hensley has pleaded not guilty to charges that include bank and mail fraud and money laundering. Prosecutors allege he and others conspired to submit loans to subprime lender ANB AMRO Mortgage using phony documentation, including fake closing statements. He was also charged with failing to file income tax returns in 2001 and 2002.
He could go to jail for 30 years and face a fine of more than $1 million in convicted.
Trester was also charged with failing to pay $224,000 in federal income taxes.
read story from the Cincinnati Enquirer
Lawyer and small town councilman Stephen T. Gionfriddo has already had his Connecticut law license suspended for allegedly misappropriating nearly $100,000 of his clients' money.
Now Gionfriddo, who is also the former mayor of Middletown, Conn., has been sued by a woman who claims he failed to payoff a $125,000 mortgage and kept money from the sale for himself, according to the Middletown Press.
Karen Grenier hired Gionfriddo to represent her in a foreclosure suit. Instead of following through on the foreclosure she sold the property. Gionfriddo handled the closing and was supposed to pay off the mortgage.
Instead, Grenier alleges in her suit, Gionfriddo "failed to pay off" the mortgage loan.
Connecticut state police are reportedly investigating Gionfriddo for any possible criminal activity.
read story from the Middletown Press
A protest by Pennsylvania homeowners over rampant mortgage fraud in the Poconos has grabbed the attention of the U.S. Justice Department.
About a dozen protestors showed up at the federal courthouse in Scranton, Pa., and demanded that the feds get involved into a four-year mortgage fraud investigation in Monroe County. U.S. Attorney Thomas Marino promised to look into the case, the Morning Call reported.
"I sympathize with" the protestors, Marino reportedly told the paper. "I owe them the opportunity to come in and look at this."
The homeowners group was formed in 2001 in the wake of more than 5,000 foreclosures over the last decade in the county. The Pennsylvania Attorney General has filed civil lawsuits against builders, appraisers and others in the housing and mortgage industry that are accused of fraud by inflating home prices.
read story from the Associated Press
Another executive of Detroit's failed MCA Financial Corp. is likely to be headed off the prison.
John P. O'Leary, the company's former senior VP for corporate finance, has pleaded guilty to one federal felony charge in connection his role at MCA, which has a large mortgage unit.
O'Leary, 52, faces 18 months in prison and millions in restitution, the Detroit Free Press has reported. He must also pay a $20,000 administrative fine to HUD.
Federal prosecutors say MCA created phony assets and revenues by purchasing low-income housing in Detroit, then sold the marked-up properties to partnerships and companies controlled by MCA.
The state seized the company in 1999, putting almost 1,000 people out of work.
In July Patrick Quinlan, 58, MCA's former chairman and CEO, was sentenced to 10 months in prison and ordered to pay a whopping $256.6 million in restitution.
A total of seven MCA officers have now pleaded guilty to federal charges.
read story at the Detroit Free Press
Here's an odd story out of North Carolina involving the proposed sale of a Middle East airline that involves a woman awaiting sentencing on a federal mortgage fraud conviction.
Published reports say Theresa Lewis, 32, of Mecklenburg, N.C., has been ordered to pay a Lebanese businessman who lives in Detroit $626,000 for allegedly committing fraud in their deal to buy two planes and a flight simulator for a proposed new airline that would serve the Middle East.
Refaat Abul Hosn wants to start an airline that would serve Bahrain. He sued Lewis after she failed to deliver $10 million for the startup.
Lewis is set to be sentenced for her involvement in a Charlotte, N.C., fraud ring. Abul Hosn said he did not know about the fraud conviction when he signed a deal with Lewis on the airline financing.
read story from the Gulf Daily News
read article from The Charlotte Observer
August 1, 2005
An affluent Connecticut developer is facing federal charges of mortgage fraud.
New York Times reports that the FBI has arrested Andrew M. Kissel, a partner in the real estate company Hancock Group, is accused of using a $2 million piece of property as collateral for nearly $12 million in loans from four lenders: Washington Mutual Bank; Independence Community Bank, Brooklyn; Hudson Valley Bank in Yonkers, N.Y.; and Fairfield County Bank in Connecticut.
Reportedly he filed fake mortgage releases in local government offices, which he then used to show lenders that the property was not encumbered by mortgage loans.
Kissel, who owns classic cars and yachts and lives in an affluent New York City suburb, was called a “sick man” by his own lawyer during a federal court appearance. The lawyer reportedly told the judge he would seek psychiatric help for Kissel “to get him into some kind of shape so he can assist with his defense.”
He was arrested at his vacation home in Virginia. Kissel “looked dazed” during his court appearance his wife “cried from her seat in the nearly empty courtroom,” the paper reported.
read story from The New York Times