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Insights from Patrick Crowley

Archives August 21, 2005


August 19, 2005

A South Carolina man is going to jail after pleading guilty to federal charges of signing a mortgage lender's endorsement on an insurance check and then cashing it.

David A. Smith, 50, of Gaston, S.C., then spent the money on himself, the State newspaper in Columbia is reporting.

Smith's home was damaged in a 2003 fire. He reportedly received a check from his insurance company for $58,000 that was made out to him and his mortgage lender. Federal prosecutors showed in court that Smith didn't tell his lender about the check, which he cashed and put into his own bank account.

Smith faces 30 years in prison and a fine of up to $1 million, the paper reported.

read story from The State

An Orlando mortgage company was offering some great deals on bus ads -- "No credit, no problem, everybody qualifies for a mortgage.

How about no license for the company.

WFTV is reporting that Prime First Mortgage, the company that placed the ads on city buses, was forced to remove the ads after the station determined that Prime First is not licensed as a mortgage company. The station reported that it called the number of the ads and was told that it could qualify a customer for a mortgage over the phone.

"But according to the state of Florida, Prime First cannot legally offer home loans because it doesn't have a mortgage license," WFTV reported on its Web site.

Prime First signed a $1.1 million advertising contract with LYNX, the city's bus operator, but reportedly has not paid any money for the ads. The station also reported that the man who signed the contract, Jim Gahan, who has been convicted of embezzlement and accused of practicing law without a license.

read story from WFTV

Nassau County New York, a community on Long Island, is having a problem with real estate lawyers going bad.

State prosecutors have charged John Meunkle, 40, with felony theft for allegedly stealing $565,110 from clients. In a statement prosecutors said Meunkle was allegedly raiding his firm's escrow accounts and cashing checks that were supposed to go to clients.

Seven of the checks were written to the firm by Wells Fargo Home Mortgage. Meunkle and his firm represented the company at refinancings.

"He deposited the checks without anyone's authority," prosecutors said.

Meunkle is facing up to 22 years in prison.

Also this week Nassau County prosecutors charged lawyer Eugene Benevenia, 65, with stealing $265,477 from 14 clients he represented in real estate closings and estate probates, the New York Daily News reported. Benevenia also allegedly raided escrow accounts.

read story from the New York Daily News

read announcement from Nassau County

The FBI is running an investigation of what it describes as a large scale mortgage fraud operation in Kentucky.

The Louisville-Courier Journal is calling the case one of the largest mortgage fraud schemes ever prosecuted in the city of Louisville. One man has pleaded guilty, another has been charged and the FBI is reportedly still investigating closing attorneys, loan officers, brokers, buyers and sellers are being investigated.

Jim Santa Cruz, 43, has pleaded guilty to 20 counts of fraud that involved nearly 25 loans he brokered through the now-closed North American Lending Co. of LaGrange, Ky.

His alleged accomplice, Stan Siwek, 43, has been charged in the case for allegedly using bogus appraisals, income statements, down-payment checks and other documents to get approval for loans. He also kept some of the cash for himself, federal prosecutors allege.

Some of the homes involved in the scheme are now in foreclosure, the paper reported.

read story from the Louisville-Courier Journal

read story from the Associated Press

August 18, 2005

The owner of a Kansas mortgage company is in trouble for allegedly conspiring with a Congressional candidate on a mortgage fraud scheme.

John Myers, the founder and chairman of Myers National Mortgage Co., is facing fraud charges. If convicted he could spend up to 30 years in prison and pay fines of as much as $1 million.

According to court documents and the newspaper's account Adam Taff, a Republican running for Congress, had agreed to buy a $300,000 house from Myers. Taff allegedly conspired with Myers and a title company to make it appear like he was using his own money to buy the house when he was actually using campaign funds as part of a complicated ruse.

The campaign funds were used to make it look like Taff was using his own dough, but as soon as the transaction closed Taff put the money back in his campaign account.

Taff has been indicted on federal charges of converting political campaign contributions for his own use and of wire fraud. He is also looking at a long prison term and steep fines if convicted.

read story from Lawrence Journal World

read indictment from Lawrence Journal World

Add Kentucky to the list of states trying to crack down on mortgage fraud related identity theft.

Kentucky Attorney General Greg Stumbo has drafted legislation he said will help protection consumers against identity theft, which is often used in mortgage fraud schemes.

The legislation will be considered by the Kentucky General Assembly in early 2006. A task force formed by the AG's office is now fine tuning the legislation.

"Identity theft is the fastest growing crime in the country, with more than 1,600 Kentuckians victimized last year alone," Stumbo said in the statement. "There's credit card fraud, bank fraud, loan fraud, benefits fraud, phone and utilities fraud...the list goes on."

One provision protects Social Security numbers by restricting a business' ability to make that information public. Stolen Social Security numbers are often used in mortgage fraud.

Stumbo said he modeled the legislation after laws enacted in Texas, California, Louisiana and North Carolina.

read announcement from Kentucky Attorney General

August 15, 2005

Scammers who were running bogus loans through two Alabama mortgage companies are facing federal charges.

A federal indictment reported by the Associated Press indicates that five people, including a real estate lawyer and the VP of a mortgage company, allegedly skimmed $286,000 from $875,000 in loans.

Among those charged are lawyer Jeffrey T. Spell, who reportedly plans to plead guilty; Anne Dobson, owner of Associated Realtors in Summerville, Ala.; Samantha Watford, vice president at AAA Mortgage and Direct Mortgage in West Ashley; and Tom Cannon, a former loan originator at the firms.

Each could get up to five years behind bars and fines as high as $250,000.

Reportedly, the ring would buy a house in foreclosure, sell the home to one of the people involved in the scam and then set aside money – in once case $44,000 -- to allegedly make repairs on the home.

Instead, prosecutors say, they were keeping the money and splitting it up.

read story from the Associated Press

Here's another case where a homebuilder was allegedly bilking customers instead of building homes.

This federal case is our of St. Louis and involves builder Jeffrey Thomas, 38, who is facing more than 14 years in prison and more than $1 million in fines and restitution. Thomas was convicted of fraud and other charges after spending clients' money for his own use, including buying luxury cars and paying his personal mortgage, according to a statement from U.S. Attorney Catherine Hanaway.

During the sentencing Chief U.S. District Judge Carol E. Jackson reportedly said Thomas, who operated several companies including Majestic Development Co., caused "devastating" losses to his victims, engaged in serial fraud and "promised dreams and delivered nightmares."

In one case Thomas took more than $500,000 from buyers but did not complete their homes or refund their money, Hanaway said.

A co-defendant, Carlton Dinwiddie, 39, has previously pleaded guilty to fraud and misuse of a Social Security number.

read announcement from U.S. Attorney

read story from the St. Louis Post-Dispatch

A Utah homebuilder who was supposed to be helping customers get loans to buy homes was instead allegedly helping himself to their money.

Samuel R. Daines II, 38, faces states charges that include forgery and theft by deception for allegedly using $86,000 for his own expenses when the money was supposed to pay for housing permits and fees, The Herald Journal has reported.

Daines' lawyers are reportedly working on a plea bargain with prosecutors.

A detective filed a court report indicating that Daines was allegedly forging his name on documents so he could draw on his customers' mortgage loans. Brett Gibbons, Daines' business partner, reportedly blew the whistle by telling mortgage and bank lenders about the forgeries.

The detective said Daines wanted "to make his profit like Wal-Mart, on volume over a long period of time."

But police believe Daines got into debt and began to take his clients' money to pay off personal debts.

read story from The Herald Journal

Three of the seven people alleged to have operated a Florida mortgage fraud property flipping ring have plead guilty.

The Bradenton Herald reported that 30 single-family homes and condos were involved in Manatee and Sarasota counties on central Florida's Gulf coast. The defendants who plead admitted to using fake documents, straw buyers and inflated appraisals to buy and then quickly sell the houses at an illegal profit, the paper reported.

Pleading guilty to the federal charges, brought by the U.S. Attorney's office in Tampa, were Todd A. Kolbe, Kirk McVey and Amy Samelson Kolbe, all of Sarasota County.

Each is facing up to five years in prison and fines as high as $250,000.

Indicted were Mary Bolan, a Bradenton real estate agent; Taya Parodo, the owner of a Bradenton title company; and Todd Kerber and his wife, Kelly Abercrombie, both of Sarasota.

If convicted of the conspiracy and fraud charges they could get 105 years in prison and fines of up to $5.25 million.

read story from the Bradenton Herald

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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