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Insights from Patrick Crowley

Archives October 16, 2005

 


 
October 14, 2005


An Olympian, Wash., man convicted of swindling an elderly widow out of her home can stay out of jail -- as long as he pays off the $107,000 left on her mortgage.

Michael Brandon Miller missed a court-imposed Aug. 30 deadline to pay off her $107,000 mortgage. But he has been given another year as long as he pays off $60,000 by April and the balance by September, according to The Olympian newspaper.

Miller, 27, a financial adviser, admitted in 2004 that a jury would have likely have convicted him of using fraud to convince the woman to sign her home over to him. Miller was also forced to sign a quitclaim deed that put the home back in the woman's name.

Prosecutors reportedly let Miller strike another deal so the mortgage would be paid off and the woman would not be forced from her home.

Miller continues to claim he is innocent. He allegedly used the 75-year-old woman's home to obtain a mortgage. He used some of the money to pay off her first mortgage and make repairs to her home.

But the paper is reporting that Miller lost the rest of the money day-trading on the stock market.

read story from The Olympian



Here's another case of somebody allegedly preying on the elderly with a mortgage fraud scheme.

Prosecutors in Contra Costa County, Calif., have charged Mark Russon, 47, the operator of Pacific Rim Mortgage, with using fraud to steal more than $1.5 million over eight years from a 92-year-old man.

The Contra Costa Times is reporting that Russon allegedly told the man he had clients interesting in investing in loans that would be secured by deeds of trust on borrower's residences. The elderly man allegedly gave Russon money to invest in 22 deals, but the borrowers did not exist, prosecutors believe.

Russon had been paying the man $1,000 a month, but when the payments stopped in 2004 he contacted prosecutors.

Russon was being held on $1 million bail. He faces 21 counts of elder abuse, seven counts of grand theft, one count of acting as a real estate agent without a license and one count of attempting to record a false or forged document.

read story from the Contra Costa Times


The retrial of a Florida real estate investor who has been indicted three times for mortgage fraud is back on trial in Jacksonville.

J.R. Parker reportedly signed contracts to buy houses and then sold the contracts at a significant markup, according to a story in The Florida Times-Union. But Parker has been indicted multiple times as prosecutors have refined their fraud case against him.

A mortgage broker reportedly testified that Parker told her to inform mortgage companies that his customers had $20,000 to $35,000 in the bank when the money allegedly did not exist. The mortgage broker, identified in the story as Heidi Weppelman, co-owner of Monarch Mortgage Funding in Jacksonville, testified yes and has already pleaded guilty to conspiracy to commit fraud.

The fraud appears to be significant.

Dale Beardsley, a real estate lawyer, was indicted with Parker. He has reportedly signed a statement that Parker was involved in a $14 million fraud that involved nearly 250 houses.

Parker has maintained his innocence. In May a judge declared a mistrial after a jury couldn't reach a verdict.

read story from The Florida Times-Union


October 12, 2005


I blogged last week about an Iowa real estate agent who denied charges he was bilking a California mortgage company by submitting phony bills on foreclosed homes.

Well, a federal grand jury in has convicted Leonard Fazio on three of the nine fraud counts against him. Fazio, 52, faces 20 years in prison and a $250,000 fine. He also has to return nearly $50,000 he made from the sale of a house that was reportedly purchased as part of the scheme.

According to an account in The Des Moines Register, Fazio, who worked for Re/Max A-1, was doctoring paperwork in transactions involving the sale of foreclosed homes and then submitting the phony bills to GMAC-subsidiary Homecomings Financial, the California mortgage company.

Fazio allegedly told Homecomings a property was worth $40,000. Using Fazio's money his girlfriend reportedly bought the house for $48,000. Fazio then resold the house for $110,000.

read story from The Des Moines Register


Here's an interesting twist to the Brasota Mortgage collapse.

Brasota was a Bradenton, Fla., mortgage company that collapsed into bankruptcy after it piled up more than $50 million losses and was accused of being a Ponzi scheme.

Now a 55-year-old trial lawyer is challenging the government's claims that Brasota was Ponzi scheme, to the Herald –Tribune in southwest Florida.

Caron Balkany reportedly claims that she, her husband and her law firm invested $3 million in legitimate investments backed by high-return mortgages. Balkany says she also has 12 clients who did the same.

If Balkany wins her court fight she and her clients would be among the first in line to be paid off an estimated $33 million as Brasota is liquidated. The other investors who claim they are victims of fraud would get less than half of what they invested in the company.

But the Brasota trustee is suing Balkany.

Trustee Gerald McHale told the paper he has already collected nearly $53 million from the company's remaining assets and holdings. With that money Brasota's nearly 1,800 jilted investors would reportedly receive about 38 cents on the dollar. But if Balkany wins her case that number would be diminished and other investors might follow her lead.

"It is the most important litigation that we have," McHale reportedly told the paper. "If I beat her, I'm home free."

read story from the Herald Tribune


Donald M. Knight was a successful South Carolina businessman and farmer before being found guilty of manufactured housing mortgage fraud.

Knight, 58, of Scranton, S.C., has pleaded guilty to running a fraud scheme that involved securing mortgage loans for people who could not qualify for the loans, according to federal prosecutors in South Carolina.

Scranton was sentenced to two years in prison and was ordered to pay $659,787 in restitution, which is the amount prosecutors say he bilked from banks and other lenders, according to the Florence Morning News.

Court records show that Knight used forged documents -- home titles, W-2 forms, paycheck stubs, rental history, financial statement and inspection forms -- to run his scheme and convince banks to lend the money.

He also used manufactured homes that had already been sold as collateral for the loans.

Dorn Smith, CEP of Citizens Bank, one of the banks hit by the scheme, called Knight "a good citizen and a good role model all his life," the paper reported.

"He's made a bad mistake, but I think he's learned from his mistake," Smith reportedly said.

read article from the Morning News


October 10, 2005


A Colorado banker could go to prison for two years for using fraud to obtain a mortgage loan he then refused to pay off.

Frederick Allison, 41, is accused of applying for a $40,000 mortgage loan from Lesh Mortgage Lending in Greeley, Colo. Mortgage broker Rhonda Lesh, who did business at the New Frontier Bank where Allison was a VP and loan officer, reportedly checked on the application and found no problems.

She then made the loan to Allison, according to the Greeley Tribune. Allison repaid $16,000 two months later but then reportedly stopped making payments. She went to authorities.

Allison, who is also facing forgery and theft charges elsewhere in Colorado over a pawned car, has been fired from the bank.

Allison was arrested in California, where is reportedly working a new job. He pleaded guilty and may spend up to two years in jail. Sentencing is scheduled on Nov. 16.

read story from the Greeley Tribune



How's this for a racket. A housing inspector cites a property for code violations, the owner loses the house because of liens, the inspector buys it and then sells the house for a profit.

That's the allegation against David E. Hallberg, who was fired from his job as a Portland housing inspector after he was accused of conflicts of interest. The Oregon Ethics Commission has brought 16 preliminary violations against Hallberg, The Oregonian is reporting. He was cited for attempting to use his office for financial gain and for failing to disclose a potential conflict of interest.

Hallberg was also cited for using a city fax machine for his personal real estate projects.

Hallberg did not comment when contacted by the paper.

Reportedly, Hallberg inspected a home in North Portland 20 times and cited the owner for code violations. Because of the violations the owner had to make $145 monthly payments to payoff liens and eventually lost the house through a foreclosure.

Hallberg allegedly bought the house in May 2002 for $77,000 and sold it in December of that year for $173,000.

Hallberg was fired last year. Neighbors reportedly told The Oregonian that he did make improvements to the houses he purchased.

read story from The Oregonian

 
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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