November 8, 2005


A bankruptcy lawyer in Pittsburgh is facing up to eight years in prison after pleading guilty to federal mortgage fraud charges.

Daniel J. Gates, 44, admitted he lied on a mortgage application for a $1.3 million loan, according to the Pittsburgh Post-Gazette. He also admitted to taking more than $400,000 from a couple who entrusted him with putting the money in a trust for their children.

Gates reportedly told the couple he was putting the money in CD's, but then spent the money for himself. Prosecutors said in a statement that on surveillance recordings Gates can be heard rehearsing the phony pitch he made to the couple.

On the mortgage application made to Skybank Gates indicated he received $450,000 in bonuses when actually that was money he allegedly embezzled from clients, prosecutors said.

Federal authorities reportedly said that Gates used the cash to buy expensive jewelry, artwork, sports memorabilia and show horses. The total loss to his victims was nearly $2.7 million. He will be sentenced Jan. 27.

read story from the Pittsburgh Post-Gazette .

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Illinois U.S. Sen. Barack Obama has asked a Senate committee to hold hearings on the growing problem of mortgage fraud.

Obama, a Democrat, said a recent Chicago Tribune investigation showed that predatory mortgage fraud is disproportionately affecting the poor and African Americans, according to an AP dispatch.

Obama is requesting that the Senate Banking, Housing and Urban Affairs Committee hold hearings to determine if law enforcement and regulators have enough resources to tackle the problem and enforce lending laws.

Obama made his request in writing to the committee's Republican chairman and its ranking Democrat.

read article from the Associated Press .

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November 7, 2005


A real estate lawyer is the latest defendant to be sentenced to prison as part of a $16.6 million Pennsylvania mortgage fraud scheme that targeted the U.S. government.

Attorney Michael Sedor was sentenced to seven months in prison and seven months home incarceration along with a fine of $5,100, according to press reports. Sedor was the settlement agent for most of the sales in the Barwood Estates development outside of Philadelphia.

Sedor was reportedly convicted of defrauding HUDs Urban Development mortgage program by disbursing loans even though he knew the seller or developer was providing buyers with their down payment and closing costs.

U.S. Attorney Thomas Marino told reporters that the funds were concealed through phony gift letters and bogus "sweat equity" that was hidden on settlement sheets.

Already sentenced in the case is Barwood Estates owner Gary Sweitzer and Harrisburg lawyer Charles R. Brown, who reportedly handled the closings.

Reportedly awaiting sentencing are Louis N. Fierro, a former loan officer with MNC Mortgage, the principal lender at Barwood, and Brian G. Hoch, the development’s sales manager.

read story from the York Daily Record

read story from The Patriot-News .

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Chicago Gangs Thrive from Mortgage Fraud
Over the course of a decade, Marvel Thompson, the reputed king of the Black Disciples street gang, used straw buyers, sham sales and phony identities to secure more than $1 million in mortgage loans that went unpaid.
read story from the Chicago Tribune

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Fraud Hits Poorest Chicago Communities
The Chicago Tribune identified 524 Cook County homes involved in fraud cases since 2000 and found that they were clustered in low-income and minority neighborhoods.
read story from the Associated Press

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Mortgage Fraud News From MortgageDaily.com
DALLAS, Nov. 7 /PRNewswire/ -- With trillions of dollars in annual mortgage production, fraud committed on just a small fraction of mortgages winds up in the billions, according to Sam Garcia, Publisher of MortgageDaily.com, the dominant online news source for the mortgage industry.
read press release from MortgageDaily.com