Top News Story
Foreclosure Fraud
Posted: 08/12/2011 04:35:26 PM PDT
Updated: 08/14/2011 04:49:27 PM PDT
SACRAMENTO, CA -- A 39-year-old Tracy man pled guilty Friday in federal court for conspiring to rig bids at public real estate foreclosure auctions in San Joaquin County. Walter Daniel Olmstead participated in the scheme with other real estate investors where they agreed not to bid against each other on certain properties. After the conspirators' designated bidder bought a property, the group would hold a second, private auction. The conspirator who bid the highest got the real estate and the difference between the public and the private auction prices was split among the conspirators. Federal prosecutors say Omstead participated from November 2008 to July 2009. Olmstead faces up to 10 years in prison and a $1 million fine. He also pled guilty to mail fraud which carries a sentence of up to 30 years in prison and a $1 million fine. His sentencing date has not yet been scheduled. Seven other people have pled guilty in connection with this case, including 38-year-old Yama Marifat of Pleasanton. Marifat pled guilty in March.
Mortgage Fraud
August 14, 2011
Mortgage Fraud: Mortgage fraud is a material misstatement, misrepresentation, or omission relied on by an underwriter or lender to fund, purchase, or insure a loan. This type of fraud is usually defined as loan origination fraud. Mortgage fraud also includes schemes targeting consumers, such as foreclosure rescue, short sale, and loan modification.
Introduction
Mortgage fraud remained elevated in 2010 despite modest improvements in various economic sectors and increased vigilance by financial institutions to mitigate it. Although recent economic indicators report improvements in various sectors, overall indicators associated with mortgage fraud––such as foreclosures, housing prices, contracting financial markets, and tighter lending practices by financial institutions––indicate that the housing market is still in distress and providing ample opportunities for fraud. National unemployment remains high, and housing inventory is at the same level it was in 2008 in the midst of the housing crisis.1 Mortgage delinquency rates and new foreclosures continued to increase in prime and subprime markets.
Mortgage Fraud Perpetrators
Mortgage fraud enables perpetrators to earn high profits through illicit activity that poses a relative low risk for discovery. Mortgage fraud perpetrators include licensed/registered and non-licensed/registered mortgage brokers, lenders, appraisers, underwriters, accountants, real estate agents, settlement attorneys, land developers, investors, builders, bank account representatives, and trust account representatives. There have been numerous instances in which various organized criminal groups were involved in mortgage fraud activity. Asian, Balkan, Armenian, La Cosa Nostra,2 Russian, and Eurasian3 organized crime groups have been linked to various mortgage fraud schemes, such as short sale fraud and loan origination schemes.
Mortgage fraud perpetrators using their experience in the banking and mortgage-related industries—including construction, finance, appraisal, brokerage, sales, law, and business—exploit vulnerabilities in the mortgage and banking sectors to conduct multifaceted mortgage fraud schemes. Mortgage fraud perpetrators have a high level of access to financial documents, systems, mortgage origination software, notary seals, and professional licensure information necessary to commit mortgage fraud and have demonstrated their ability to adapt to changes in legislation and mortgage lending regulations to modify existing schemes or create new ones.
Mortgage fraud perpetrators target victims from across a demographic range, with perpetrators identifying common characteristics such as ethnicity, nationality, age, and socioeconomic variables, to include occupation, education, and income. They recruit people who have access to tools that enable them to falsify bank statements, produce deposit verifications on bank letterhead, originate loans by falsifying income levels, engage in the illegal transfer of property, produce fraudulent tax return documents, and engage in various other forms of fraudulent activities. Mortgage fraud perpetrators have been known to recruit ethnic community members as co-conspirators and victims to participate in mortgage loan origination fraud.
Read the Full Report: 2010 Mortgage Fraud Report - Year in Review
Foreclosure Fraud
Posted: 07/01/2011 06:55:41 AM PDT
Updated: 07/01/2011 11:10:41 AM PDT
Eight Bay Area real estate investors have agreed to plead guilty for their parts in two conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Alameda and Contra Costa counties, the Department of Justice announced Thursday.
Felony charges were filed Thursday in federal court in Oakland against:
Thomas Franciose, 64, of San Francisco;
William Freeborn, 44, of Alamo;
Robert Kramer, 63, of Oakland;
Thomas Legault, 50, of Clayton;
David Margen, 53, of Berkeley;
Brian McKinzie, 38, of Hayward;
Jaime Wong, 42, of Dublin; and
Jorge Wong, 36, of San Leandro.
Prosecutors claim they conspired to rig bids by agreeing not to bid against one another at foreclosure auctions in Alameda and Contra Costa counties -- some in both counties, some only in one -- between May 2008 and this January.
When real estate properties are sold at the auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. After the conspirators' designated bidder bought a property, they would hold a secret, private auction -- sometimes right near the courthouse steps at which the legitimate auction had just been held -- at which each would bid the amount above the public auction price he was willing to pay. The difference between the public auction price and that at the second auction was the group's illicit profit to be divided among the conspirators, often in cash.
The eight men also were charged with using the U.S. mail in carrying out their conspiracy, by paying potential competitors not to bid competitively in the public auctions, court filings say.
"While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors," said Christine Varney, assistant attorney general in charge of the Department of Justice's Antitrust Division, in a news release. "The Antitrust Division will vigorously pursue these kinds of collusive schemes that eliminate competition from the marketplace."
Franciose, Jaime Wong and Jorge Wong were charged with one count each of bid rigging to obtain selected real estate at foreclosure auctions in Alameda County and one count each of conspiracy to commit mail fraud. Freeborn and Legault were charged with one count each of bid rigging to obtain selected real estate at foreclosure auctions in Contra Costa County and one count each of conspiracy to commit mail fraud. Kramer, Margen and McKinzie were each charged with two counts of bid rigging to obtain selected real estate at foreclosure auctions in Alameda and Contra Costa Counties and two counts each of conspiracy to commit mail fraud.
Each bid-rigging count -- a violation of the Sherman Antitrust Act -- is punishable by up to 10 years in federal prison and a fine of up to $1 million, or either twice the gain derived from the crime or twice the loss suffered by the victim. Each mail fraud conspiracy count is punishable by up to 30 years in federal prison and a fine of up to $1 million.
Justice Department spokeswoman Gina Talamona said court dates have not yet been scheduled. Anyone with information on bid rigging or fraud related to public real estate foreclosure auctions should call the Antitrust Division's San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.
Foreclosure Resources
April 28, 2009
The Federal Reserve Banks have established Foreclosure Resource Centers to help address local and regional challenges in their mortgage markets and local communities. The map below links to these regional foreclosure centers, where you’ll find resources for small municipalities, housing counselors, and consumer and community groups.
Communities across the country are facing the challenge of dealing with the destabilizing impacts of foreclosed properties. If you are having difficulty making your mortgage payment, one of the most important things you can do is seek assistance. The resources contained in this blog provide information and links to agencies and organizations that may be able to help you.
Fraud
By Kurtis Alexander, Santa Cruz Sentinel [Santa Cruz, California]
Posted: 04/26/2009 08:18:49 PM PDT
Updated: 04/27/2009 07:48:04 AM PDT
Two years ago Tom Decker and his wife, Maria McArthur, bought an old home on a wooded lane in the Santa Cruz Mountains they thought held promise of becoming the perfect retirement getaway.
The East Bay couple knew the house, acquired for a modest $50,000, came with its share of problems, like a slipping hillside in the back and other government-required fixes. While Decker says he was prepared to tackle the repairs, the two could not have been ready for what they now say stands between them and their dream home.
A week ago, after many long weekends spent driving from their primary residence in Pleasanton to improve the new property, the couple returned to the Ben Lomond house and discovered someone else had moved into the home.
The cars in the driveway weren't theirs, their belongings had been stacked in the garage and their keys no longer fit the locks, they said. And worse yet, upon arriving at the property on Hubbard Gulch Road, the couple says, a man emerged from the front door.
"We said, 'This is our home,' and he said, 'This is my home,' " Decker said. "We were dumbfounded."
A week later, McArthur and Decker remain unable to legally get back into the house, they say, and have been staying with friends, until they sort out what they believe is an elaborate case of real estate fraud.
"We'd always been a little nervous about break-ins, but we never had thought our home could be stolen," McArthur said.
The Santa Cruz County Sheriff's Office did not return phone calls seeking comment on the couple's situation.
The man who moved into the house earlier this month tells a much different story.
Daniel Judd says he was sitting at his home two Saturdays ago when strangers arrived at the house and told him it was theirs.
"They started yelling at me," he says. "I said if you have a claim, please bring it forward."
The difference of opinion that day, both sides agree, turned into a heated debate that sheriff's deputies ended up settling. When Judd produced a deed that showed he was the property's owner, the deputies allowed Judd to remain on the property and sent McArthur and Decker on their way.
Since then, however, both parties have been ordered to stay out of the home, both sides acknowledge.
Meanwhile, the Santa Cruz County District Attorney's Office confirmed at the end of last week that it too is looking into the case.
Real estate records reviewed by the Santa Cruz Sentinel indicate Decker and McArthur bought the property two years ago. But their transfer documents assigned ownership, in what was an apparent mistake, to another party, which has since sold the home to Judd.
In November 2007, McArthur purchased the home for $50,000, records reveal. In 2008, she transferred ownership to a corporation called the California Housing Association LLC, jointly owned by her and her husband. Decker says the corporation is where he conducts his real estate business.
That corporation, however, is licensed in Nevada, records show, while the home's title was moved to what appears to have been a then-nonexistent California company of the same name.
In March of this year, records show, a California Housing Association LLC was established by Ray Tate of Santa Cruz. As the registered owner of the property, that corporation sold the home on April 2 for $14,000, ostensibly to Judd.
A representative of Old Republic Title Co. in Capitola, where Decker and McArthur had insured property titles, reviewed the records. "The last deed to the individual (Judd) is a fraudulent deed," said Rod Seyffert, chief title officer at Old Republic.
Judd, who says he moved into the mostly furnished home earlier this month, confirmed he bought the property from Tate. Tate could not be reached to comment.
Bank of America and its Countrywide unit will pay $8.5 billion to settle claims that the lenders sold poor-quality mortgage-backed securities that went sour when the housing market collapsed.
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