How to Get Out of Debt With the Get Out of Debt Guy » mortgage fraud

Mortgage Loan Fraud Reports Up Significantly

Steve Rhode — Wed, 07 Mar 2012 22:24:50 +0000

The Financial Crimes Enforcement Network has just released its Q3 2011 report on mortgage loan fraud.

“As housing markets look to recover, criminals persist in their efforts to prey on struggling homeowners, while financial institutions continue to uncover apparent fraud as they work through their portfolios of earlier mortgages now in default,” said FinCEN Director James H. Freis, Jr. “FinCEN will continue to monitor these reports and work closely with law enforcement to help them track illicit actors.”

Mortgage loan fraud encompasses some form of loan workout or debt elimination attempt, questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in the original loan application and the workout request.

Overall the number of reports of mortgage loan fraud rose 20 percent from the same period the year before.

The states most likely to have fraudulent activity reported, per capita, are:

Hawaii
California
Nevada
Florida
Delaware
Arizona
Illinois
District of Columbia
New Jersey
New York

The areas with the highest amounts of reported mortgage loan fraud per capita are:

San Jose-Sunnyvale-Santa Clara, CA
Riverside-San Bernardino-Ontario, CA
Los Angeles-Long Beach-Santa Ana, CA
Miami-Fort Lauderdale-Pompano Beach, FL
Las Vegas-Paradise, NV
San Francisco-Oakland-Fremont, CA
Tampa-St. Petersburg-Clearwater, FL
Orlando-Kissimmee, FL
Phoenix-Mesa-Scottsdale, AZ
Milwaukee-Waukesha-West Allis, WI
Chicago-Naperville-Joliet, IL-IN-WI
San Diego-Carlsbad-San Marcos, CA
New York-Northern New Jersey-Long Island, NY-NJ-PA
Washington-Arlington-Alexandria, DC-VA-MD-WV
Detroit-Warren-Livonia, MI
Salt Lake City, UT
Seattle-Tacoma-Bellevue, WA
Sacramento–Arden-Arcade–Roseville, CA
Denver-Aurora-Broomfield, CO
Jacksonville, FL

Of the filings of suspicious activity there were a number of complaints about Freeman-style debt renunciations. “Freeman-style” arguments refer to specious arguments that avow that the funds were never loaned and therefore the borrower has no duty to repay the mortgage. These arguments rely on an unreasonable interpretation of Section 1-207 of the Uniform Commercial Code that has never been affirmed or supported by any court or governmental authority. – Source

@GetOutOfDebtGuy

Hells Angel Commits Mortgage Fraud For Marijuana Grow House

Amanda Miller — Mon, 23 Jan 2012 17:48:29 +0000

From How to Get Out of Debt

In September I covered a story about two leaders of the Hells Angels that had been accused of mortgage fraud. A mortgage broker in the San Francisco bay area was charged with conspiracy to arrange more than $10 million in fraudulent home loans including the two Hells Angels leaders.

Raymond Foakes, former President of the Hells Angels Sonoma Chapter, pleaded guilty in October to conspiracy to commit bank and wire fraud, wire fraud and money laundering and was sentenced last week to 70 months in prison and ordered to pay $1,085,000 in restitution for his role in the multi-million dollar mortgage fraud scheme.

According to the plea agreement, Foakes admitted that from 2006 until early 2007, he was involved in a scheme to fraudulently obtain mortgage loans for parcels of real property located in Northern California, including for a property located at Laguna Road in Santa Rosa, California.

As part of this conspiracy, Foakes submitted a series of false statements on mortgage loan applications and altered bank statements. For example, the applications falsely stated that he had been self-employed as owner of “Foakes Concrete” for approximately 10 years where he made approximately $24,000 per month, and the bank statements reflected inflated account balances and recurring deposits. Rather than occupy the property as a primary residence, as he stated on his applications he intended to do, he allowed it to be used as a marijuana grow house. Further, Foakes laundered the criminally-derived proceeds by engaging in financial transactions over $10,000.

Foakes was one of several defendants indicted by a federal grand jury in the conspiracy on September 1, 2011. He was charged with conspiracy to commit bank and wire fraud, wire fraud, money laundering and conspiracy to maintain drug involved premises – Source.

If you have been scammed and would like to file a scam report, please click here.

It’s A Hard Knock Life For Mortgage Fraudsters

Amanda Miller — Wed, 14 Dec 2011 20:58:55 +0000

From How to Get Out of Debt

For my generation the term “Hard Knocks” cannot be mentioned without the memorable image and sound of Jay-Z’s “ghetto anthem” rendition of “It’s A Hard Knock Life” from the play Annie.

My personal favorite lyric and image from the infamous song being: “I’m from the school of the hard knocks, we must not let outsiders violate our blocks.” You see, when I was in school the boys would go around claiming they were from the school of “hard knocks”, reciting this rap song and claiming they’d learned so much from awful, painful, negative experiences (you know, like Jeff Lang stealing their lunch money or illegally purchased cigarettes) in their life rather than what they’d learned in school.

Now knowing this fun fact about my young adulthood I’d like for you to put yourself in my shoes when earlier this month I came across a press release published in my current home city and state of Raleigh, North Carolina.

You see, earlier this month David Joseph Pikul was sentenced to 14 months in prison followed by three years supervised release for mortgage fraud. Pikul also owes restitution in the amount of $182,702.73.

APPARENTLY Pikul operated a law practice in Fayetteville, North Carolina. Between 2002 and 2004, Eric Omar Jones, also from Fayetteville, operated a business called the (are you ready for it?) University of Hard Knocks Investments, Inc. (UHK).

I said the…

University of Hard Knocks Investments

::deep sigh::

Jones purported to be experienced in the purchase, renovation, and resale of foreclosed real estate for profit. During this time, Pikul served as closing attorney for numerous real estate transactions in which Jones used his investors’ loan monies from Omni National Bank to purchase properties for himself and U.H.K. (UNIVERSITY OF HARD KNOCKS!)

Pikul then assisted Jones to “flip” these properties to the unwitting investors for a higher price, with Jones receiving the profit and the investors receiving all the credit risk.

To facilitate the scheme, Pikul created and submitted false HUD-1 settlement statements to numerous banks selling foreclosed properties and to numerous banks financing the purchase of the foreclosed properties.

The false statements to selling banks generally reflected that UHK had a loan with Omni when it did not, or that UHK was bringing cash to closing, when in fact, Omni was financing the deals under the auspices of a loan to a third party borrower.

Simultaneously, Pikul sent false documents to Omni and other banks funding the transactions. These documents generally reflected that the buyers brought money to closing or made earnest money payments that they did not make. It is estimated that losses to the various banks exceeded $200,000 – Source.

So, REALLY, who would take the University of Hard Knocks Investment company seriously? Oh right, maybe these guys…

Embed Share

Yep. That JUST happened.

If you have been scammed and would like to file a scam report, please click here.

$78 Million Mortgage Fraud “Dream Home” Scheme Owner Convicted

Amanda Miller — Mon, 14 Nov 2011 23:27:51 +0000

From How to Get Out of Debt

Andrew Hamilton Williams, Jr., was convicted last week in Maryland of fraud conspiracy, wire fraud and conspiracy to commit money laundering in connection to a massive mortgage fraud scheme. The scheme, entitled “Metro Dream Homes” promised to pay off homeowners’ mortgages on the homes of their dreams but instead left them high and dry.

According to evidence presented at the two week trial, beginning in 2005, Williams and his conspirators targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments, and pay off the homeowners’ mortgage within five to seven years.

Dream Homes Program representatives explained to investors that the homeowners’ initial investments would be used to fund investments in automated teller machines (ATMs), flat screen televisions that would show paid business advertisements, and electronic kiosks that sold goods and services. To give investors the impression that the Dream Homes Program was very successful, Metro Dream Homes spent hundreds of thousands of dollars making presentations at luxury hotels such as the Washington Plaza Hotel in Washington, D.C., the Marriott Marquis Hotel in New York, New York, and the Regent Beverly Wilshire Hotel in Beverly Hills, California. Metro Dream Homes had offices in Maryland, the District of Columbia, Virginia, North Carolina, New York, Delaware, Florida, Georgia and California.

According to trial testimony, Williams and his co-conspirators failed to advise investors that the ATMs, flat-screen televisions and kiosks never generated any meaningful revenue. The defendants used the funds from later investors to pay the mortgages of earlier investors, in a Ponzi-like fashion.

Evidence showed that MDH had not filed any federal income tax returns throughout its existence. The defendants also failed to advise investors that their investments were being used for the personal enrichment of select MDH employees, including Williams, to: pay salaries of up to $200,000 a year as well as their mortgages; employ a staff of chauffeurs and maintain a fleet of luxury cars; and travel to and attend the 2007 National Basketball Association All-Star game and the 2007 National Football League Super Bowl, staying in luxury accommodations in both instances. Nor were investors told that investor funds were used to: pay off investors in a prior failed ATM investment venture called Bankcard Group; make multiple donations of up to $50,000 each to charitable organizations to give MDH the appearance of being financially successful; and transfer millions of dollars in investor funds to third-party businesses for purposes not disclosed to investors.

Trial testimony showed that Williams and his co-conspirators arranged for early Dream Homes Program investors, whose monthly mortgage payments had been paid by MDH using the funds of later Dream Homes Program investors, to attend recruitment meetings to assure potential investors that the Dream Homes Program was not a fraud. MDH used a third party company to pay investors to advertise the Dream Homes Program to friends and family. MDH encouraged homeowners to refinance existing mortgages on their homes in order to withdraw equity and generate the funds necessary to enroll their homes in the Dream Homes Program.

On August 15, 2007, the Maryland Securities Commissioner issued a cease-and-desist order to MDH and other related companies directing them to immediately cease the offering and sale of unregistered securities in connection with their promotion of the Dream Homes Program. However, Williams thereafter called meetings in which investors were told that MDH was earning up to $10 million in one month and that the company’s legal difficulties were the result of either misunderstandings or racial animus against company leaders.

As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested approximately $78 million. When Williams and his co-conspirators stopped making the mortgage payments, the homeowners were left to attempt to make the mortgage payments MDH had promised to make in full.

Williams faces a maximum sentence of 30 years in prison for the fraud conspiracy; 30 years in prison on each of the 15 counts of wire fraud; and 20 years in prison for conspiracy to commit money laundering. Yes, that’s just shy of 100 years.

U.S. Attorney Rod J. Rosenstein said, “Metro Dream Homes was an egregious fraud scheme, and an excellent example of the principle that financial schemes that sound too good to be true are usually scams.”

“This case shows that the appearance of success can be a mask for a tangled financial web of lies,” said IRS Special Agent in Charge Jeannine Hammett. “Ponzi schemes can thrive for a time on false claims about how the money is being invested and where the returns are coming from. But that time is gone, and as this verdict shows, it’s time for those responsible to face judgment” – Source.

I hope Williams’ dream home involved steel bars, a roommate and a toilet next to his bunk bed.

If you have been scammed and would like to file a scam report, please click here.

Mother Daughter Fraud Team Pleads Guilty After Five Days Of Trial

Amanda Miller — Tue, 08 Nov 2011 02:58:18 +0000

From How to Get Out of Debt

Mid-trial a mother and daughter fraudster team, along with an accomplice from Las Vegas, pleaded guilty to participating in a mortgage fraud scheme that lead to more than $1.9 million in mortgage loan losses to lenders.

Mother, Patricia Smith, pleaded guilty to Counts Four and Five of the Superseding Indictment, which charged her with wire fraud. Daughter, Jamilah Smith, pleaded guilty to Counts Two and Three of the Superseding Indictment, which charged her with wire fraud. Pleading along with them was Carol Ashley to Counts Four and Five of the Superseding Indictment which charged her with wire fraud.

What’s strange about this trial is that all three defendants entered their guilty pleas after five days of trial.

Apparently, Patricia and Jamilah Smith served as “straw buyers” to purchase two condominiums each in North Wildwood, New Jersy. The straw buyers had good credit scores, but lacked the financial resources to qualify for mortgage loans. The Smiths’ accomplices created false documents, such as fake bank statements, W-2 Forms, and pay stubs to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans. Ashley falsely verified to the lenders that Patricia Smith worked for Ashley’s company, Exclusive Entertainment Production, based in the Los Angeles area.

Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, the defendants’ accomplices took a portion of the proceeds from the fraudulent mortgage loans and ultimately paid the Smiths for their roles.

Each charge to which the defendants pleaded guilty carry a maximum potential penalty of 30 years in prison and a $1 million fine. Patricia Smith agreed to forfeit $82,716.80, and Jamilah Smith agreed to forfeit $65,047.70, representing the amount of proceeds obtained as a result of the offenses.

Sentencing for all three defendants is scheduled March 2012. A fourth defendant named in the Superseding Indictment Ollie Rudolph Thaxton, pleaded guilty to Count One, which charged him with wire fraud on Sept. 20, 2011, and is scheduled to be sentenced Jan. 12, 2012 – Source.

If you have been scammed and would like to file a scam report, please click here.

Treasury Reports An 88 Percent Increase In Mortgage-Fraud Since 2010

Amanda Miller — Tue, 11 Oct 2011 21:36:21 +0000

From How to Get Out of Debt

Banks are re-examining loans that took place during the housing boom and are now finding problems which has resulted in a large jump of reported mortgage-fraud. Reports are showing an 88 percent jump in the second quarter according to the Treasury Department.

“Most of the mortgages suspected of fraud closed during the height of the real-estate bubble, the financial-crimes division said. The report added that 81 percent of the complaints involved suspicious activities before 2008, and 63 percent described what appeared to be fraud occurring four or more years ago – Source.”

The agency reports that 29,558 suspicious activity reports have been filed that may involve possible loan fraud. The same time last year 15,727 reports were filed.

“The Financial Crimes Enforcement Network said California had more reports of suspected mortgage fraud on a per-capita basis than any other state, followed by Florida and Nevada – Source.”

The Treasury thinks this recent spike in fraud reports may be in part to loan-repurchase demands from investors and what financial institutions are finding as they go through defaulted mortgages.

Financial Crimes Enforcement Network Director, James Freis Jr., believes that mortgage fraud still continues now but at a much lower level – Source.

What are your thoughts on this matter? Do you think mortgage fraud is on the rise or decline?

Homeowners In Financial Distress Lose Over $1.2 Million To Mortgage “Rescue” Fraud

Amanda Miller — Tue, 11 Oct 2011 16:06:28 +0000

From How to Get Out of Debt

To the tune of a MasterCard commercial:

$4.7 million in fradulent mortgage loans…
$944,224 lost by lenders….
$1.2 million lost in equity to homeowners….

Shameful.

Mary Ann Dean and Charles Donaldson pleaded guilty to the charge of conspiracy to commit wire fraud in connection with a mortgage fraud scheme of Sunset Mortgage Company.

Dean was a loan originator and operator of the Maryland-licensed mortgage brokerage franchise while Donaldson acted as a loan originator during part of the conspiracy. Donaldson would steer clients to Dean’s brokerage franchise and facilitated communication between Dean and buyers and sellers.

Beginning in 2005, Donaldson identified homeowners who were in financial distress because they were unable to make the mortgage loan payments on their homes and enticed the homeowners to participate in a foreclosure “rescue” plan. Donaldson told the homeowners that he would locate “investors” to purchase the homeowners’ properties; that the homeowners would rent their properties after selling them to the “investors,” who would receive a small percentage of the homeowners’ equity; that the remainder of the homeowners’ equity would be transferred to Donaldson, who would hold it in escrow; and that the homeowners would buy back their properties after twelve to eighteen months, during which they could rehabilitate their finances and “repair” their credit while they continued to live in their homes.

Donaldson then recruited associates and family members as “investors” to purchase the properties. He then paid them all a small percentage of the seller’s equity at settlement. Homeowners were then expected to pay monthly rent to the “investor” to remain in their home and in return the “investor” was expected to make and keep up with the mortgage payments.

Prior to the sales of the properties, Donaldson created and recorded Second Deeds of Trust or promissory notes that purported to show debts owed by the homeowners to Donaldson, and which were secured by the existing equity in their home. At the closing of the sale of the property to the “investors,” the title companies disbursed funds to Donaldson’s bank account in order to payoff the liens he had established. Donaldson assured the homeowners and “investors” that he would assist them, if need be, with their rent and mortgage payments respectively, using that equity, which he claimed he was holding in his “escrow account.”

In reality all Donaldson simply put the funds into his own personal checking account, using the for business and personal purposes. Dean knew of this practice the whole time.

Donaldson and Dean obtained the new mortgage loans on the properties in the names of the “investors” with higher monthly mortgage payments, and, most times, higher interest rates, than that which the homeowners were currently paying. To obtain the new loans, Dean made false representations in the loan applications, including, that the “investors” intended to live in the properties as primary residents and inflating the incomes of the “investors.” Donaldson also assisted Dean by procuring false verification of employment letters. Dean, who acted as the mortgage broker, submitted the false loan applications to lenders to obtain financing for the purchases of the properties in the names of the “investors.” In some instances, Dean submitted fraudulent loan applications for the same “investor” to purchase multiple properties as their ‘primary residence’ in a short period of time.

Given the fraudulent loans at a high interest rate and large transaction fees and premiums Donaldson and Dean knew the clients that had trusted them to help them keep their homes had lost control and could not afford the new loan payments since they were now higher than what they were higher than what they were originally paying. They also did not quality for a refinance.

Due to the nature of the high payments “investors” and homeowners were forced to use personal savings and credit cards to keep up with mortgage and rent payments, respectively, until their funds had run dry. The loans went into default and as of right now thirteen of the homes have been foreclosed upon and proceedings for foreclosure have started for three of the other homes.

Lenders made over $4.7 million in mortgage loans based on the fraudulent loan applications, and have so far lost at least $944,223.91. Dean and Donaldson’s scheme also caused the homeowners to lose between $1.2 million and $1.4 million. More than 20 victims were defrauded by Donaldson and Dean.

Inspector General Jon T. Rymer of the Federal Deposit Insurance Corporation (FDIC) said, “I am once again pleased to join our law enforcement colleagues in defending the integrity of the financial services industry by combating mortgage fraud. We are particularly concerned in cases like this one where professionals have misused their positions of trust and whose fraudulent activities in committing mortgage fraud have harmed numerous innocent homeowners. We are committed to continuing our investigations of such criminal misconduct to help maintain the safety and soundness of the nation’s financial and lending markets” – Source.

If you have been scammed and would like to file a scam report, please click here.

Master Builders for Christ and Vision Builders Christian Center Steal Homes of People Facing Foreclosure

Steve Rhode — Thu, 04 Feb 2010 16:06:50 +0000

From How to Get Out of Debt

I’m not sure if it’s just me or that there seem to be more financial frauds occurring in the name of God.

Using the words of God and a promised opportunity of hope in desperation, three Delaware residents stole the foreclosed houses of desperate homeowners. – Source

Delaware Attorney General Beau Biden announced that Jamaar Manlove, Larry Manlove, Rhonda Manlove, Master Builders for Christ and Vision Builders Christian Center have been charged in a 21-count indictment for crimes related to a mortgage rescue scam. Warrants have been issued for their arrest and racketeering liens have been placed on their assets. This represents what is believed to be one of the largest mortgage rescue fraud indictments in Delaware history.

The indictment alleges that Jamaar Manlove ran a criminal enterprise involving theft, money laundering, and forgery in which he preyed on vulnerable homeowners who faced imminent foreclosure. In these scams, struggling homeowners sell their homes to third parties to avoid foreclosure based on the false promise that they can repurchase their homes through a complex sale/lease-back arrangement when their financial situations improve. In reality, this never happens. Instead, these schemes impose exorbitant hidden fees that take thousands of dollars of equity away from homeowners, and they ultimately lose their homes, unable to obtain financing to repurchase their home.

“Those who take advantage of vulnerable homeowners under extreme financial duress or facing foreclosure should be on notice,” Attorney General Biden stated. “We will track you down, prosecute you, and put you behind bars.”

The indictment follows a 10-month investigation by the Attorney General’s Consumer Protection Unit and includes charges of Criminal Racketeering, Conspiracy, Money Laundering, Felony Theft, Forgery, and Failure to File Taxes. If convicted on all counts each defendant faces a minimum of two years in prison. Jamaar Manlove faces a maximum of 83 years in prison if convicted on all counts.

This case is the direct result of the collaborative work of the Delaware Attorney General’s Mortgage Fraud Task Force, which was formed in June 2009 to reduce foreclosures and foreclosure- related fraud statewide. Individuals who believe they may have been victimized in this scheme or other mortgage rescue frauds are urged to contact Special Investigator Craig Weldon of the Delaware Department of Justice Consumer Protection Unit at 302-577-8600.

@GetOutOfDebtGuy

Exotic Dancer Opens Foreclosure Avoidance Company, Advertises on Gospel, Partner Punches Lawyer in Face

Steve Rhode — Tue, 17 Nov 2009 18:59:05 +0000

From How to Get Out of Debt

LOL, OMG, you can’t make this stuff up.

A Maryland woman who stole millions from Washington area homeowners trying to avoid foreclosure is a “vulture” whose case should serve as a warning to other con artists, a federal judge said yesterday before imposing a sentence of more than 12 years.

Joy Jackson, 41, a former exotic dancer who became president of the Metropolitan Money Store, carried out the years-long scheme through the Lanham-based business. She used the cash to buy jewelry, fur coats and vacations, and to cover a lavish wedding at the Mayflower Hotel, where Patti LaBelle serenaded guests who feasted on lobster and drank Cristal.

Metropolitan, which advertised on gospel and R&B stations, promised to help people keep their homes and repair their credit. Instead, Jackson and several co-conspirators, including her husband, Kurt Fordham, took titles to properties and drained them of equity.

The case produced more courtroom drama Monday when Assistant U.S. Attorney James A. Crowell IV was punched in the face by a relative of Jackson’s key accomplice, Jennifer McCall, witnesses said.

Read the rest of the story here.

@GetOutOfDebtGuy

How to Get Out of Debt With the Get Out of Debt Guy » mortgage fraud

Mortgage Loan Fraud Reports Up Significantly

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Hells Angel Commits Mortgage Fraud For Marijuana Grow House

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$78 Million Mortgage Fraud “Dream Home” Scheme Owner Convicted

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Mother Daughter Fraud Team Pleads Guilty After Five Days Of Trial

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Treasury Reports An 88 Percent Increase In Mortgage-Fraud Since 2010

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