In the following press release Joseph P. Russoniello, United States Attorney for the Northern District of California announced that Michael Chou pleaded guilty in federal court today to wire fraud conspiracy. [Information]

In pleading guilty, Chou admitted that, in a scheme that began in 2003 and continued until approximately April 30, 2009, he defrauded mortgage lenders and financial institutions by providing false and fraudulent information in support of mortgage loan applications. Working out of an office in San Francisco, Chou and his colleagues assisted individuals who wanted to obtain mortgages from mortgage lenders so they could purchase residential properties in the Northern District of California and elsewhere. As a part of this scheme, Chou routinely transmitted fraudulent loan applications to mortgage lenders. Those loan applications contained false employment information and false and inflated income and bank account information, which was intended to inflate the borrowers’ creditworthiness. In addition, the loan applications were supported by false and forged documents that purported to verify the borrowers’ employment, income and assets. Chou, and other members of the scheme, used a network of co-conspirators who agreed to pose as the borrowers’ employers and falsely verify to the mortgage lenders the accuracy of the employment and income information listed on the loan applications. As a result of Chou’s participation in this conspiracy he illegally earned $360,800.

Chou, who is currently not in custody,  is scheduled to be sentenced on March 19, 2010, before U.S. District Court Judge Susan Illston in San Francisco. The maximum statutory penalty for wire fraud conspiracy in violation of Title 18, United States Code, Section 1349 is 30 years and a fine of $1 million. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Pursuant to the plea agreement, Chou has agreed to forfeit $360,800 to the United States.

Eleven other individuals have been charged in connection with the case.

David C. Weiss, United States Attorney for the District of Delaware, announced today that Ed Johnson, age 60, and G. Carol Johnson, age 67, of Wilmington, were both found guilty by a federal jury yesterday of one count of conspiracy to commit mail and wire fraud, 10 counts of mail and wire fraud and one count of engaging in an illegal monetary transaction. Mr. Johnson was also convicted individually of one additional mail and wire fraud count. The jury also found that $1,549,598.78 is subject to forfeiture by Mr. and Mrs. Johnson, as that amount represented the proceeds of their fraud. The conspiracy and mail and wire fraud counts are punishable by a maximum term of 30 years imprisonment and a maximum fine of $1,000,000. The count of engaging in an illegal monetary transaction is punishable by a maximum term of imprisonment of 10 years and a fine of not more than twice the amount of the criminally derived property involved in the transaction.

Beginning in 2003 through 2007, Mr. and Mrs. Johnson engaged in a multi-year loan fraud scheme, operating initially through MERL Financial Group and later through Heritage Capital Credit Corporation and Independent Capital Credit Corporation – all companies controlled by Mr. and Mrs. Johnson. As part of that scheme, the defendants fraudulently collected large fees totaling $1,549,598.78 from at least 21 different sets of victims, including a number of churches. The victims, who were seeking funding for a variety of building and development projects, were told by Mr. and Mrs. Johnson that if they paid these large fees, the defendants’ companies would arrange for them to receive loans for these projects. However, at the time the defendants made these promises, they had no source of funding available, nor was this funding imminently available. When promised loan closing dates came and went with the victims receiving no money, the defendants continued to attempt to collect additional fees from the victims and to make misrepresentations regarding their ability to fund loans. Ultimately, none of the 21 sets of victims ever received a loan through the defendants and their companies.

As part of their scheme, the defendants told victims that the victims had to pay application fees, loan commitment fees, closing costs and appraisal fees – at times totaling over $300,000 per victim – in order to receive their loan. With respect to the appraisal fees, in some instances the defendants hired an appraisal company to work on the victim’s project, but the defendants wrongfully retained the fees they had collected for appraisal work and never paid the appraisal company. At other times, victims paid appraisal fees to defendants, yet the defendants never even hired the appraisal company to complete work on that victim’s project and instead kept the money for themselves.

The evidence at trial demonstrated that in significant part, Mr. and Mrs. Johnson spent the victims’ money on luxury items for themselves and their family. These purchases included over $66,000 of jewelry and clothing at stores such as Tiffany and Company or Saks Fifth Avenue. The defendants also spent over $44,000 of victim monies at restaurants and distributed victim funds to their children in various ways.

United States Attorney David C. Weiss said “The defendants used Delaware as the launching pad for a nationwide financial fraud scheme, in which they wrongfully took money from victims living all over the country. These victims, including some from the Delaware Valley, suffered financially and emotionally losing thousands of dollars and their dreams of success. We are pleased with the jury’s guilty verdict and will continue to help the victims attempt to recover funds from the defendants.”

The case was investigated by Special Agent Peter Gangel of the Federal Bureau of Investigation’s Wilmington, Delaware office. It was prosecuted by Assistant United States Attorneys Lesley F. Wolf and Christopher J. Burke.

In the following press release the Idaho Department of Finance announced that it has filed a complaint in Ada County District Court against Sheila Lea Jones. Jones, owner of Vitruvian Investment Group, solicited investors to pool their money for investment into a real estate fund managed by Jones. The fund purportedly invested in short-term construction and development loans, as well as conventional real estate transactions including both commercial and residential loans. The defendant allegedly raised over $3.7 million from at least 40 investors and offered annual returns of 8 percent to 10.5 percent. The State’s complaint alleges violations of the anti-fraud provisions of the Idaho Securities Act and violations of the Idaho Financial Fraud Prevention Act. Vitruvian Investment Group filed for Chapter 7 bankruptcy protection in November 2008.

The department’s complaint alleges that the defendant:

• misrepresented to investors that their investment proceeds would be secured by real estate loans
• misrepresented to investors that not less than 75 percent of the fund portfolio balance would be invested in first lien position real estate loans
• misrepresented to investors that the fund would be reconciled by a CPA on a monthly basis
• misrepresented to investors that a CPA would perform an annual audit of the fund
• failed to advise investors that some investor money would be used for Jones’ personal benefit
• failed to advise investors that the only way the fund could be successful would be to continue to bring new investor money into the fund

The State’s suit seeks a Court order permanently enjoining Jones from further violations of the Idaho Securities Act and the Idaho Financial Fraud Prevention Act and seeks to place restrictions on future business activities. Additionally, the Department seeks restitution of $3.7 million and civil penalties.

In the following press release B. Todd Jones, United States Attorney for the District of Minnesota announced that on October 23, a 45-year-old Prior Lake woman appeared in federal court in St. Paul, where she pleaded guilty to stealing more than $470,000 in money designated for payment of title insurance premiums. Roseann Wagner entered her plea before United States District Court Judge Paul Magnuson. She pleaded guilty to one count of wire fraud and one count of failure to file a tax return. Wagner was charged on October 13, 2009.

In her plea agreement, Wagner admitted operating a scheme to defraud mortgage lenders, borrowers, and a title insurance underwriter from January 2007 to December 2007. Wagner, a licensed insurance agent, owned and operated Tri-Star Title, a title insurance agency. Tri-Star was the insurance agent for Stewart Title Guaranty Co., a Houston, Texas, title insurance underwriting company.

In a mortgage transaction, title insurance protects the lender’s financial interest in the property. The person or entity that obtains the mortgage is required to pay title insurance premiums as part of closing costs. The cost of those premiums is included in the amount financed by the lender.

Wagner accepted more than a total of $470,000 from lenders at hundreds of closings, knowing the money was to be used to pay closing costs, including title insurance premiums. Instead, however, she used the money for her own benefit. Initially, because of Wagner’s fraud, the title insurance premiums, title search costs, and recording fees on hundreds of residential mortgage transactions went unpaid. When Stewart Title Guaranty discovered Wagner had misappropriated the funds, however, it absorbed the losses of all the borrowers and paid the title insurance premiums and other expenses.

In order to effect the fraud scheme, Wagner used interstate wire communications. For example, on October 15, 2007, she wire transferred $30,000 from a Tri-Star account to her personal bank account. Moreover, she failed to file a tax return or pay taxes on more than $270,000 in 2007. The tax loss from her under reporting of income was at least $70,000.

Wagner faces a potential maximum penalty of 20 years in prison for her crime. Judge Magnuson will determine her sentence at a future date. This case is the result of an investigation by the Internal Revenue Service-Criminal Investigation Division and the Minnesota Department of Commerce. It is being prosecuted by Assistant U.S. Attorney Tim Rank.

In the following press release Nevada Attorney General Catherine Cortez Masto announced today that Wayne Goldenbaum, also known as Robert King, of Las Vegas, Nevada, has been indicted on multiple charges of theft, including theft from an individual over the age of 60.

The charges stem from instances where King fraudulently obtained the proceeds from his victims’ mortgage loans or obtained money for the lease of property which he did not own. The case is being prosecuted by the Attorney General’s Mortgage Fraud Task Force.

“Unfortunately, unscrupulous individuals continue to take advantage of homeowners who, due to the current economic climate, are experiencing difficulty making their mortgage payments,” said Attorney General Masto. “It is a top priority in my office to investigate and prosecute mortgage fraud.”

The indictment alleges that King, through his company, King Highway Estates, promised to obtain refinancing for local homeowners who wished to use the proceeds to clear up outstanding debts or make improvements on their homes. After arranging the loans with hard money lenders, King would withhold most of the proceeds under the pretense of using them to pay off the homeowner’s bills or authorizing the home improvement projects.

In the case involving a victim over the age of 60, King represented that he had the authority to sell a business, including the right to occupy the location to a group interested in opening a Smoothies for Life franchise. After providing King with a down payment of $10,000 cash, and expending over $30,000 on
renovations to the site, the group was advised by the actual owner that King had no legal authority to rent the building.

In each case, King is alleged to have continued to mislead the victims into believing that he was providing services well past the time provided for him to perform under the respective contracts. It was not until a search was performed on King’s residence that the alleged fraud was discovered.

An indictment is not a determination of guilt or innocence, but is a finding of probable cause that a crime was committed. As with all defendants, King is presumed innocent until proven guilty.

King is currently incarcerated in Federal prison on an unrelated charge.

Anyone who has information regarding this case should contact the Attorney General’s Office at 702-486-3221 in Las Vegas or 775-684-1180 in Carson City.

In the following press release detectives with the Highlands County Sheriff’s Office and Agents of the Florida Department of Law Enforcement’s (FDLE) Sebring Field Office announced that they attempted to serve arrest warrants on 10 subjects for charges that include conspiracy to commit racketeering, conspiracy to traffic in cannabis, attempt to manufacture cannabis, mortgage fraud and grand theft. Of the ten, as of today 4 have been located and arrested.

The investigation by FDLE and the Sheriff’s Office began April 2008 and stemmed from the 2007 investigations of the marijuana grow houses that were discovered and dismantled in Highlands County. The targets of the investigation reside in the Miami area.

Highlands County law enforcement officials have continued to probe the many marijuana growing operations identified throughout the county over the past couple of years. These ongoing investigations resulted from a joint effort by the Highlands County Sheriff’s Office and FDLE.

“Following the marijuana growing busts, we started looking backward to see how this many grow houses popped up all at once,” said Sheriff Susan Benton. “What we discovered was that through the use of mortgage fraud, these criminals had a means to organize and conspire to commit racketeering and trafficking of marijuana”.

This is the first tier of arrests with more arrests anticipated. Highlands Sheriff’s Detectives and FDLE Agents from the Miami and Fort Myers Regional Operations Centers, which includes the Sebring Field Office, traveled to Miami and conducted an arrest operation of all targets. This particular case is being prosecuted by the Office of Statewide Prosecution in Orlando.

Suspects arrested today and booked into the Miami-Dade Detention Facility are listed below with charges and bonds:

Lesman Chavarria of 3520 NW 79th Street, Lot F-614, Miami, FL 33147.

Yeleines Viera of 5101 Collins Ave #3L, Miami Beach, FL 33140 and 1155 West 77th Street #118W,
Hialeah, FL 33010.

Maria Lurbe of13210 SW 17th Lane Apt 3, Miami, FL 33175

Alexander Yanes of 230 SW 136th Place, Miami, FL 33184

This joint investigation is in the early stages and we look forward to many additional suspects and charges of mortgage fraud.

For Further Information Contact:
Capt. Randy LaBelle Highlands County Sheriff’s Office, 863-402-7200
or Heather Smith/Mike Morrison  FDLE Office of Public Information, 850-410-7001

In the following press release Ohio Department of Insurance Director Mary Jo Hudson has announced that on Friday, October 23, 2009, former Granville title agent Karen Axline was sentenced in the Franklin County Court of Common Pleas to four years in prison for her role in a mortgage scam.  Ms. Axline pled guilty to ten felony counts of theft, falsification and money laundering on August 11, 2009.

A Department investigation revealed that from February 2006 to May 2007, Ms. Axline knowingly participated in a scheme to defraud mortgage lenders in several real estate transactions.  She presented bogus documents including invoices for home improvements on residences.  The home improvements were the basis for inflated appraisals that resulted in mortgage loans that were in excess of the actual real estate value.  None of the improvements were done and the funds that were generated were split among the participants. 

Ms. Axline agreed to the suspension of her insurance license on May 7, 2009.  She also agreed to the revocation of her license if she pled guilty to any counts on the indictment.  The license of Ms. Axline’s business, Granville Title Agency, was surrendered on May 7, 2009.

Ohioans who believe they have witnessed insurance fraud or misconduct should call the Department’s Fraud hotline, 1-800-686-1527.  Information about fraud and misconduct can be found on the Department’s web site, www.insurance.ohio.gov.

In the following press release New Jersey Attorney General Anne Milgram announced that a Ewing couple and their real estate firm were indicted on charges they stole more than $600,000 from home sellers in connection with 11 home sales. They are also charged with defrauding three mortgage companies of $641,800 by falsifying the earnings of applicants for three home loans.

According to Director Deborah L. Gramiccioni, the Division of Criminal Justice Major Crimes Bureau obtained a state grand jury indictment yesterday charging Joann Smith, 44, her boyfriend, Wayne Betha, 39, and their real estate company, S&B Property Management and Maintenance LLC of Trenton, with first-degree money laundering, first-degree conspiracy, second-degree theft by deception (2 counts) and third-degree failure to file corporate tax returns, among other crimes. Arrest warrants were issued for Smith and Betha, who remain at large.

Press Release   Indictment

“These defendants are charged with preying on people who had to sell their homes due to financial hardship, taking advantage of their trust and lack of financial sophistication,” said Attorney General Milgram. “They stole from people who had little or nothing to spare.”

It is alleged that between August 2006 and February 2008, the couple stole more than $600,000 from clients who agreed to have Smith sell their homes. Smith and Betha allegedly diverted proceeds of the sales into their own bank accounts for their personal use, deceiving the sellers into believing they were not entitled to all of the profits from their homes. Most of the sellers were having serious financial problems and could not continue paying their mortgages. The 11 homes are in Trenton (4 homes), Ewing, Hamilton (2 homes), Orange, Willingboro (2 homes), and Camden.

In arranging for sales of three of the homes, Smith and Betha allegedly provided false information about the salary or wages of the buyers on settlement forms filed with the U.S. Department of Housing and Urban Development (HUD) and mortgage applications, causing three mortgage companies to issue loans totaling approximately $641,800.

Smith and Betha are also charged with misconduct by a corporate official (2nd degree) and failure to file a tax return (3rd degree). No corporate business tax returns were filed with the State of New Jersey for S&B for 2005 through 2008. Smith also failed to file state personal income tax returns for those years. Betha failed to file a state personal income tax return for 2007.

The couple allegedly used a variety of schemes to fraudulently divert proceeds from the home sales into bank accounts maintained by Smith and S&B, which they allegedly used to launder the stolen funds. They represented to sellers and title companies that monies were owed to them for expenses, including property renovations and repairs that were never done and exorbitant consultant fees that they claimed the sellers had authorized. Many of the checks issued by the title companies handling the property sales were written to the home sellers, but Smith convinced the sellers to sign the checks over to her for payment of business expenses and fees.

It is alleged that, in several instances, the defendants falsely indicated on HUD forms and tax forms that the sellers directly received all of the profits from the home sales. They also omitted to tell sellers that they were agreeing in mortgage closing documents to pay large, unauthorized “seller’s concessions or seller’s assists” to the buyers.

The victims were not financially sophisticated. They did not understand the details of the property closings and, because of their financial woes, were anxious to be free of the obligation of paying mortgages they could no longer afford. Smith and Betha allegedly took advantage of these facts to steal the victims’ profits from the home sales.

Smith sometimes wrote false notations on checks written from her account and the S&B account to make it appear that payments were made for home repairs. Other times she would write a small check to the seller and write “gift” in the memo portion of the check. Smith and Betha used the diverted funds for personal expenses, withdrawing hundreds of thousands of dollars, primarily as ATM withdrawals, checks written to cash, and checks written to Betha.

The Division of Criminal Justice is focusing on complex white collar crime cases, including mortgage fraud and money laundering. During the past two years, the Division has filed or resolved eight cases involving $12 million in mortgage or financial fraud. The cases include the indictment in June 2009 of Yi Feng Reid, Yu Jane Chen and other co-defendants in an alleged $1.1 million conspiracy involving the use of stolen identities to obtain mortgages, other types of loans and credit cards; the sentencing in February 2009 of Spiro Pollatos to 13 years in prison for orchestrating a $2.7 million money laundering conspiracy involving a series of mortgage fraud and investment schemes; and the sentencing in June 2009 of Michael Rumore to 15 years in prison for stealing $4 million entrusted to him as an attorney for real estate closings.

“It is troubling that dishonest operators see these tough economic times as an opportunity to cash in on others’ financial woes,” said Director Gramiccioni. “We are committed to vigorously investigating and prosecuting financial fraud.”

Deputy Attorney General Francine Ehrenberg presented the case to the state grand jury. The investigation was conducted and coordinated for the Division of Criminal Justice Major Crimes Bureau by Detective Martin Farrell, Analyst Rita Gillis, and Deputy Attorney General Ehrenberg. The Mercer County Prosecutor’s Office provided assistance.

The first-degree money laundering charge carries a maximum sentence of 20 years in state prison, including a period of parole ineligibility equal to one-third to one-half of the prison sentence imposed, and a fine of up to $500,000. The defendants also could face an additional anti-money laundering profiteering penalty of up to $500,000. Second-degree crimes carry a maximum sentence of 10 years in state prison and a $150,000 fine, while third-degree crimes carry a maximum sentence of five years in state prison and a $15,000 fine.

The indictment is merely an accusation and the defendants are presumed innocent until proven guilty. The indictment was handed up to Superior Court Judge Maria Marinari Sypek in Mercer County.

The indictment is posted with this release at www.njpublicsafety.com.

The Division of Criminal Justice has established a toll-free tipline: 1-866-TIPS-4CJ for the public to report corruption, financial fraud and other suspected crimes. Additionally, the public can log on to the Division of Criminal Justice Web page at www.njdcj.org to report wrongdoing. All information received through the Division of Criminal Justice Corruption Tipline or Web page will remain confidential.

In the following press Lawrence G. Brown, United States Attorney for the Eastern District of California, DEA Assistant Special Agent in Charge Gordon Taylor, and IRS-Criminal Investigation Special Agent in Charge Scott O’Briant announced today that a Sacramento federal grand jury returned three superseding indictments charging 14 Bay Area residents with conspiracy to manufacture at least 1000 marijuana plants and manufacturing at least 1000 marijuana plants arising out of a wide-scale, sophisticated indoor marijuana cultivation operation in the Central Valley.

The federal grand jury also returned a separate indictment five Bay Area residents with 26 counts of mail fraud in connection with mortgage fraud in several houses used in the scheme. (One defendant is charged in two indictments, making the total 18.)

Press Release | Fraud Indictment | List of Defendants

This case is the product of an extensive investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigations Division, Elk Grove Police Department, Stockton Police Department, and Lathrop Police Department. Significant assistance was also provided by Bay Area local, state, and federal law enforcement agencies and the U.S. Attorney’s Office for the Northern District of California.

“All of the individuals indicted in this case are from the Bay Area. They chose the Central Valley to perpetrate their scheme due to lower housing prices. They chose unwisely. What they failed to factor in were residents proud of their neighborhoods, skilled local police departments, and federal agencies that work seamlessly with their local and state counterparts,” stated U.S. Attorney Brown.

DEA Assistant Special Agent in Charge Taylor noted, “Operation Marvin Gardens is a crackdown on one of the largest, most sophisticated residential indoor marijuana growing organizations in the nation. This  Bay area crime ring invaded our nice bedroom communities, set up marijuana factories, and ultimately impacted the real estate, mortgage and utility company industries. The success of this investigation would not have been possible without the cooperation of multiple law enforcement agencies.”

“These types of crimes create a significant loss of tax revenue, drive buyers into foreclosure, leave lenders burdened with bad loans and neighborhoods with abandoned and deteriorating properties. IRS-CI is committed to pursuing individuals who create such havoc,” stated IRS, Criminal investigation Special Agent in Charge O’Briant.

According to Assistant United States Attorneys Heiko P. Coppola and Robin Taylor, who are prosecuting the case, the superseding indictments allege that the defendants operated sophisticated, large-scale, commercial marijuana gardens in approximately 50 single-family homes located in Sacramento, Elk Grove, Stockton, Lathrop, Tracy, and Modesto in 2006 and 2007. Approximately 24,500 marijuana plants were recovered by law enforcement officers during the execution of search warrants during the initial stages of the investigation.

The mail fraud indictment alleges that five defendants committed mortgage fraud between March and October 2006 in order to purchase 26 residences in Stockton that were to used to grow marijuana, were being converted or were awaiting conversion for indoor marijuana cultivation. As a result of the mortgage fraud scheme, various financial institutions and mortgage lenders issued approximately $15,000,000 in residential home loans with a resulting multimillion dollar loss.

The following defendants are charged in the mortgage fraud scheme [see the attachment above for the others]:         

• DICKSON WING KEI HUNG, (also charged in the marijuana manufacturing)
• KAREN N. LEE, 29, of San Francisco
• NGAI CHUNG HUNG, 28, of San Francisco
• WAYNE RONG ZHI FENG, 29, of Oakland
• WING CHOU CHAN, 27, of San Francisco

These indictments are the product of a continuing investigation into indoor marijuana manufacturing that began in 2006. The original indictments, returned in 2006 and 2007 charged 17 individuals with conspiracy to manufacture at least 1000 marijuana plants and manufacturing at least 1000 marijuana plants. Of the 17 originally charged, 15 have pleaded guilty and two remain at large.

If convicted of conspiracy to manufacture marijuana and manufacturing marijuana counts, the defendants face a maximum possible sentence of life in prison and a mandatory minimum sentence of at least 10 years in prison. If convicted of the mail fraud counts, the defendants face a maximum possible sentence of 20 years in federal prison. The actual sentence, however, will be determined at the discretion of the court after consideration of the Federal Sentencing Guidelines, which take into account a number of variables and any applicable statutory sentencing factors.

The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

In the following press release A. Brian Albritton, U.S. Attorney for the Middle District of Florida, announced that U.S. District Judge Henry Lee Adams today sentenced James Otto Price, III, (47, of Jacksonville) to 30 months in federal prison for willfully preparing false tax returns. The court also entered a money judgment against Price in the amount of $216,454.00, the loss attributable to Price’s fraudulent conduct. Price had pleaded guilty on August 12, 2009.

According to the Internal Revenue Service, Price is the first tax preparer in the country to be found guilty and sentenced for committing tax fraud involving the First-Time Homebuyer Credit.

According to court documents, Price prepared numerous fraudulent tax returns. In at least fifteen tax returns prepared by Price for tax year 2008, Price falsely claimed that the taxpayers were eligible to receive the First-Time Homebuyer Credit made available by Congress pursuant to the Housing and Economic Recovery Act of 2008. A number of the taxpayers who Price claimed were eligible for the homebuyer credit were not even aware that Price had claimed a First-Time Homebuyer Credit on their returns. Other clients were erroneously advised by Price that if they merely contemplated buying a house in the upcoming months, they were eligible for the credit. Price knew when he prepared the tax returns that the taxpayers whose returns had not purchased a home to qualify for the credit. Price also knew that his false representations were material to the IRS’s determination of whether the taxpayer would receive the home buyer credit. Price was able to pay himself fees of approximately $1,000 per fraudulent tax return by electronically debiting this amount from the $7,500 home buyer credit and tax refund proceeds wrongly received by his clients.

In addition to the fraudulent returns involving the First-Time Homebuyer Credit, Price also fraudulently prepared 20 additional tax returns involving tax years 2004 and 2005. In those returns, Price intentionally overstated or made up charitable contribution deductions and unreimbursed employee expenses for the taxpayers. Price also intentionally made up false businesses and business expenses in order to increase the amount of the tax refund that his clients would receive. The total tax loss attributable to Price as a result of the 35 fraudulent tax returns for which he was sentenced is $216,454.00.

This case was investigated by the Jacksonville Division of the Internal Revenue Service. It was prosecuted by Assistant United States Attorney Nick Pilgrim.

In the following press release Benton J. Campbell, United States Attorney for the Eastern District of New York; Kenneth Donohue, Inspector General for the Department of Housing and Urban Development; and Assistant Secretary David H. Stevens, Commissioner of the Federal Housing Administration announced that  civil complaint was filed today in federal court in Central Islip against Ideal Mortgage Bankers, Ltd. d/b/a/ Lend America, a mortgage lender located in Melville, Long Island, seeking a court-ordered injunction to prevent the company from making loans insured by the Federal Housing Administration (“FHA”). The complaint also seeks relief against Lend America’s Executive Vice President and Chief Business Strategist, Michael Ashley. The case has been assigned to United States District Judge Joseph F. Bianco.

Press Release  Civil Complaint

As alleged in the government’s pleading, Lend America participates in a federal program sponsored by the United States Department of Housing and Urban Development (“HUD”) that authorizes Lend America to make mortgage loans that are insured by FHA in the event of default. As a condition of participation in the program, Lend America must determine that all borrowers who receive FHA-insured mortgage loans meet HUD lending standards. The complaint alleges that Lend America falsely certified to HUD that borrowers who received over $14 million in loans met HUD’s lending requirements when, in fact, the defendants knew they did not.

“Fraudulent lending practices that compromise the integrity of the FHA mortgage insurance program and contribute to the alarming increase in loan defaults and housing foreclosures will not be tolerated,” stated United States Attorney Campbell. “We will use all means at our disposal to stop those who engage in such activity.” In May 2008, Mr. Campbell announced the formation of a task force comprised of federal, state, and local law enforcement agents and investigators to address the burgeoning problem of mortgage fraud.

HUD Inspector General Donohue stated, “One of our most important responsibilities is administering and enforcing procedures that protect our federal mortgage insurance programs from fraud. The complaint announced today, the product of a joint effort by the U.S. Attorney’s Office, HUD’s Office of Inspector General, and the Department of Housing and Urban Development, demonstrates our continuing commitment to this goal.”

FHA Commissioner Stevens said, “Fraud against the Federal Housing Administration impacts every family that looks to the FHA for access to safe and reliable mortgage financing. Those who would seek to game the system should be on notice – play by the rules or you will face the consequences.”

The government’s case is being litigated by Assistant United States Attorneys Kevan Cleary, James H. Knapp, Edward K. Newman, and John Vagelatos.

Court records show that 8 people have been charged in relation to the purchase of properties in the Jacksonville, FL area. We had previously reported on one of them, Barry Westergom. Those charged are:

1. Sharon Keller Baker - title company employee  Information

Sharon Baker was the office manager for Helwig & Todd Title Services, LLC in Jacksonville FL and is accused of a fraud where she agreed to purchase 312 Morris Loop, St Johns, FL for $1,900,000 with $1,098,843 due to the sellers. She obtained a $1,720,000 mortgage loan from Countrywide and agreed to provide a second mortgage back to the sellers in the sum of $180,000 however she did not record the second as required by law.

However at the closing in December 2005 at Fortress Title Baker is accused of preparing a false HUD-1 and altering the sales contract to reflect the sales price as $2,150,000 with $1,346,368 due to the seller.Countrywide provided the loan of $1,762,604. The title company transferred $2,112,252 to the account of Helwig and Todd. Baker then paid off the existing mortgages and the true amount due to the sellers which left an overage of $247,525 which had been fraudulently used to qualify her for the Countrywide loan. She then paid $459,425 back to Fortress Title.

2. Joseph Cirlot   Indictment

Cirlot was a licensed mortgage broker in Florida [under license #MB0804384] which is now shown as inactive. On January 8, 2007 Cirlot closed a loan with First Magnus Financial Corp for the purchase of 6036 White Tip Road, Bartram Spings, Jacksonville, FL. The agreed sales price was $474,991.

On or about the same time an addendum was added to the Sales Agreement stating that the seller agreed to pay $60,000 to a FL corporation at closing. At the closing Cirlot caused a line item on the HUD-1 settlement statement to reflect a payment to the corporation for “home improvements/pool” for the subject. It is alleged that Cirlot knew that no such improvements had been made and and that he did not intend to make them. Cirlot allegedly received most of the $60,000 paid to the corporation.

[Editor Note: Florida State records shows that the following businesses appear to be owned by the defendant.

S & C Solutions is actually registered at the address mentioned in the indictment]

3. Jennifer Rosemary Genus   Indictment

4. Donna Nelson Gurlides   Indictment

5. Timothy Lee Miller   Indictment

6. Christopher Reid   Indictment

7. Winslow Ballenger Wheeler   Indictment

8. Barry C. Westergom - an appraiser   Information   Plea Agreement

9. Debra Landberg - a notary   Indictment

10. Scott Fawcett - a contractor   Information