In the State Bar Journal the California State Bar announced that its loan modification task force obtained the resignations of three more California attorneys as a result of misconduct related to their loan modification activities. It also placed another attorney on inactive status, charging his work poses a substantial threat to the public, and has undertaken similar efforts against two other lawyers.

In addition, JAMES PARSA [#153389], a southern California lawyer who advertised his loan modification work on television throughout the state, resigned Oct. 21. He faced interim suspension from practice as a result of a 2001 misdemeanor conviction for sex with a child under 18 that he never reported to the bar.

Parsa, 44, advertised heavily throughout California for the past several months, offering to help homeowners facing foreclosure. Although he provided evidence to the bar that he was in fact working on cases, an investigator uncovered two 2001 misdemeanor convictions for sex with an underage girl. The bar court ordered that Parsa be placed on interim suspension Oct. 16, but his resignation made the suspension moot.

The State Bar created a 10-person loan modification task force in March after receiving thousands of calls from homeowners complaining that lawyers have done no work after taking fees purportedly to help avoid foreclosure. The task force had 738 active investigations underway last month.

It earlier released the names of 16 attorneys it was investigating for possible misconduct related to loan modification. Four of the six who resigned or face inactive enrollment were on that list.

“We are very pleased that we have been able to remove these practitioners from the practice of law quickly in order to protect the public,” said Interim Chief Trial Counsel Russell Weiner.

Until last month, attorneys were able to legally accept advance fees from borrowers for residential loan modification work and other forms of mortgage loan forbearance services. Lawyers’ services were in demand by foreclosure relief companies and operators that could not otherwise receive payment until contracted or promised loan modification work was completed. However, on Oct. 11, Gov. Schwarzenegger signed SB 94, which prohibits attorneys and any other persons from collecting an advance fee for residential loan modification and mortgage loan forbearance services. The measure took effect immediately. Details about the new law are at the Department of Real Estate home page, www.dre.ca.gov.

The attorneys who resigned from the State Bar are:

• CAMERON EDWARDS [#222549], Alliance Law Center in San Diego, resigned Sept. 25.

• RONALD RODIS [#181873], of Rodis Law Group and America’s Law Group in Newport Beach, resigned Oct. 13.

• JEFFREY NEMEROFSKY [#213014], U.S. Advocacy Law Group and U.S.  Financial Products, in Laguna Niguel, resigned Oct. 16.

The three are ineligible to practice law pending a California Supreme Court order accepting the resignations.

Those the bar is seeking to place on involuntary inactive status for posing “a substantial threat of harm to (their) clients or the public” under Business & Professions Code §6007(c) are:

• PAUL LUCAS [#163076], of Lucas Law Center in Aliso Viejo. The bar court petitioned to put him on inactive status Sept. 21; he did not reply to the petition and the State Bar Court took the matter under submission.

• SEAN RUTLEDGE [#255938], of United Law Group in Irvine, had a hearing Oct. 23; the bar filed its petition Sept. 22. The bar earlier charged him with seven counts of misconduct in handling a loan modification for a client who paid an advance $3,500 fee. Rutledge never took any action to negotiate with the client’s mortgage lender, the bar charges. The judge took the matter under submission and had 10 days to rule.

In addition, CHRISTOPHER L. DIENER [#187890] of Irvine, principal attorney for Home Relief Services LLC, was placed on inactive status Oct. 9. Attorney General Jerry Brown sued Diener last summer and accused him of telling homeowners he and his company would act as sole agent and negotiators and directed the homeowners to stop contacting their lender. None of the known victims received a loan modification with the company’s assistance.

The Los Angeles County sheriff last month raided the offices and homes of TANMAY MISTRY [#251425] and KURT ELKINS [#241562], attorneys allegedly affiliated with a Pico Rivera loan modification business alternately called Safe Haven, Home Loan Negotiators, Proteccion Familiar and Your Dreams Come True.

In September, people who had given money to the business to modify their home loans gathered at the office complaining no work had been done. Several in the crowd were in foreclosure.

Both Mistry and Elkins told the authorities their identities had been stolen. Mistry submitted his resignation with charges pending from the bar, but later rescinded it. He did not return a phone call. Bar officials would not comment on Elkins, but he said he has done nothing wrong.

He was hired on a one-month contract about eight months ago by Safe Haven, who he now says “probably lied about who I am and what I do.” He said he believes the company did loan modification work but declined to specify the nature of his work.

“Clearly, I didn’t do anything wrong,” Elkins said. “I’m a victim of identity theft.”

Los Angeles Sheriff Sgt. Dana McCants said Safe Haven’s clients were solicited through a Spanish language Christian radio station, located in the same Pico Rivera building that was home to the loan modification business. Clients generally paid about $2,900 for a loan modification.

But McCants said in a typical scenario, an employee of Safe Haven then filed bankruptcy for the client, adding numerous fictional names to the grant deed for the purpose of stalling the lender from foreclosing. Each individual named in the bankruptcy petition receives a 90-day extension. However, McCants said as the extensions end, “the house of cards starts to collapse.”

 He said about 300 homeowners have filed complaints with the sheriff and estimated another 200 were victimized by Safe Haven.

McCants would not disclose the nature of the evidence seized during the raid; many of the files are under the custody of a special master because they may involve attorney-client relationships. The loan modification business was shut down, but at press time, no arrests had been made.

Oakland, CA - Press Release

A federal grand jury has returned a 53 count indictment charging seven individuals with conspiracy to commit wire fraud, wire fraud, and money laundering for their roles in a mortgage fraud scheme that involved more than 100 properties in Northern California, United States Attorney Joseph P. Russoniello, Special Agent in Charge, IRS Criminal Investigation, Scott O’Briant, and Special Agent in Charge, FBI, Stephanie Douglas, announced.

The indictment, which was unsealed yesterday, charges Amy Schloemann, aka Amy Kinney; Karim Akil, aka Scott Kinney, aka Scott Kenney; Wonda Louise Kidd; Michelle McGuire; Kaska Clay, aka Mark Lane, aka Michael Lewis; James Ross; and Darnell Thomas.

According to the indictment, from October 2004 through July 2007, the defendants participated in a conspiracy to defraud involving more than 100 properties that provided profits in the millions to members of the conspiracy through the fraudulent purchase of real estate and the laundering of profits.

The indictment alleges that in furtherance of the conspiracy, the defendants and their associates recruited and controlled individuals in key positions, including straw buyers, real estate appraisers, notaries and escrow agents. The defendants encouraged straw buyers and others to purchase homes throughout Northern California by falsely promising: to pay them large sums of money and at times paying them large sums of money, that the real estate transactions were legal, that the buyers would not be responsible for the mortgage payments, and that the mortgage payments would be taken over by another person shortly after the purchase of the property.

The indictment states that the defendants directed straw buyers to sign mortgage loan applications that contained false information and false supporting documentation, and paid the straw buyers thousands of dollars in exchange for allowing the defendants to purchase property in their names. The defendants are also alleged to have hired notary publics who were willing to notarize documents by falsely attesting to having witnessed signatures on loan documents when in fact the documents were not signed in the presence of the notaries. 

According to the indictment, the defendants increased their profits on the purchase of properties by submitting documents to lenders, including purchase and sale agreements that falsely inflated the purchase prices of the properties, thereby causing the lenders to unwittingly provide loans in amounts that exceeded the true purchase prices and values of the properties. Once the properties were purchased, the defendants disbursed funds from the escrow accounts into bank accounts held by the defendants. The defendants also regularly failed to make the mortgage payments on the purchased properties, causing lenders to foreclose on the properties which resulted in financial losses to the lenders and damaged the credit ratings of the buyers. 

Amy Schloemann, aka Amy Kinney, was a licensed realtor and president of Hiddenbrooke Mortgage in Vallejo, Calif.  She completed and caused others to complete false loan application for straw buyers and fictitious buyers. She also acted as a real estate broker for both straw buyers and fictitious buyers. 

Karim Akil, aka Scott Kinney, aka Scott Kenny, was the president of Marsh Group Corporation in Oakland, Calif. He was the husband of Schloemann. Akil employed and paid co-conspirators to recruit individuals to act as straw buyers of real estate. 

Schloemann and Akil held signature authority on business checking accounts in the names of Hiddenbrooke Mortgage Group, Marsh Group, the Brooke Property Management Company and Sanford and Son MTG. Schloemann and Akil used these accounts to launder the profits of the fraudulent scheme, to make deposit payments on real property purchases in the names of straw and fictitious buyers and to make payments to co-conspirators. 

Michelle McGuire worked as a personal assistant for Akil. She was responsible for assisting in the completion of loan applications for straw buyers and fictitious buyers and submitting these loan applications and supporting documentation to lenders. She was paid hundreds of thousands of dollars for her involvement in the fraud scheme.

Wonda Louise Kidd was a manager and escrow officer of Financial Title Company in Castro Valley, Calif. Kidd was the escrow officer on more than 100 properties involved in this scheme, disbursing profits to Schloemann and Akil through wire transfers and checks to their various accounts. 

James Ross and Darnell Thomas worked with Akil to recruit straw buyers to purchase real property. Thomas also falsified information on a loan application submitted to a lender for a property he purchased. They were each paid hundreds of thousands of dollars for their involvement. 

Kashka Clay aka Mark Lane aka Michael Lewis was a real estate agent who purchased two properties using the alias, Mark Lane. Clay also authorized the use of his telephone number to falsely represent to lenders that Clay’s number belonged to a certified public account. 

Schloemann and McGuire were arrested on Nov. 2, 2009 and made their initial appearance in federal court in Oakland on that date. They are currently out on bond. Kidd, Clay and Ross were arraigned today in Oakland federal court and were released on $100,000 bond. Thomas is scheduled to be arraigned tomorrow.  Akil, who is presently serving a sentence in state custody, is scheduled to appear on Nov. 19, 2009 for arraignment. The case is assigned to District Judge Phyllis Hamilton.  The defendants are scheduled to make their initial appearance before Judge Hamilton on Nov. 25, 2009 at 1:30 p.m.

The charges of conspiracy to commit wire fraud and wire fraud each carry a maximum penalty of 20 years in prison and a $250,000 fine. The charge of money laundering carries a maximum prison sentence of 10 years and a fine of $250,000 or twice the amount of the criminally derived property involved in the transaction.

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. 

Stephen G. Corrigan is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kathleen Turner. The prosecution is the result of an investigation by the FBI and IRS-Criminal Investigation with the assistance of the Alameda County District Attorney’s Office.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Schloemann, Akil, Kidd, McGuire, Clay, Ross and Thomas must be presumed innocent unless and until proven guilty.

In the following press release Thomas E. Moss, United States Attorney for the District of Idaho announced that Reed J. Bowen, Jr., 50, of Meridian, Idaho, pled guilty today in United States District Court in Boise to one count of bankruptcy fraud.

Bowen admitted that in 2004, he committed a scheme to defraud his creditors and the bankruptcy trustee. Bowen disclosed in bankruptcy that he had only a lease on his Meridian home and fraudulently failed to disclose a Real Estate Agreement and Contract for Deed that granted him an exclusive right to purchase the home for a fixed price. Bowen purchased the home, pursuant to the contract, shortly after bankruptcy and immediately obtained substantial equity in the home. Bowen’s bankruptcy disclosures also included an interest in a McCall cabin, however, Bowen fraudulently inflated the mortgages against that cabin and thus underrepresented his equity in it. He sold the cabin while in bankruptcy and netted substantial equity from the sale. In the bankruptcy proceedings Bowen discharged over $3 million in unsecured debt so he could finalize the purchase of his Meridian home. The United States agreed to dismiss additional charges pending against Bowen arising out of his bankruptcy in exchange for his guilty plea.

“Over the past five years, bankruptcy filings have averaged 1.37 million annually, with the IRS a party to approximately 40 percent of these filings. The detection and prosecution of bankruptcy fraud continues to be a priority for the IRS, as well as the Department of Justice,” said IRS Special Agent in Charge Christopher M. Sigerson.

“Fraudulent conduct in bankruptcy results in serious consequences which undermine public confidence in the system, and taint the reputation of honest citizens seeking protection under the bankruptcy statutes,” said Thomas E. Moss, United States Attorney.

Sentencing is set for January 19, 2010, before U.S. District Judge Edward J. Lodge in Boise.

The federal charge carries a maximum statutory penalty of five years in prison and a $250,000 fine. Any sentence following conviction, however, 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.

The case was investigated by the Internal Revenue Service, Criminal Investigation Division, in cooperation with the United States Trustee Program.

Robin Lewis-Ivy, a licensed real estate agent in Maryland, was sentenced today for her role in an extensive mortgage fraud scheme involving properties in the District of Columbia and Maryland, announced Acting U.S. Attorney Channing D. Phillips, Special Agent in Charge Ava A. Cooper-Davis of the Washington Field Division, Drug Enforcement Administration (DEA), Special Agent in Charge Phillip Durham, Washington Field Division, Bureau of Alcohol, Tobacco and Firearms (ATF), and Robert L. Hylton, Chief of Police of the Prince George’s County Police Department.

Lewis-Ivy, 48, of Laurel, Maryland, was sentenced in U.S. District Court of the District of Columbia before the Honorable Judge Reggie B. Walton. Judge Walton, after crediting Lewis-Ivy for her cooperation in other matters, sentenced Lewis-Ivy to five years of probation, including one year of home detention and 200 hours of community service. He also ordered her to forfeit to the government $289,700, in which the money will be used to provide restitution to the victims of these crimes.

Lewis-Ivy Information    Douglas Information

According to the government’s evidence at the time of her guilty plea, beginning as early as 2005, Lewis-Ivy conspired with several people to purchase homes in the District of Columbia and Maryland through various acts of fraud. Using her status as a licensed real estate agent, Lewis-Ivy searched real estate databases and identified listings of properties for her coconspirators to purchase. She also drove around Washington, D.C. with her co-conspirators in an effort to locate properties that the co-conspirators could obtain after defrauding mortgage lenders.

Further, Lewis-Ivy and her co-conspirators knowingly used straw purchasers, that is, purchasers in name only, who were mere fronts for members of the conspiracy, to act as if they were legitimate purchasers of these homes. On at least one occasion, Lewis-Ivy helped to prepare a HUD-1 and related paperwork for a loan on a property knowing that the property was going to be purchased by a straw purchaser.

To help the co-conspirators obtain the loans for the homes, Lewis-Ivy and her coconspirators created or had created certain fraudulent documents that would make it appear that the prospective purchasers of the homes had businesses and incomes, when in truth they did not.

When no documents were needed to apply for the loans, such as in the case of so-called “no document” or “stated income” loans, Lewis-Ivy and her co-conspirators placed false information on loan applications for her clients. After these loan applications were completed, Lewis-Ivy sent the applications, or caused the applications to be sent by facsimile from Maryland to lending institutions in California and Washington State. Lewis-Ivy’s purpose in participating in the fraud was to enrich herself and her co-conspirators.

As part of their scheme, Corey M. Douglas, one of Lewis-Ivy’s co-conspirators, opened accounts in the names of fictitious businesses so that he could receive money from the scheme. Lewis-Ivy advised Douglas on how to register these fictitious businesses. Lewis-Ivy obtained real estate sales commissions for these home sales, or money as “repair costs.” Lewis-Ivy helped Douglas receive invented fees at the time of closing on these properties, such as finder’s fees or consulting fees. These payments to Douglas were often wired into Douglas’ fictitious business accounts, such as a SunTrust account in the name C&M Capital.

Also as part of the scheme, Lewis-Ivy attempted to locate and identify properties that she and her co-conspirators could claim as “undervalued” properties, so that they could later secure loans in amounts that exceeded the value of the properties. Lewis-Ivy and her co-conspirators worked with others who were mortgage brokers and could help change the apparent value of properties so that it would appear that a larger mortgage loan amount was justified in order to buy the property.

On December 17, 2007, co-conspirator Douglas pled guilty to a two-count information, count one charging a conspiracy to distribute narcotics and count two charging a conspiracy to commit wire fraud. On May 4, 2009, Judge Walton sentenced Douglas to 156 months on each count, to run concurrently, three years of supervised release, and forfeiture of $800,000.

In announcing today’s sentencing, Acting U.S. Attorney Phillips, Special Agent in Charge Cooper-Davis, Special Agent in Charge Durham, and Chief Hylton praised the hard work of the investigative agents involved in this matter, especially the involved DEA Special Agents, ATF Special Agent Aaron Ybarra, and Prince George’s County Detective Matt Albertson. They also acknowledged the efforts of former Criminal Investigator Diane Eickman, Paralegal Specialists Mary Treanor, as well as former Assistant U.S. Attorney Elisabeth Poteat, who handled the prosecution of Lewis-Ivy and Douglas, and Assistant U.S. Attorney Daniel Butler, who handled the sentencing of Lewis-Ivy.