This Realtor’s Scheme Got Her Rich, Quick

ST. PETERSBURG – A year ago, Dawn L. Molen quit her job as a commercial loan officer and set out to become a real estate agent. The 26-year-old got her license and quickly landed a job at Charles Rutenberg Realty in St. Petersburg.

With three months’ experience, the agent who had never listed a home closed her first sale Jan. 27 in a working-class neighborhood. Her buyer paid $45,000 more than the asking price. It stunned her peers. From then on, Molen brought in contracts by the stack.  To read the full article…

CAMB Calls For Licensing of All Loan Originators

Inman Real Estate News reports today that a California Association of Mortgage Brokers (CAMB) report suggests that rather than curb the use of so-called “exotic” loans, borrowers would benefit more if the loan officers who offer them were trained and licensed. In California, only mortgage brokers and their loan agent-employees are required to be licensed, while loan agents who work for banks or for mortgage banking firm do not need a license, as they are covered under the parent company’s license. Thus, an untrained bank employee could conceivably offer unsuitable loans to clients on his first day on the job. To read the full article…

Former Mortgage Broker Pleads Guilty To Mortgage Fraud

KANSAS CITY, Mo. – Todd P. Graves, United States Attorney for the Western District of Missouri, announced that a former mortgage brokerage employee pleaded guilty in federal court today to his role in a conspiracy to defraud a mortgage lending company. Vernon David Williams, 58, of Kansas City, pleaded guilty before U.S. District Judge Scott O. Wright this morning to charges contained in an indictment returned by a federal grand jury on Oct. 7, 2004, in Kansas City.

 By pleading guilty, Williams admitted that he conspired to defraud MILA, Inc., a mortgage lending company with its principal office in Mountlake Terrace, Wash., and Finance America LLC, a mortgage lending company with its principal office in Irvine, Calif., between July 24 to Sept. 16, 2004. Williams was a loan employee of mortgage brokerage companies in the Kansas City area at the time of the conspiracy.

In carrying out the conspiracy, Williams admitted that he prepared and submitted false and fraudulent loan applications and supporting documentation to lenders and that he caused borrowers to sign such applications. Specifically, Williams admitted that Finance America caused Deutsche Bank Trust Co. to send a wire transfer to United Missouri Bank in Kansas City on Aug. 18, 2004, for the purpose of funding a loan in the amount of $158,251.23. Williams admitted that the money was transferred based on false and fraudulent loan applications and supporting documentation that he submitted to Finance America. Under federal statutes, Graves explained, Williams may be subject to a sentence of up to 20 years in federal prison without parole, plus a fine up to $500,000.

A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office. This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the Federal Bureau of Investigation, the Criminal Division of the Internal Revenue Service and the Inspector General of the U.S. Department of Housing and Urban Development.

Georgia Attorney Pleads Guilty to Fraud

The U.S. Attorney for Atlanta has announced that on September 26, 2006 MICHAEL M. HIPE, 42, of Snellville, Georgia, pleaded guilty  in federal district court to conspiracy to commit mortgage fraud.
In May 2006, HIPE was indicted along with co-defendants ERIC FRIEDMAN, BRIANNE FRIEDMAN and TIMOTHY BAUER on two counts of conspiracy to commit mail fraud and money laundering, two counts of mail fraud, and eight counts of money laundering.
According to United States Attorney Nahmias and the information presented in court: In 2000, HIPE and co-defendant ERIC FRIEDMAN became partners in an used car sales business called “Hipe Motors” in the metro Atlanta area. HIPE invested in the business and ERIC FRIEDMAN ran the business. In order to raise money to operate the business, in the summer of 2000, HIPE purchased four new condominiums in the metropolitan Atlanta area.  ERIC FRIEDMAN prepared false loan applications and supporting documentation, including tax returns, which misrepresented HIPE’s income.  At the real estate closings, HIPE signed the false loan applications, certifying them as accurate and true.

In order to pull money out from the closings, ERIC FRIEDMAN and HIPE misrepresented to the lenders that a portion of the loan proceeds would be used for the renovation and construction of the properties, even though the condominiums were new or otherwise did not need renovation or upgrade.  Further, ERIC FRIEDMAN and MICHAEL HIPE misrepresented to the lenders that the construction work was to be performed by “The Fabricators, Inc.,” which in fact was a name of a shell company, not  incorporated in the State of Georgia. ERIC FRIEDMAN and HIPE used the monies to finance Hipe Motors and for ERIC FRIEDMAN’s personal expenses.  The funds obtained at closings were run through HIPE’s bank accounts and then run through ERIC FRIEDMAN’s and BRIANNE FRIEDMAN’s bank accounts.  ERIC FRIEDMAN was supposed to obtain tenants for the condominiums and buy cars for the business, but failed to do so.

When HIPE was unable to obtain further financing to purchase condominiums, he introduced his mother and a family friend, both of whom live and work in Massachusetts, to ERIC FRIEDMAN.  ERIC FRIEDMAN persuaded HIPE’s mother to act as a “straw purchaser” on the purchase of three condominiums in Atlanta to provide funds to operate Hipe Motors. ERIC FRIEDMAN prepared loan applications containing false information and supporting documentation, including tax returns which misrepresented HIPE’s mother’s employment and income.  At two of the three real estate closings for his mother, HIPE, along with ERIC FRIEDMAN, acted as her attorneys, and executed the documents, including the loan applications.

ERIC FRIEDMAN also persuaded HIPE’s family friend to provide him with his credit information.  Once FRIEDMAN obtained that information, he opened a checking account at Wachovia Bank in the name of the family friend “d/b/a The Fabricators,” Inc.  In June 2002, at ERIC FRIEDMAN’s behest, the family friend purchased 104 Chablis Court, Braselton, Georgia, as a home for ERIC M. FRIEDMAN and BRIANNE FRIEDMAN and for the purpose of pulling money out of the transaction to further finance Hipe Motors. The transaction was also financed through the submission of a false loan application prepared by FRIEDMAN. At ERIC FRIEDMAN’s behest, in February 2004, the family friend sold that property to straw purchaser/borrower TIMOTHY BAUER to obtain more money.  At that real estate closing, BAUER signed an ERIC FRIEDMAN-prepared false loan application, which misrepresented his income and his intentions to reside at that address.
The lenders have foreclosed on all seven condominiums that HIPE and his mother purchased, because FRIEDMAN, HIPE, and HIPE’s mother have failed to make the monthly mortgage payments.  The lenders’ loss amount on the condominiums exceeds $500,000.

HIPE pleaded guilty to one count of conspiracy to commit mail fraud.  He could receive a maximum sentence of five years in prison and a fine of up to $250,000. Sentencing for HIPE has not yet been scheduled by United States District Judge Orinda D. Evans. On August 23, 2006, co-defendant ERIC FRIEDMAN pleaded guilty to conspiracy to commit mail fraud, attempt to evade the payment of income taxes, credit card fraud, and interstate transportation of cars obtained by fraud.  He could receive a maximum sentence of forty years in prison and a fine of up to $1,250,000.  No sentencing date is scheduled. Trial for BRIANNE FRIEDMAN and TIMOTHY BAUER is scheduled for December 11, 2006.

Articles Invited

Attorneys and litigation consultants are invited to submit articles of no longer than 750 words concerning mortgage forensic issues as they shape public policy. Articles should be e-mailed to Eric Forster, ef@american.LA.

Two Loan Officers Indicted in Mortgage Fraud

PORTLAND, OREGON – On October 19, 2006 two Eugene based mortgage loan officers were indicted in a scheme involving the use of fraudulent information on loan applications submitted to obtain mortgage loans. Karin J. Immergut, United States Attorney for the District of Oregon, announced that MARK TODD HARLESS, age 39, and HIEN WILLIAMS, age 41, both residing in Eugene, Oregon, were charged in a three count federal indictment. According to the charges, from January through April 2005, HARLESS and WILLIAMS were employed as loan officers at Allegiance Mortgage Company in Eugene, Oregon. Known as “The Boys of Allegiance” in company advertisements, HARLESS and WILLIAMS are charged with engaging in a scheme to provide false employment information for some of their customers in order to qualify them for mortgage loans.According to the indictment, HARLESS and WIILIAMS listed that three of their customers were each managers of a Eugene children’s clothing store, earning at least $3,000 per month, and had been employed there for at least two years. In reality, HARLESS’ girlfriend allegedly owned the store and none of the Allegiance customers worked there. HARLESS and WILLIAMS are further alleged to have caused loan applications, containing the false employment and earning information, to be submitted to lenders (New Century and GreenPoint) for loan approval.

Defendant HARLESS allegedly arranged for someone at the used clothing store to falsely verify to lenders that the Allegiance customers were really working at the store, and earning the income falsely listed in the loan applications. The indictment states that, on one occasion, defendant HARLESS charged an Allegiance customer $200 for use of the false employment and earning information. The loans were funded by lenders, and HARLESS and WILLIAMS earned commissions for the loans.

Defendant HARLESS and WILLIAMS were charged with wire fraud, which is a felony punishable by up to twenty years in prison and a $250,000 fine. They are scheduled for arraignment on November 13, 2006 in United States District Court in Eugene.

Three Portland Residents Charged with Fraud in Connection With Real Estate Transactions

PORTLAND, OREGON – Three Portland residents were indicted on September 19, 2006 by a federal grand jury in Portland for federal offenses in connection with two residential real estate financing transactions. RYAN BONNEAU, age 30, of Portland, TROY MARTIN, age 40, a Portland real estate sales agent, and LEANNE BOOTH, age 48, a Portland real estate loan broker, were charged in a 21-count indictment with Wire Fraud, False Statements to a Federally Insured Bank, Money Laundering, and Engaging in Prohibited Financial Transactions. In addition, BONNEAU is charged with Aggravated Identity Theft, and MARTIN is charged with Tampering with a Witness. During the time he allegedly engaged in the conduct charged in the indictment, BONNEAU was on federal supervised release following a prior conviction. The charges stem from a federal investigation by the Internal Revenue Service (IRS) and the Federal Bureau of Investigation (FBI) into allegations that the defendants engaged in a scheme to defraud the Union Federal Bank of Indianapolis (UFB) in connection with the mortgage financing of the sale of two residential properties located in northeast Portland.

The indictment alleges that in each of the sales, certain defendants made false representations to UFB in order to induce UFB to approve mortgage loans and wire transfer funds to title companies in the Portland area. It is further alleged that defendant BONNEAU caused the submission of false and inflated appraisals to UFB in support of the mortgage applications on two properties, and when he submitted the appraisals, BONNEAU caused the use of an appraiser’s name and license without the authority of the appraiser. The alleged unauthorized use of the appraiser’s name and license by BONNEAU is charged as Aggravated Identity Theft.

Further, the indictment charges Money Laundering and Engaging in Prohibited Monetary Transactions in connection with the disbursements of mortgage proceeds received by the defendants from UFB, and alleges that MARTIN corruptly attempted to induce a title company employee not to provide certain information to investigators.

A criminal indictment is only an allegation and not evidence of guilt. Defendants are presumed to be innocent unless and until proven guilty.

AG Charges Loan Officer With Theft

TACOMA, WASHINGTON  – Attorney General Rob McKenna announced today that his office has filed first-degree theft charges against a mortgage loan officer accused of stealing a check intended to pay for brokerage fees.The Attorney General’s Criminal Division Financial Crimes Unit charged Robert L. Flath, 41, of Gig Harbor, with one-count of first-degree theft. Flath entered a plea of not guilty during his arraignment today in Pierce County Superior Court.

The charge carries a maximum penalty of 10 years in prison and a $20,000 fine. The charge was brought at the request of the Washington State Department of Financial Institutions.

The Attorney General’s Office alleges that Flath was a branch manager at American Residential Funding’s Tacoma office in 2003 when an escrow company mistakenly delivered a check for brokerage fees in the amount of $7,842.50. Flath received the check and deposited it into his account. The escrow company later discovered that the check should have been sent to another mortgage company and requested Flath return the funds, but he refused.

Submitted by Eric Forster