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Mortgage Industry Fraud Insights from Patrick Crowley

Archives June 12, 2005



June 12, 2005

An alleged pawn in the massive mortgage fraud scheme run by Florida fugitive Matthew Cox has been sentenced to prison.

Eric Tamargo of the Tampa area was convicted as a "straw buyer" for using stolen identities to get mortgage loans on two pieces of property. Tamargo has pleaded guilty to federal fraud charges and must serve nearly two years in prison and repay $232,278, which is the amount he fraudulently borrowed.

A Social Security number Tamargo allegedly used was allegedly stolen from a 4-year-old girl.

Tamargo allegedly worked with Cox, who is still on the lam and wanted for running a mortgage fraud scheme that involved nearly 100 properties and millions of dollars in fraudulent mortgage loans, the St. Petersburg Times is reporting.

Cox, who was acquisitions director for a firm called Urban Equity, was on probation for mortgage fraud when a series of St. Petersburg Times articles dubbed "Dubious Deals" ran him out of town in December 2003. He briefly appeared in Atlanta last summer, where he and a female accomplice allegedly used stolen identities to pull off about $800,000 in mortgage fraud deals.

Police actually had Cox in custody last April but released him before learning his true identity.

read story from the St. Petersburg Times

The owners of a home improvement company, a bar, a cellular phone firm, a roofer and a computer company were among the 12 people charged by federal authorities in Illinois with trying to rip off HUD.

The "loan scam", as the FBI reportedly described it to television station WREX, involved the ring using fake and forged documents to get dupe HUD into making up to $2 million in bad loans.

Ring leader Douglas Hastings and his wife would allegedly buy cheap houses and then pay $500 to anyone referring a buyer to them. But the buyers couldn't have qualified for the loans, so Hastings allegedly worked along with Phillip Miskimon and Edward Martins in paying the $500 bounty to businesses that would provide false employment records for the buyers.

Authorities were tipped off by neighbors of some of the houses who noticed that the properties were changing hands every few months.

"If (people) see a property owned by one person, and six months later it's owned by someone else, and six months after that it's owned by a third person, they should pay attention because there could be something wrong," HUD special agent Barry McLaughlin reportedly told the TV station.

read story from 13 WREX NEWS

read story from 23 WIFR

read story from The Journal Standard

The owner of a New York mortgage company has been indicted by federal prosecutors in New Jersey for his role in what the feds are calling a mortgage fraud conspiracy.

Devon Bowie, 53, president of Neighborhood Mortgage Bankers Co. was charged along with real estate investor Barry Fauntleroy, the president of EON Institute, a real estate holding company, and two of Bowie's associates, Stacey Marrero and Sean Mason.

Bowie has been arrested but as of the weekend authorities were still looking for Fauntleroy.

The ring is accused of preparing fake loan applications and other supporting documents to make FHA loans to unqualified buyers through Bowie's company. Fauntleroy and Bowie were allegedly buying the properties beforehand and then selling them at steeply inflated prices to people who basically couldn't afford them.

The pair had promised buyers that improvements would be made on the houses in low income sections of New Jersey, but little work was ever completed, prosecutors said.

"These were master manipulators at work," U.S. Attorney Christopher J. Christie of Newark said in a statement. "A lot of people were hurt by these alleged con men, from the government which backed the fraudulent loans to low-income home buyers whose hopes and dreams were shattered by fraud."

read story from The Miami Herald

read announcement from the U.S. Attorney's Office

The illegal flipping of 26 pieces of property means prison time for a couple of south Florida men.

Rodney Way of Pembroke Pines and Juan Carlos Suarez of Miami have been convicted on multiple federal charges, including bank and mail fraud, the U.S. Attorney's office in Miami is saying.

The mode of deception was the same as in other flipping cases with Way and Suarez using phony job and personal information to get a mortgage loan. Stuart Blum, who the feds identified as a mortgage broker and the owner of Old Florida Mortgage, prepared and submitted the phony applications to a host of lenders on behalf of Way's cousin, Doyle Raynard Blum.

Blum was the alleged straw buyer in the scheme. That's an important element because most illegal flips can't happen unless someone agrees to either act as the buyer, or allows the use of their name, Social Security number and other personal financial information.

All of the loans eventually went into foreclosure, costing lenders millions.

Blum and Aaron have already pleaded guilty. Way and Suarez face up to 35 years in prison and fines of up to $2 million.

read story from The Miami Herald

read announcement from the Department of Justice

Kenneth Jenkins was not your average home rehabber.

Jenkins, 36, of Camden, N.J., would allegedly buy rundown homes with money he made selling drugs, pay handymen with crack to make a few repairs and then sell the homes with fraudulently obtained mortgages to buyers who had no idea what was going down.

The "house hustle," as federal prosecutors in New Jersey dubbed it, earned Jenkins a prison sentence of at least 30 years, the Philadelphia Inquirer is reporting.

Jenkins is described as a major east coast drug dealer who along with his girlfriend told more than $1 million of real estate. Jenkins said he was a legitimate businessman who struggled since the 9/11 terrorist attacks.

A federal judge and prosecutors said he was running the racket to launder drug money and routinely sold homes with faulty appliances, rats and even sewage seeping through the walls.

"You guys bought a house and moved out of Camden," U.S. District Judge Freda Wolfson reportedly told Jenkins and his girlfriend. "But you came back here and inflicted your harm, to sell drugs, and that deserves a substantial sentence."

read story from The Philadelphia Inquirer

read story from the Associated Press

read announcement from the Department of Justice

June 9, 2005

Another person has gone down in an inside mortgage fraud job at Ameriquest Mortgage in Kansas City.

Avonda L. Nicodemus of Kansas City has pleaded guilty to federal charges, the U.S. Attorney is saying. Nicodemus worked for Ameriquest and was in co-hoots with Chauncey Calvert, who pleaded guilty earlier this week.

In fact, Nicodemus is the "co conspirator" prosecutors mentioned when they announced Calvert's plea.

The pair convinced investors to take loans on properties, promising they would find someone to rent or buy the property. Investors were told they would be paid $1,500 and receive half the money when the property sold.

Fake documents, phony employment records, bogus loan papers and faux payoff letters were all used to pull off the scheme, said U.S. Attorney Todd Graves.

"I want to take responsibility for my actions," Nicodemus reportedly told a federal judge, according to The Kansas City Star. "I understand that my actions have affected a lot of people. I want to step up to the plate."

The fraud involved 66 properties and $4 million in loans. Each faces 15 years in prison and fines of $500,000.

read story from the Associated Press

read U.S. Attorney's announcement

Boy, they aren't kidding about Georgia being a hot spot for mortgage fraud.

The U.S. Attorney's office in Atlanta has indicted 19 people and charged them with a scheme to defraud Centrum Financial Services out of a $1.3 million loan.

Among those charged is Phillip E. Hill, a self-described real estate developer whose companies included We Build Atlanta Inc., The Estate Firm Inc., Estate Artistians of Georgia Inc., Estates Atlanta Inc. and other companies.

Prosecutors allege said the scheme involved the sale of 13 homes with Hill and his crew using straw purchases who applied for mortgage loans on properties that had an inflated price – a classic flipping scam. The phone buyers were paid a kick-back for allowing their name and credit histories to be used. Lenders made loans based on what turned out to be phony information.

Many of the properties were sold, or "flipped", more than once.

read story from the Atlanta Business Chronicle

read announcement from U.S. Department of Justice

June 7, 2005

Arizona Attorney General Terry Goddard is going after a company that allegedly duped homeowners into signing over their homes.

In a lawsuit Goddard said Virtual Realty Funding Co. preyed on people, including many who spoke only Spanish, who were close to losing their homes with a high pressure scheme that used sale and repurchase agreements.

Virtual led people to believe they could save their homes by transferring their titles to the company, which would then make mortgage payments. But in some cases homeowners weren't told they deeding their property over to Virtual. And the owners then had to rent their homes back from Virtual, Goddard said.

One homeowner's monthly payment increased by $157 after Virtual started charging rent. Fees charged by Virtual were as high as $4,000.

"This case represents the worst in our community," Goddard said in a statement. "(Virtual Realty) took advantage of homeowners desperate to save their homes from foreclosure, and deceived them into turning over their homes."

read story from the Tucson Citizen

read about lawsuit at ConsumerAffairs.com

read announcement from the Arizona Attorney General

read about predatory foreclosure scams at MortgageDaily.com
(subscription required)

Someone is finally admitting some culpability in a high-profile mortgage fraud case in Canada.

According to Canada's CBC News, Brian Slobogian, the former CEO of failed Eron Mortgage Corp., has testified in a Vancouver court that he and former Vice President Frank Biller didn't properly manage the company.

Slobogian is already serving six years and was testifying at the sentencing hearing for Biller, who has already been convicted.

Thousands of investors lost more than $200 million when Canadian securities regulators closed Eron in 1997. The company was promising big returns on real estate investments, but regulators and prosecutors have described the company as a Ponzi scheme.

read story from CBS News

Chauncey Calvert was a busy originator for the Ameriquest Mortgage office in Kansas City between May and December of 1999. At one point he had 66 loans totaling $4 million approved.

But it turns out those loans were fakes, and Calvert pocketed almost $30,000 in illegal fees, bonuses, commissions, kickbacks and benefits, say federal prosecutors in Missouri.

Calvert has pleaded guilty to what prosecutors called a conspiracy to defraud Ameriquest and investors.

Calvert allegedly convinced investors to take loans on properties, promising that his co-conspirator would find someone to rent or buy the property. Investors were told they would be paid $1,500 and receive half the money when the property sold.

To get the loans Calvert used fake documents, including phony employment records, loan papers and payoff letters, according to U.S. Attorney Todd Graves.

Calvert steered the money to a co-hort by claiming bogus companies held the first mortgage on the properties. He faces a fine of up to $500,000 and 15 years in prison.

read announcement from U.S. Attorney

read Associated Press story

read Patrick's story at MortgageDaily.com
(subscription required)

Patrick Crowley is fraud journalist for MortgageDaily.com and a reporter and columnist for The Cincinnati Enquirer.

Email Patrick at: PatCrowley@FraudBlogger.com
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