MORTGAGE MODIFICATON AND LOAN COMPANY BANNED FROM MORTGAGE MODIFICATION AND LOAN BUSINESS

FROM:  U.S. FEDERAL TRADE COMMISSION 
FTC Settlement Bans Florida Scammer from Mortgage Modification and Loan Business
FTC: Defendants Targeted Homeowners in Financial Distress

A Florida-based scammer will be banned from the mortgage modification business as part of a settlement resolving Federal Trade Commission charges that he tricked financially strapped consumers into paying for mortgage-relief services that he never provided.

“Years after the economic meltdown, the FTC is still exposing and shutting down bogus mortgage relief schemes,” said Jessica Rich, Director of the Bureau of Consumer Protection. “This case highlights the depths to which scammers will sink to defraud struggling homeowners, and our resolve to hold them accountable.”

According to the FTC’s complaint, filed earlier this year, Jonathan Herbert and his Fort Lauderdale-based operation falsely claimed that it was affiliated with the federal government’s Making Homes Affordable assistance program, and that it would renegotiate consumers’ mortgages to reduce monthly payments by several hundred dollars. The FTC alleged that Herbert hid his involvement in the scam through the use of stolen identities, shell corporations, and other ruses.

Deceptively using the Federal Deposit Insurance Corporation’s (FDIC) logo and calling itself the “Federal Debt Commission,” the “Federal Mortgage Marketplace,” and the “Federal Assistance Program,” Herbert’s companies promised consumers their mortgage modifications would be completed quickly and for free. They also told consumers to stop communicating with their lenders, and to send their “new” mortgage payments to addresses in Washington, DC, which turned out to be UPS Stores, not government office buildings. These payments were then forwarded to Herbert in Florida.

Although Herbert and his companies collected more than $800,000 in payments from hundreds of consumers, they made no effort to obtain loan modifications and did not apply any of the money to pay down consumers’ existing mortgages. As a result, many consumers lost their homes, as well as thousands of dollars.

The court order settling the FTC’s charges imposes a judgment of $815,865. It also bans Herbert for life from any involvement with all debt-relief programs, including mortgage loan modifications. The order also prohibits him from misrepresenting any aspect of a financial product or service or the terms and conditions associated with such products or services.

The order also prohibits the defendants from disclosing any of the consumer information obtained through their fraudulent operations and prohibits anyone associated with them from collecting payments from any consumers who agreed to buy their fake mortgage relief services.

For consumer information about avoiding mortgage and foreclosure rescue scams, see Home Loans.

The Commission vote approving the proposed final order was 5-0. The stipulated final order was filed in the U.S. District Court for the Southern District of Florida, and entered on December 12, 2014.

The court order announced today settles the FTC’s charges against: FMC Counseling Services, Inc.; FDC Assoc Group, Inc.; FDC Businesses, Inc.; FMC Review Corporation, NDR Group, Inc.; FMC Consultants Group, Inc., and Jonathan L. Herbert, individually and doing business as Federal Debt Commission, Inc; FDC Financial, Inc., and FDC Consultants, Inc.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

3 DEVELOPERS CONVICTED IN MORTGAGE FRAUD SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, November 21, 2014

Three Real Estate Developers Convicted in $20 Million Mortgage Fraud Scheme
A federal jury convicted three Miami real estate developers today for their roles in a $20 million mortgage fraud scheme involving the sale of condominium units in the Miami area.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Nadine Gurley of the Department of Housing and Urban Development’s Office of the Inspector General (HUD-OIG) in Miami and Inspector General Laura S. Wertheimer of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG) made the announcement.  U.S. District Judge Patricia A. Seitz presided over the trial in the Southern District of Florida.

Stavroula Mendez, 68, Lazaro Mendez, 42, and Marie Mendez, 49, were each convicted of one count of conspiracy to commit bank fraud and wire fraud.  Additionally, Stavroula Mendez was convicted of 10 counts of bank fraud and three counts of wire fraud; Lazaro Mendez was convicted of 10 counts of bank fraud, and one count of wire fraud; and Marie Mendez was convicted of three counts of bank fraud and one count of wire fraud.

According to evidence presented at trial, Stavroula Mendez, Lazaro Mendez, and Marie Mendez controlled and managed various condominiums in the Miami area.  As part of their fraud scheme, the defendants paid straw buyers to apply for mortgages to purchase units in their projects.  The defendants then accepted the mortgage proceeds for the purchase of the units, but continued to control the units after the sales.

The evidence showed that Lazaro Mendez recruited family members and others to be straw buyers of units he controlled, and that he facilitated false loan applications for them.  In addition, Lazaro Mendez enlisted mortgage brokers and another individual to recruit straw buyers and assist them in obtaining fraudulent loans.  He accepted kickbacks out of loan proceeds for each buyer the brokers referred.

Evidence at trial further demonstrated that after units were sold at a development Stavroula Mendez controlled with her husband, Luis Mendez, Stavroula Mendez funneled money from the loan proceeds to shell companies controlled by others to pay for the straw buyers’ closing cash obligations and mortgage payments.  In 2008 and 2009, Stavroula Mendez used various shell companies to funnel more than $2 million of the fraudulent proceeds to off-shore accounts located in Switzerland and Liechtenstein.

The evidence also showed that Marie Mendez assisted in the transfer of rental money received by the conspirators to make mortgage payments, and funneled cash to another individual to make mortgage payments on behalf of straw buyers.  She also submitted fraudulent loan applications for three condominium units that were purchased in her name.

Eventually, the conspirators were unable to make mortgage payments, causing many of the condominium units to go into foreclosure and leading to $20 million in losses to the lenders.

Following their convictions, each of the defendants was remanded into custody.  Sentencing is scheduled for Feb. 3, 2015.  Eleven other defendants associated with the scheme were previously convicted of fraud charges.

The case is being investigated by HUD-OIG and FHFA-OIG.  The case is being prosecuted by Senior Trial Attorney Brian Young and Trial Attorneys Gary A. Winters and Kyle Maurer of the Criminal Division’s Fraud Section.

OWNER, EMPLOYEES OF MORTGAGE COMPANY, TWO REAL ESTATE DEVELOPERS INDICTED FOR ROLES IN $50 MILLION MORTGAGE SCAM

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, August 28, 2014

Owner and Seven Employees of Mortgage Company and Two Real Estate Developers Indicted for $50 Million Scam Involving Federally Insured Mortgages

The owner of a Florida mortgage company, seven employees of the company and two real estate developers were indicted in the Southern District of Florida in connection with an alleged $50 million mortgage fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and David A. Montoya, Inspector General for the Department of Housing and Urban Development (HUD) made the announcement.

Hector Hernandez, 56, of Miami, Florida, the owner and operator of Great Country Mortgage Bankers (Great Country), a mortgage lender in Miami, was charged with one count of conspiracy to commit wire fraud affecting a financial institution and 25 counts of wire fraud affecting a financial institution.   Great Country loan officers Durand Deeb, 43, of Miami, Frank Carino, 48, of Apollo Beach, Florida, and Fabian Perez, 39, of Miami; Great Country loan processors Juliette Del Rio, 37, of Miami, and Julissa Saavedra, 43, of Miami,; Great Country underwriters Olga Hernandez, 58, of Lake Mary, Florida, and Olga Rodriguez, 53, of Miami; and real estate developers Armando Bravo, 42, of Coral Gables, Florida, and Aleida Fontao, 61, of Miami, were also indicted for conspiracy to commit wire fraud affecting a financial institution and varying counts of wire fraud affecting a financial institution.

According to the indictment, beginning in January 2006 and continuing through September 2008, Hernandez and others allegedly obtained mortgage loans insured by the Federal Housing Administration (FHA), a division of HUD, for unqualified borrowers by exaggerating the borrowers’ income and otherwise misrepresenting their financial condition.

Specifically, Hernandez and others allegedly created false documents on behalf of borrowers who could not otherwise qualify for FHA-insured loans due to insufficient income, high levels of debt, and outstanding collections.   These documents included bogus earnings statements that inflated the borrowers’ income and false verification of employment forms that overstated their work histories.

In addition to creating these false documents, Hernandez and others allegedly offered the unqualified borrowers cash back after closing as an incentive to purchase condominiums.   These secret payments were not disclosed in the loan applications and were omitted from loan closing documents so that HUD and the financial institutions that subsequently purchased the loans would not know of their existence.

By later selling the fraudulent loans to financial institutions, Great Country transferred the risk of loss to those institutions .   The vast majority of the unqualified borrowers failed to meet their monthly mortgage obligations and defaulted on their loans.   When the loans went into foreclosure, HUD, which insured the loans, was required to pay the outstanding balances to the financial institutions, resulting in losses in excess of $50 million to the agency.

The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

This case is being investigated by HUD’s Office of Inspector General with assistance from the U.S. Marshals Service, Miami-Dade Police Department Warrants Bureau and Miami-Dade State Attorney’s Office – Public Corruption Task Force.   This is being prosecuted by Senior Litigation Counsel David A. Bybee and Trial Attorney Michael T. O’Neill of the Criminal Division’s Fraud Section.

SIX FLORIDIANS PLEAD GUILTY TO MORTGAGE FRAUD INVOLVING CONDOMINIUM DEVELOPMENTS

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, May 15, 2014

Six Miami-Area Residents Plead Guilty to Mortgage Fraud Scheme Involving Four Condominium Developments

Six Miami-area residents, including three former loan officers, pleaded guilty in the Southern District of Florida this week to participating in a fraudulent scheme designed to enrich real estate developers by selling condominium units to straw buyers.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Special Agent in Charge Phyllis Robinson of the Department of Housing and Urban Development’s Office of the Inspector General (HUD-OIG) in Miami and Acting Inspector General Michael P. Stephens of the Federal Housing Finance Agency (FHFA) made the announcement.

Today, Leidy Masvidal, 42, of Miami, pleaded guilty before U.S. District Court Judge Marcia G. Cooke to conspiring to commit bank fraud.   Sentencing is scheduled for Sept. 24, 2014.   Alfredo Jesus Chacon, 48, of Orange Park, Florida, and Francisco Martos, 63, and Dorian Wong Magarino, 49, both of Miami, also pleaded guilty today to conspiring to commit wire fraud and mail fraud before U.S. District Court Judge Ursula Ungaro.   Sentencing is scheduled for Aug. 1, 2014.

On May 14, 2014, Tania Masvidal, 49, and Douglas Ponce, 40, both of Miami, each pleaded guilty before Judge Cooke to conspiring to commit bank fraud.  Sentencing is scheduled for July 30, 2014.

According to the defendants’ plea agreements and other court documents, the defendants participated in a scheme to pay straw buyers to submit false loan applications to lending institutions to purchase condominiums owned by co-conspirators.   Leidy Masvidal and Tania Masvidal used a mortgage brokerage they owned, EZY Mortgage Inc., to arrange financing for the purchases.   Because the straw buyers were not credit-worthy, the Masvidals secured loans in their names by submitting to lending institutions loan applications and other fraudulent documents containing false statements about the buyers’ income, employment and assets, and falsely stating that the buyers intended to reside in the properties.   Additionally, the Masvidals enabled their co-conspirators to secretly fund the buyers’ obligations to pay money at closing (known as “cash to close” obligations) by establishing shell corporations, which the co-conspirators used to funnel cash from conspirators to the escrow account used at closing, as well as paying the straw buyers.   The co-conspirators compensated the Masvidals for their role in the scheme by sending kickback payments taken from the loan proceeds to the Masvidals’ shell corporations for every straw buyer identified.

According to admissions in court records, Martos was a former loan officer at a mortgage company known as State Lending who helped secure financing for straw buyers in exchange for kickbacks by procuring false employment documents and by including false information in buyers’ loan applications. Chacon and Ponce recruited straw buyers to purchase properties owned by co-conspirators in exchange for kickbacks paid from the sales proceeds.   Chacon also allowed a company that he controlled to be used as a false employer for the straw buyers.   Magarino accepted payments to act as one of Chacon’s straw buyers and recruited other straw buyers into the scheme.   For the properties in which Margarino acted as the straw buyer, he represented to the lender that he personally met his cash-to-close obligations when in fact he knowingly paid these costs with funds supplied by conspirators.

Many of the straw buyers defaulted on their loans after the conspirators stopped making their mortgage payments on their behalf, causing millions of dollars in losses to lenders.

On March 31, 2014, Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez, Marie Mendez, Wilkie Perez and Enrique Angulo were indicted in the Southern District of Florida for their alleged participation in this scheme.   They have pleaded not guilty and trial is currently set for Sept. 8, 2014.   The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case is being investigated by HUD-OIG and FHFA-OIG.  The case is being prosecuted by Trial Attorneys Gary A. Winters and Brian Young of the Criminal Division’s Fraud Section.

JUSTICE ANNOUNCES INDICTMENTS IN FLORIDA MORTGAGE FRAUD SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 
Monday, March 31, 2014
Seven Indicted in Florida in Mortgage Scheme

Seven individuals have been indicted in the Southern District of Florida for their alleged participation in a mortgage fraud scheme in the Miami area.

The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Inspector General David A. Montoya of the Department of Housing and Urban Development and Acting Inspector General Michael P. Stephens of the Federal Housing Finance Agency’s Office of the Inspector General.

A 19-count indictment, returned on March 13, 2014, by a federal grand jury and unsealed today, charges Miami-Dade County residents Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez, Marie Mendez, Wilkie Perez and Enrique Angulo with one count of conspiracy to commit wire and bank fraud.   Some of those defendants have also been charged with bank fraud and wire fraud.   Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez and Marie Mendez were taken into custody today and made their initial appearances before United States Magistrate Judge Jonathan Goodman in Miami, while the other three defendants remain at large.

As alleged in the indictment, Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez and Marie Mendez owned or controlled various real estate properties in the Miami area.   They enlisted mortgage brokers and other individuals, including Perez and Angulo, to recruit straw buyers to act as qualifying mortgage applicants to fraudulently purchase condominiums in the properties.   The defendants prepared and caused to be prepared loan documents containing false statements and representations relating to the buyers’ income, assets and other information necessary to enable lenders to assess the buyers’ qualifications to borrow money, which induced the lenders to make loans to finance the condominiums.   Luis Michael Mendez and Marie Mendez are alleged to have submitted their own fraudulent loan applications for two condominiums, and they, as well as Luis Mendez and Stavroula Mendez, advanced the buyers cash to close the transactions.

After the loans were funded, the defendants allegedly caused fraudulent payments to be made from the loan proceeds to pay kickbacks through shell companies to the brokers, recruiters and straw buyers, as well as to pay the mortgages to conceal the conspiracy.   Eventually, the conspirators were unable to make mortgage payments, causing many of the condominium units to go into foreclosure and leading to losses by the lenders.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case is being investigated by HUD-OIG and FHFA-OIG.  The case is being prosecuted by Trial Attorneys Gary A. Winters and Brian Young of the Criminal Division’s Fraud Section.

MORTGAGE AGENT CONVICTED IN MORTGAGE FRAUD SCHEME THAT NETTED $1.43 MILLION

FROM:  U.S. DEPARTMENT OF JUSTICE 
Las Vegas Agent Convicted in Mortgage Fraud Scheme

A Las Vegas mortgage agent has been convicted for his role in a “cash back at closing” mortgage fraud scheme that netted $1.43 million in fraudulent mortgage loans, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada, and Acting Special Agent in Charge William C. Woerner of the FBI’s Las Vegas Field Office.

After a three-day trial before U.S. District Judge Larry Hicks in the District of Nevada, a federal jury convicted Jawad “Joe” Quassani, 42, on July 10, 2013, of one count of conspiracy to commit wire fraud and mail fraud, two counts of wire fraud, and two counts of mail fraud.

According to court documents and evidence presented at trial, Quassani participated in a scheme in which the prices of two homes were falsely inflated, mortgage loans were obtained through the submission of loan applications containing false and fraudulent information about the buyer’s income and intent to occupy the homes as primary residences, a portion of the loan proceeds was diverted at the close of escrow to the defendant’s co-conspirators, and commissions on the fraudulent loans were paid to Quassani and his co-conspirator.  Evidence at trial established that Quassani, a licensed mortgage agent at Rapid Funding Group, conceived the scheme together with two of his co-conspirators, prepared one of the loan applications and arranged for the preparation of the other, and shared in the commissions generated by transactions that had no purpose other than to generate profits for the co-conspirators.

Co-conspirators Anita Mathur and Shirjil “Sean” Qureshi previously pleaded guilty in related cases in Las Vegas to one count of conspiracy to commit bank fraud, wire fraud and mail fraud.  Both are awaiting sentencing.

This case was investigated by the FBI.  Trial Attorneys Stephen J. Spiegelhalter and Gary A. Winters of the Criminal Division’s Fraud Section are prosecuting the case.

Today’s conviction is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.

LOAN OFFICER SENTENCED FOR ROLE IN $9.2 MILLION MORTGAGE FRAUD

FROM:  U.S. DEPARTMENT OFF JUSTICE
Monday, June 25, 2012
Loan Officer Sentenced to 54 Months in Prison for Role in Mortgage Fraud Scheme That Resulted in More Than $9.2 Million in Losses
WASHINGTON – A loan officer for a Florida mortgage company was sentenced today in Miami to 54 months in prison for his role in a mortgage fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, and Department of Housing and Urban Development (HUD) Inspector General David A. Montoya.

Alejandro aka “Alex” Curbelo, 32, of Miami was sentenced before U.S. District Judge Joan Lenard.  In addition to his prison term, Curbelo was sentenced to three years of supervised release and was ordered to pay $9.2 million in restitution to HUD.  Curbelo was indicted and arrested on Jan. 24, 2012, and pleaded guilty on April 16, 2012, to one count of conspiracy to commit wire fraud.

According to court documents, from approximately February 2006 through July 2008, Curbelo was employed as a loan officer for Great Country Mortgage Bankers.  In this role, he assisted in the sales and financing of condominium units at two complexes in Florida – Dadeland Place and Pelican Cove on the Bay.  The borrowers who Curbelo assisted at these two complexes were unqualified to obtain mortgage loans due to insufficient income, high levels of debts and outstanding collections.

Curbelo admitted that he conspired with others to create and submit false and fraudulent Federal Housing Administration (FHA) mortgage loan applications and accompanying documents to the lender on behalf of the unqualified borrowers.  Curbelo and others offered the borrowers cash back after closing as an incentive for them to purchase the units.  These payments were not disclosed properly during the loan application process.  According to court documents, the closing costs were paid on behalf of the borrowers by interstate wire.  After the loans closed, the unqualified borrowers failed to meet their monthly mortgage obligations and defaulted on their loans.

According to court documents, when the loans went into foreclosure, HUD, which insured the loans, was required to take title to the units and pay the outstanding loan balances to the lenders.  As of the date of the sentencing hearing, HUD paid more than $9.2 million for losses related to Curbelo’s conduct.

This case was investigated by the HUD Office of Inspector General, as participants in the Miami Mortgage Fraud Strike Force.  Trial Attorney Mary Ann McCarthy of the Fraud Section in the Justice Department’s Criminal Division is prosecuting the case with assistance from the U.S. Attorney’s Office for the Southern District of Florida.
               
This prosecution is part of efforts under way by the Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.