FEDERAL COURT— A San Diego gang member who federal authorities said was the leader of a massive mortgage fraud scam pleaded guilty yesterday to participating in a racketeering conspiracy involving bank fraud, money laundering and other crimes.

Darnell Bell, 39, faces a maximum of 20 years in prison. Prosecutors said he was a chief orchestrator of a fraud and kickback scam that used straw buyers, fraudulent loan applications and bogus escrow documents on more than 100 properties in San Diego County.

The scheme resulted in real estate losses between $20 million and $50 million.

He’s the fourth person, and second principal, to plead guilty under an indictment naming 24 people that was unsealed last year.

Earlier, Michael Ivy pleaded guilty to a conspiracy charge. Ivy was the owner of The Real Estate Center of La Mesa, which authorities said played a central role in the scam. He is awaiting sentencing.

The ring identified properties that had been languishing on the market for months. Then, using “straw buyers,” ring members used 100 percent borrowed money and paid more than the asking price for the homes.

That overage amount was put into an account for a bogus construction company that Bell set up. The money was ostensibly to be used for retrofitting homes for disabled access, but no work was ever done.

The “buyers” later walked away from the homes, sending them into foreclosure and sticking the lenders with losses.

Bell, known as “D-Bell,” is a documented member of the Lincoln Park street gang in San Diego.

The indictment said he used his status in the gang to recruit other members and enforced discipline among the diverse web of conspirators.

They included an appraiser, a notary, an escrow officer, a tax preparer and a real estate broker.

When the ring was broken up, the bank account Bell set up contained $9 million in proceeds.

Ivy was alleged to have pocketed $200,000 during the time of the scheme, which took advantage of the lax lending standards widely at play during the real estate bubble years.

Because the case is still active, the U.S. Attorney’s Office declined to comment on the plea yesterday.

Two other principals still face charges. Stanley Gentry, a real estate broker, allowed the ring to have access to the multiple listing service and received a $10,000 fee per month, according to the indictment.

One other defendant, Billie Bishop, was the escrow officer on more than 100 transactions.

No trial date has been set, but court records show plea deals are on the table for some of the straw buyers.

The lawyer for one of those buyers said in a court filing that prosecutors have a “package deal” proposal for eight of the buyers, including her client, Ray Logan.

The others are not identified, and the indictment lists at least 13 straw buyers.

Damiani said they are weighing the offer, which, as a package deal, must be accepted by all defendants or none of them gets it.

She declined to outline the terms of the deal but said the penalty would be “significantly lower than what my client would face if he went to trial and was convicted of all the charges.”

One straw buyer, Marcus Dozell, pleaded guilty to racketeering conspiracy and was sentenced Feb. 16 to 46 months in prison.

The indictment said Dozell recruited other straw buyers and was paid $100,000.

http://www.signonsandiego.com/news/2010/mar/06/leader-of-fraud-ring-pleads-guilty/

A former loan officer at a Texas mortgage company was sentenced last week to 31/2 years in federal prison and ordered to pay $751,075 in restitution for faking mortgage documents sent to the U.S. Department of Housing and Urban Development. U.S. District Judge Terry Means recommended that Ingles be imprisoned close to Fort Worth so she can have contact with her 18-month-old son, who will be in her mother’s custody.

She was the second person to admit guilt in a scheme that cost HUD $964,814 after 21 mortgages defaulted, according to HUD and court documents. Last year, another loan officer pleaded guilty to conspiracy to make false entries to HUD. In December, she was sentenced to 18 months in prison and ordered to pay $214,837 in restitution.

The U.S. attorney’s office in Fort Worth said fake or altered W-2s, pay stubs and child support payment records were provided to HUD officials who used them to approve and insure loans. She ultimately admitted falsifying work and rental histories, certificate of deposit statements, and verifications of rent and employment, according to a factual resume, a court document. She was licensed and worked for the same company October 2000 until the company canceled her sponsorship in November 2003, according to Texas Department of Savings and Mortgage Lending records.

An “investigation is ongoing,” said Kathy Colvin, a spokeswoman for the U.S. attorney’s office. Three other people, including the owner of many of the properties involved, have been indicted on charges of conspiracy to make false entries to HUD or making false entries to the agency.

The government had accused her of telling a property owner that she could falsify a buyer’s employment at a company, according to the indictment. The buyer’s Loan Application stated that “R.P.” earned $4,000 a month at Home and Note Solutions. R.P. later told investigators that the person never worked at the company or made such a claim.

She did plead guilty to conspiracy to make false entries to HUD, had faced up to five years in prison. She also admitted that between Jan. 1, 2002, and about Dec. 31, 2003, she conspired with a property owner to submit false loan applications to HUD, according to the factual resume.

We should praise the work done by the members of HUD’s office of inspector general for uncovering fraud scheme after a routine review of loan correspondence.

The ethical honest “Real Estate Industry Professionals” need to step up and assist the “American Homeowners” that are being victimized from these fraudsters and assist our governmental agencies in stopping mortgage fraud.

The majority of fraudulent loans are an inside job. Borrowers are not sophisticated enough to know the inner workings of a mortgage loan to get it through the different stages of loan processing, underwriting, and closing. We need to learn and teach how to prevent mortgage fraud, recognizing its signs and taking proactive, definite, and realistic steps to not only prevent it but also punish it.

http://www.examiner.com/x-28218-Mortgage-Examiner~y2010m3d4-Loan-Officer-Imprisoned-close-so-she-can-have-contact-with-her-18monthold-Son

Frederick Earle Deen, 30, was sentenced to 24 months in prison today for his role in a $20 million mortgage fraud scheme that operated in the Twin Cities.

U.S. District Court Judge Richard Kyle handed down the sentence, which was reduced because Deen cooperated with investigators and is expected to testify at future proceedings.

Sentencing guidelines called for Deen to spend 46 to 57 months in prison, Kyle said. Deen’s attorney, Joe Friedberg, told Kyle that “there’s no way he would dare not cooperate in the future.”

Deen was a part owner of Legacy Lending, which obtained mortgage loans from unsuspecting lenders using straw buyers. From 2005 to 2007, Deen and business associates used inflated appraisals and received $2.2 million payments out of loan proceeds. Some of the largest fraudulent deals involved properties in Rogers and Otsego, Minn.

Deen had earlier pleaded guilty to wire fraud involving a transfer of more than $575,000 and evading taxes on $200,000 in income. At Friday’s sentencing, he apologized to his friends and family for his actions.

At one point Deen’s sentencing turned into a debate over the role of Taylor Trump in the fraud scheme. Trump, who has a criminal record and served as a police informant, was sentenced to 20 years in prison back in 2008. The U.S. Bureau of Prisons has said Trump is in custody, but would not disclose the location.

Friedberg said that Deen and the others involved in the scheme “we’re scared to death” of Trump. “They were worried they’d end up with their bodies in a field,” Friedberg said.

But Tim Rank, an assistant U.S. attorney prosecuting Deen, said that Trump worked with Deen for two years, and that Deen also carried out the scheme on his own with other colleagues after Trump was no longer involved.

Earlier this week Thomas John Hunter, another part owner of Legacy Lending, pleaded guilty to wire fraud and money laundering.

Deen was released after Friday’s hearing and will surrender to federal authorities in six weeks to begin his sentence. Friedberg said he’ll ask federal authorities that Deen serve his time at a federal prison in Duluth, Minn.

http://www.twincities.com/business/ci_14519599?nclick_check=1

People who can no longer afford their home could start seeing price cuts on the back end as more lenders reluctantly accept that forgiving debt is key to reducing foreclosures.

Ron Faris, president of West Palm Beach-based Ocwen Financial Services, testified to Congress this week that more principal reductions are needed when troubled home loans are modified.

About 24 percent of the nation’s loans are underwater, or have negative equity, which means the amount owned on the loan is more than what the house is worth.

“In Ocwen’s experience, negative equity increases the chance of a re-default by one-and-a-half to two times,” Faris told the Domestic Policy Subcommittee of the House Oversight and Government Reform Committee on Wednesday.

Ocwen, a 23-year-old servicing company, has become a leader nationally in reviving failing loans by working with borrowers to find an affordable payment that won’t cut into lender profits too deeply.

Faris made four recommendations during his testimony on the Obama administration’s $75 billion foreclosure rescue program, which so far has had lackluster results.

The suggestions include:

• Spend more money on grass-roots counseling and outreach groups.
• Reduce the eligible debt-to-income ratio from 31 percent to 28 percent. Currently your mortgage payment must be 31 percent or more of your monthly income to qualify for the federal program.
• Require low-performing lenders to contract with an outside company to do their modifications.
• Make more principal reductions either through permanent forgiveness or a forebearance that delays part of the principal payment.

Principal reductions have been an unpopular solution to the foreclosure crisis, with lenders preferring interest rate cuts and extending payments. One fear is if some homeowners have their debt reduced, others will ask for the same deal.

“We still live in America, we still have the sanctity of a contract and if we lose that, we’re in trouble,” said Michael Sichenzia, president of Dynamic Consulting Enterprises in Deerfield Beach.

Sichenzia said he’s not wholly against forgiving some homeowner debt, but says it shouldn’t be government directed and should be done on a very individual level — something banks aren’t equipped to handle.

Still, principal write-downs are happening.

“Wells Fargo uses both principal set-asides and principal forgiveness in helping borrowers who are seriously delinquent on their loans,” said spokeswoman Debora Blume.

Bank of America officials said Thursday that the company is working on new modification programs that “incorporate principal forgiveness features in certain situations.”

But not every lender is advertising the write-downs. Chase didn’t want to comment when asked about principal forgiveness. Litton Loan Servicing would only say it uses “multiple strategies to assist homeowners with avoiding foreclosure.”

http://www.palmbeachpost.com/money/real-estate/principal-reductions-will-save-mortgages-ocwen-chief-tells-318585.html

A former Bakersfield real estate agent and her father face 15 felony counts each of money laundering, conspiracy and grand theft in connection with an alleged multi-million dollar mortgage fraud scheme, newly filed court charges show.

Guadalupe Ramirez, 31, and Augustine Ramirez, 60, each are wanted on $1 million arrest warrants. The father and daughter were not in custody as of Thursday morning. They face more than 19 years in prison each if convicted on all charges.

The younger Ramirez was a Realtor with Bakersfield’s Touchstone Real Estate before the company merged with Watson Realty. Calls to several managers at Touchstone/Watson Realty Wednesday were not returned.

Augustine Ramirez purchased five homes in the span of six weeks near the end of 2006, according to county documents. In applying for loans, Ramirez indicated each house was to be his principal residence, mortgage fraud prosecutor Gordon Isen alleges in court documents.

In exchange for buying the homes at an inflated price, Ramirez received a kickback from the seller, in one case totaling $100,000, Isen writes.

Bakersfield Police Financial Crimes Detective Frank Wooldridge said Ramirez took out $4.1 million in fraudulent loans, and with his daughter, received about $385,000 in kickbacks. The homes went into default a few months after they were purchased, indicating Augustine Ramirez never made a single payment, Wooldridge said.

It’s one of the first cases handled by the new mortgage fraud division of the District Attorney’s Office but, Isen said, it’s just the beginning.

“I wouldn’t want to give you the impression this is the only real estate fraud case that we’re looking into, or the only one of this magnitude that we are looking into,” Isen said, declining to provide specifics.

“The victim is all of us, all of us who own homes and have to pay our mortgages,” Det. Wooldridge said. “We have to deal with these types of matters because it results in homes that are going to be foreclosed upon.”

Crisp & Cole Connection
One of the homes purchased by Augustine Ramirez is part of the focus of a federal mortgage fraud investigation centered on Crisp & Cole Real Estate. Prosecutors allege in court filings Ramirez received a $100,000 kickback from Crisp & Cole agent Justin Eddleman.

Documents obtained by 17 News reveal this series of transactions for the home at 12610 Crown Crest Drive:

Carl and Rebecca Cole bought the home in September 2004 for $361,500.

The Coles then sold the home to Crisp & Cole Real Estate in December 2004 for $465,000. That’s a profit of about $103,500 for the Coles in about three months.

Crisp & Cole sold the home to Crisp & Cole agent Justin Eddleman on the same day for $668,000

That’s a $203,000 one-day profit for the Crisp and Cole documents show.

Eddleman then sold the home to Augustine Ramirez in December 2006 for $949,000. That’s a profit to Eddleman of $281,000.

More than a year later the house went into foreclosure and was resold. That’s a loss of hundreds of thousands of dollars to the mortgage company.

Another Case
In another case highlighted by Det. Wooldridge in court filings, Augustine Ramirez bought a home in 2006 for more than $800,000 that initially had been purchased one year earlier by American Star Mortgage loan officer Kevin Hoover.

“I bought a lot of houses, I flipped a lot of houses,” Hoover said in a telephone interview Wednesday indicating he had the home constructed before selling it to Augustine. “It was a year-long process and I think I lost money on the deal. I remember writing a check at the close of escrow to the bank because there wasn’t enough money to cover everything.”

“I think it was $25,000 or $50,000,” he added, saying he had not been contacted by law enforcement investigators.

“The loan file shows a $50,000 payout to “Ramirez Landscaping,” Det. Wooldridge notes in a search warrant filed in court. “This is a business that up until this sale has not been identified in the course of my investigation.”

Hoover remains in the lending industry with Creative Realty Mortgage in downtown Bakersfield.

Appraiser Jenny Recondo, who valued one of the properties for Ramirez, was cited in September 2008 by the Office of Real Estate Appraisers, a state agency that regulates the profession. The Ramirez property was noted in the decision.

Recondo was ordered to complete 30 hours of continuing education and received a $1,500 fine. An email to Recondo and calls to several numbers listed for her online were not immediately returned. 

The four other home appraisals were performed for Ramirez by Eli Donati, who was stripped of his license by the OREA in November 2009.

Donati “failed to comply with the Management Section of the Ethics Rule by appraising to a predetermined result requested by a client,” OREA director Bob Clark writes of one of the Ramirez homes in an accusation against Donati.

Calls to Donati’s listed business number were not immediately returned.

The charges are among the first and most serious from the District Attorney’s mortgage fraud unit, which was created in August. The unit is funded by a fee attached to property sales.

“I wish the district attorney had more money to spend on real estate fraud, I wish the police department had more money to spend on real estate fraud.” Isen said. “Inevitably people slip through the cracks.”
http://www.kget.com/news/local/story/Mortgage-fraud-charges-filed-against-former/U9YvwsU5B0630UYxIcu8oA.cspx

The housing foreclosure rescue program developed at the height of the Great Depression saved millions of homeowners from foreclosure. Nearly 40% of all mortgage holders applied for the program, half of whom were granted help through the plan. A similar program may be in the works today.

The Obama administration has delayed a decision on formulating a similar program in order to monitor housing markets and determine the need for such a program. In delaying plans to reformulate or eliminate Fannie Mae and Freddie Mac, the nation’s two largest issuers of home mortgages, the White House is taking time to develop a program to help resolve the housing crisis.

“The Making Home Affordable” program initiated by the White House has received heavy criticism for failing to deliver millions of mortgage modifications with the help of bankers.

Sooner or later it’s inevitable that the government will offer a real plan to aid homeowners at risk of foreclosure like the program during the Great Depression, which will act to heal the entire nation’s economy. How long it will take to finally pull the trigger is another question all together.

Nearly 5-million homeowners have been foreclosed so far in what is the worst foreclosure crisis in U.S. history. Another 15-million are at risk of foreclosure as forecast by Housing Predictor.

One year after President Franklin D. Roosevelt’s plan was launched, the program received applications from 40% of all mortgage holders. The program was targeted for lower income homeowners, who had been left out by the private market to refinance their homes to make payments affordable. The government program was established for homeowners who needed it the most, not just those who commercial bankers deemed “good risks.”

Despite being criticized by Wall Street, the Roosevelt era program remains a major success story.

The establishment of a similar program may be necessary if bankers are not forced to reduce mortgages to affordable levels for homeowners at risk of foreclosure, and for those who lack the equity in their homes or rigid credit worthiness required in the current marketplace to refinance.

Instead of forcing a plan on bankers to implement affordable mortgages for homeowners, President Obama is making quiet overtures in the housing mess. Under growing pressure, the Obama administration is sending a trial balloon in the form of public relations publicly announcing the possibility of banning foreclosures unless at risk mortgages have been examined for modifications.

The same type of plan is already being implemented in parts of California, Florida and Ohio among other states by state lawmakers, and it isn’t working. Bankers aren’t interested in reducing the payments for homeowners. That means they would get less money. They won’t take less unless they are forced, which would presumably take government aid.

Bankers have delayed millions of foreclosures as they wait to see what the Obama administration comes up with in the form of additional aid, which presumably would come in the form of more bail-outs. Frankly, it’s a sort of cat-and-mouse game and the bankers hold most of the cards since they hold the purse strings to mortgage lending.

Whatever the Obama administration decides to do to curtail the rising number of foreclosures it needs to act forcefully. In the end, a “New Deal” era sort of program will inevitably be forced to balance out housing markets that have been so destabilized by the financial mess.
http://www.nuwireinvestor.com/articles/stronger-rescue-plan-needed-to-prevent-millions-of-foreclosures-54766.aspx

A MILL Hill man is among four people sentenced for their part in a £3m mortgage fraud scam yesterday.

Felix Taggert, of Tythe Close, was jailed for 12 months after being found guilty of obtaining money transfer by deception and fraud in January at Luton Crown Court.

Accountant Taggert worked with brothers Daud and Dele Macaulay, a registered broker, to lie about the incomes of mortgage applicants to buy homes for them to rent out.

The 49-year-old also lied about his income in order to get a mortgage for £300,000 for his home in Mill Hill.

The Macaulays pleaded guilty to obtaining £2m by deception in October and Dele was handed a 21 month sentence while Daud was jailed for 15 months.

Mabel Barnes, 29, of Walthamstow was handed a six month suspended sentence for obtaining a mortgage on a house by deception along with the three men.

Detective Inspector Paul Watts, of the Stevenage Money Laundering team, said: “This has been a complex and detailed investigation and I am delighted it has reached a successful conclusion.

“These four people all played their part in this large scale mortgage fraud and acted dishonestly for their own selfish gains.

“Dele Macaulay broke the position of trust he held as a registered mortgage broker and I am pleased that he has been banned from practising.

The Macaulays may also face having their assets seized by police under the Proceeds of Crime Act.

http://www.times-series.co.uk/news/5039795.Accountant_jailed_for_part_in_mortgage_fraud_scam/

A Washington, D.C. lawyer, accused late last year of collecting more than $1.2 million from homeowners with false promises to arrange loan modifications, has been charged with bank fraud after depositing $2.4 million in counterfeit checks at several banks.

Howard R. Shmuckler allegedly deposited the checks between April and October 2005, according to federal court documents. According to an affidavit, Shmuckler deposited 11 checks supposedly written to him from companies such as software giant Oracle USA Inc. and the National Bank of Canada. The checks were returned by the companies as fakes.

Shmuckler was arrested last week and released on his own recognizance. Calls to his attorney were not returned today and Shmuckler could not be reached.

His criminal past dates to 1996, when he pleaded guilty in California to bankruptcy fraud after he hid a Jaguar convertible and other assets from creditors. After the conviction, he was banned from practicing law in the state but it took another 10 years for that case to catch up to him in Washington, D.C.

The Maryland Department of Labor, Licensing and Regulation in December issued a cease-and-desist order to his firm, The Shmuckler Group. The order accused Shmuckler and two other men of collecting more than $1.2 million in fees to help homeowners avoid foreclosure. The department says the firm charged 372 Maryland homeowners an average of $3,440 but only obtained loan modifications for about 25% of their clients. They then refused to provide refunds.

Shmuckler’s Web site mentions an FBI raid that occurred in March 2009 and blames an ex-employee, who had been terminated, for instigating the raid. The site does not mention why the firm’s offices were targeted or how the investigation was resolved.

http://www.collectionscreditrisk.com/news/lawyer-accused-in-loan-mod-scheme-charged-with-bank-fraud-3000877-1.html

The U.S. Department of Housing and Urban Development (HUD) issued a press release announcing its partnership with the Loan Modification Scam Prevention Network in launching the www.PreventLoanScams.org website and national scam complaint form. It is a “a major step in the fight against loan modification scammers,”

“Homeowners at risk of foreclosure can be easy prey for home loan modification scammers. Often, dishonest individuals lure vulnerable homeowners into foreclosure rescue scams by making false promises. Scammers frequently claim they can lower mortgage payments or stop the foreclosure process.”

“Troubled homeowners lose time and money when they are tricked by con artists who promise to help but never do,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “This initiative combines the collective energies of public and private enterprises to strengthen the ability of law enforcement to prosecute scammers and protect homeowners.”

The Network developed PreventLoanScams.org to provide homeowners with a single destination to report alleged scammers. Complaints filed online are added to a national complaint database and forwarded to the appropriate law enforcement agencies for review. The Network estimates that the website will assist approximately 50,000 homeowners affected by scams. Additionally, HUD has directed its local fair housing and housing counseling grantees to begin reporting alleged loan modification scams via the website.

The creation of a national complaint database is a major step in the fight against loan modification scams. Prior to the launch of PreventLoanScams.org, federal, state, and local government agencies could not share complaint data with non-profit organizations. The new system allows for better analysis of trends across jurisdictional lines and will likely lead to an increase in private enforcement action filings.
Tips to Avoid Being Scammed

• Always beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
• Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.
• Beware of people who pressure you to sign papers immediately, or who try to convince you that they can “save” your home if you sign or transfer over the deed to your house.
• Do not ever sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
• Never make a mortgage payment to anyone other than your mortgage company without their approval.

HUD is a key partner in the fight against loan modification scammers. They have taken numerous steps to publicize the Loan Modification Scam Prevention Network’s online complaint form, including contacting over 2,400 of their certified housing counselors requesting that they use utilize it to report scams while working with homeowners.
We must be vigilant against fraud, recognizing its signs and taking proactive, definite, and realistic steps to not only prevent it but also punish it.
It starts with me.
It starts with you.
It starts with us…

You are all encouraged to report any suspected mortgage fraud activity to authorities, www.PreventLoanScams.org

http://www.examiner.com/x-28218-Mortgage-Examiner~y2010m3d1-HUD-PreventLoanScamsorg-Website

A disbarred D.C. lawyer has been accused of depositing $2.4 million in counterfeit checks at Washington-area banks.

Howard R. Shmuckler allegedly deposited the checks between April and October 2005, according to court documents unsealed in D.C.’s federal court charging him with bank fraud.

The FBI says Shmuckler spent six months in 2005 passing counterfeit checks to area banks. According to an affidavit, Shmuckler deposited 11 checks supposedly written to him from various companies like California software giant Oracle USA, Inc. and the National Bank of Canada. The checks were returned by the companies as fakes, the affidavit said.

Calls to Shmuckler’s attorney were not immediately returned.

Shmuckler is best known in the Washington region for allegedly running an illegal mortgage modification program.

In December, the Maryland Department of Labor, Licensing and Regulation issued a cease-and-desist order to the Vienna-based Shmuckler Group. The order accused Shmuckler and two other men of collecting more than $1.2 million in fees on a promise that was never kept of helping homeowners avoid foreclosure. The department says they charged 372 Maryland homeowners an average of $3,440, but only obtained loan modifications for about 25 percent of their clients. They then refused to provide refunds.

Shmuckler has a criminal history dating back to 1996, when he pleaded guilty to bankruptcy fraud after he hid a Jaguar convertible and other assets from creditors.

Following his conviction, he was banned from practicing law in California, but it took another decade for the case to catch up to him in D.C..

Shmuckler joined the D.C. bar in 1985, but was placed on administrative suspension from 1987 to 2004 because he wasn’t keeping up with his dues, D.C. bar records show. In 2004, he paid what he owed and was reinstated without informing the bar board of his California legal problems.

When the criminal conviction came to the bar’s attention in 2007, Shmuckler was suspended and then disbarred in July 2009 for committing a crime that involve moral turpitude, the bar board wrote in its decision.

Shmuckler was arrested on bank fraud charges on Feb. 19 and released on personal recognizance