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Tag: mortgage fraud

  • U.S., Colorado Say Bella Homes — An MLM ‘Opportunity’ — Is A Foreclosure-Rescue Scam Whose ‘Mastermind’ Is A Convicted Felon Currently On Probation; Firm’s Business Operations Halted

    “Foreclosure-rescue scams prey on distressed homeowners’ desire to save their homes and to find any means to help fix their dire financial situations. As is the case with most loan-modification and foreclosure-rescue operations, consumers who dealt with Bella Homes lost not only the thousands of dollars they paid for ‘help,’ but also their homes.” — John Suthers, Attorney General of Colorado, Feb. 23, 2012

    From a YouTube pitch for the Bella Homes' MLM compensation scheme.

    BULLETIN: Colorado’s U.S. Attorney and the state’s Attorney General have gone to federal court in Denver to halt what they described as a foreclosure-rescue scam operated through an entity known as Bella Homes LLC.

    Bella, which operated as an MLM and allegedly recruited more than 200 salespeople who paid the firm a combined total of  more than $138,000 to pitch the “opportunity” and earn a shot at commissions from desperate homeowners, has been sued.

    Also named defendants were Mark Stephen Diamond, Michael Terrell, David Delpiano and Daniel David Delpiano.

    In court filings in the civil case, Daniel Delpiano was described by state and federal prosecutors as the Georgia-based “mastermind” of the Bella Homes fraud, which allegedly gathered more than $3 million.

    Daniel Delpiano is a convicted felon currently on supervised federal probation, prosecutors said. Terrell is a Georgia attorney, and Diamond is an Arizona businessman, according to the complaint.

    In February 2005, Daniel Delpiano was convicted of conspiracy to commit wire fraud in the District of Massachusetts. After that — in November 2006 — he was convicted of conspiracy to commit mail fraud, wire fraud and money laundering in the Middle District of Florida, prosecutors said.

    And in May 2007, prosecutors noted, he was convicted of mortgage fraud and racketeering in Georgia Superior Court. Daniel Delpiano is the father of David Delpiano, who also resides in Georgia, prosecutors said.

    RealScam.com, a forum that concerns itself with mass-marketing fraud, was among the first outlets today to report the news of the Colorado lawsuit. RealScam has been tracking Bella Homes’ developments at least since Nov. 27, 2011.

    “To become a representative, the representative must pay Bella Homes an initial enrollment fee of $99.00 and a $195.00 fee to complete mandatory online training,” prosecutors said. “Each representative also has an option to pay a $49.00 monthly fee to create his own replicate of the Bella Homes website in order to recruit homeowners for the program.”

    But the program, which has ceased to operate in the wake of the state and federal action, was a scam, prosecutors said.

    “Bella Homes gave false hope to desperate homeowners, taking advantage of their desire to do anything to save their homes,” said U.S. Attorney John Walsh. “Bella Homes’s actions not only hurt those vulnerable homeowners, but the housing market generally. The company will now face the consequences of its misconduct.”

    At least 450 people sent Bella money to save their homes, but no evidence has surfaced that Bella saved any homes, prosecutors said.

    The 52-page complaint includes a number of examples in which financially strapped homeowners allegedly paid Bella thousands of dollars in illegal, upfront fees.

    “The homeowner is fraudulently induced to pay ‘rent’ to Bella Homes in lieu of making the mortgage payments,” prosecutors charged. “Some of the mortgage lenders and mortgage servicers detrimentally affected by Bella Homes’ fraudulent scheme are federally insured financial institutions.”

    Most of the money paid by victims “has been diverted to the individual Defendants for their own personal use,” prosecutors said.

    Diamond, for instance, allegedly received “at least” $321,000 in fraud proceeds, “including more than $277,000 for his American Express bills,” prosecutors said.

    Meanwhile, Daniel Delpiano received “at least” $184,000 in fraud proceeds that were applied to personal expenses. Of that sum, as much as $86,180 appears to have come in the form of ATM cash withdrawals, prosecutors said.

    “The ATM cash withdrawals were frequently in the amount of $700,” prosecutors said.

    Although YouTube videos touting the Bella Homes’ MLM compensation scheme continue to appear, the company’s website is offline and a federal judge has issued orders to preserve assets.

    Here is a snippet from the complaint. (Italics added):

    Rather than helping homeowners remain in their homes long term, as promised, Bella Homes preys upon distressed homeowners, duping them into paying thousands of dollars based on false promises and false representations, yet provides no meaningful assistance to prevent foreclosure or to allow homeowners to remain in their home for the time period promised by Bella Homes.

    Bella Homes has fraudulently obtained approximately $3,000,000 from over 450 homeowners across the nation, and is rapidly expanding its fraudulent operations. In the last two months of 2011 alone, it has fraudulently obtained approximately $1,000,000 from homeowners.

    As part of the scheme, Defendants solicit distressed homeowners to convey title to their home to Bella Homes for no consideration and to enter into purported three-, five-, or seven-year lease agreements under which the homeowner pays Bella Homes monthly “rent.” Bella Homes also collects an advance fee from the homeowner of three-months? “rent” upon transferring title and signing the lease. Despite Bella Homes taking title to and collecting “rent” for the property, it does not pay the homeowner for the property and it does not pay off or assume the existing mortgage. Nor does Bella Homes make any of the mortgage payments or pay any of the taxes or insurance for the property.

    Read the complaint.

    Here is a snippet from the preliminary injunction. (Italics added):

    Except as noted below, Defendants and those involved in active concert with them who are served with a copy of this Order are ENJOINED from:

    1. Conducting or continuing to conduct business activities by or on behalf of Bella
    Homes, LLC, including but not limited to: (a) engaging in any action affecting real title to any property; (b) entering into any agreements relating to real property; (c) collecting, negotiating, or depositing any rental payments made by purported lessees of Bella Homes, LLC; (d) distributing or receiving disbursement of any funds from Bella Homes, LLC; and (e) advertising, promoting, or soliciting customers on behalf of Bella Homes, LLC.

    2. Transferring, withdrawing, pledging, dissipating, or otherwise using or concealing
    funds of Bella Homes, LLC or funds received by any Defendant from Bella Homes, LLC in any accounts with any financial institution . . .

    Read the preliminary injunction:

    The defendants have agreed to the preliminary injunction, which calls for “ceasing further operations and transferring approximately $500,000 to the government for homeowner restitution, pending final resolution of the case,” prosecutors said.

  • BULLETIN: Church Pastor (And Recidivist Felon) Charged In Alleged Mortgage-Fraud Caper; Michael Wilkerson Accused Of Recruiting Congregants To Dupe Bank In $6 Million Scheme

    BULLETIN: A church pastor, his wife and two real-estate brokers have been charged in an elaborate mortgage-fraud caper in which congregants allegedly were recruited as “straw purchasers” in a scheme that led to a patch of foreclosures and cost Chase Manhattan Bank $3 million.

    Pastor Michael Wilkerson presided over New Life Millennium Life Restoration Fellowship in Montgomery County, Pa., prosecutors said. Wilkerson identified church members with good credit and paid them $15,000 to sign loan documents.

    If they were able to recommend others with good credit to do the same thing, Wilkerson paid them another $5,000 as a recruitment commission, prosecutors said. The scheme allegedly netted $6 million in fraudulent proceeds.

    Joyce Wilkerson, the pastor’s wife, explained the scheme to the straw purchasers, paid them to be “straws” and also “pretended” to be a co-purchaser when the straws attended the property settlements.

    Lee Garell, a real-estate broker with Long & Foster Cos., prepared the illicit paperwork for the straw purchases, and Denise Haines, a broker with American Group Mortgage Corp., submitted fraudulent loan applications to Chase, prosecutors said.

    “[A]fter settlement on the homes, Michael Wilkerson took possession of all of the homes, rented four of them and lived in another,” prosecutors said.  “He paid the mortgages with rental income for approximately six months then told the ‘straw’ purchasers that they had to pay the mortgages. This last act led to the loans falling into default and then foreclosure, resulting in a loss of approximately $3 million.”

    Bogus appraisals were part of the scheme, and information about the “straws” was fudged. Other misrepresentations included “the source of funds, the borrower’s income and assets, and their intent to take possession of the homes as their primary residence,” prosecutors said.

    The Philadelphia Inquirer is reporting that Michael Wilkerson is a former television evangelist. Meanwhile, the Pottstown Mercury is reporting that Wilkerson is a recidivist jailbird who spent time in prison prison for an earlier fraud scheme and was arrested in a separate case in 2009 on charges of writing a bad check for $111,000 to a Mercedes-Benz dealer.

  • FBI: ‘Sovereign Citizen Domestic Extremists Throughout The United States’ Are Perpetrating Mortgage Fraud And ‘Debt Elimination Schemes’ And ‘Coaching’ Others To Do So

    Is your purported debt coach or foreclosure-relief expert a “sovereign citizen” with an avowed contempt for the U.S. government and banking in general? Is he (or she) actually trying to recruit you into a criminal scheme that only will add to your stress? Is your last disposable dollar going into the pockets of a domestic extremist posing as a patriotic problem-solver and putting you in the position of having to explain incomprehensible legal filings to a judge?

    A new report by the FBI “indicates a continued effort by Sovereign Citizen domestic extremists throughout the United States to perpetrate and train others in the use of debt elimination schemes,” the agency said.

    “Victims pay advance fees to perpetrators espousing themselves as ‘sovereign citizens’ or ‘tax deniers’ who promise to train them in methods to reduce or eliminate their debts,” the agency said.

    “While they also target credit card debt, they are primarily targeting mortgages and commercial loans, unsecured debts, and automobile loans,” the FBI said. “They are involved in coaching people on how to file fraudulent liens, proof of claim, entitlement orders, and other documents to prevent foreclosure and forfeiture of property.”

    The finding is included in a 29-page report on mortgage fraud released this month. Sovereign citizens, though, are hardly the only force driving the fraud, according to the report.

    “Mortgage fraud enables perpetrators to earn high profits through illicit activity that poses a relative low risk for discovery,” the FBI said. “Mortgage fraud perpetrators include licensed/registered and non-licensed/registered mortgage brokers, lenders, appraisers, underwriters, accountants, real estate agents, settlement attorneys, land developers, investors, builders, bank account representatives, and trust account representatives.

    “There have been numerous instances in which various organized criminal groups were involved in mortgage fraud activity,” the FBI said. “Asian, Balkan, Armenian, La Cosa Nostra, Russian, and Eurasian organized crime groups have been linked to various mortgage fraud schemes, such as short sale fraud and loan origination schemes,” the FBI said.

    Read the full FBI report.

  • Judge Says Ponzi And HYIP Operator Who Swindled Mother Of Fallen U.S. Marine Deserves More Jail Time Than Specified In Plea Bargain, Sentences Juan Rangel To 22 Years; Rangel’s Son Wanted By FBI In Bribery Caper

    ON THE LAM: This is a 2008 photo of Harold Rangel, now 22, who is wanted in a bribery case and is believed to have been involved in his father's HYIP and mortgage-fraud scam in the Los Angeles area. Harold Rangel may have ties to the region of Pachuca, Mexico, the FBI said. Source: FBI.

    EDITOR’S NOTE: Although this story largely focuses on the sentencing of Juan Rangel, his son — Harold Rangel — is wanted by the FBI in a bribery case and is believed to have helped his father pull off a massive HYIP and Ponzi scheme.

    Although federal prosecutors offered a plea bargain to Ponzi and HYIP operator Juan Rangel that would jail him for 15 years, U.S. District Judge S. James Otero said Rangel deserved more time behind bars and sentenced him to 22 years.

    Otero upped the sentence by seven years after hearing from victims, including the mother of a U.S. Marine who was killed in Iraq. The grieving mother was persuaded to invest money she received after her son’s death with Rangel.

    Rangel, 47, of Downey, Calif., maintained a $2.5 million mansion and bought a Lamborghini with victims’ money, according to records. Investigators said Rangel, a Mexican national, wired $1 million to Mexico when the Ponzi was collapsing and that the scheme generated up to $250,000 a day.

    A former Rangel employee told the FBI that Rangel was involved in “multiple fraud schemes” and paid an “associate” to intimidate investors who complained about not getting their promised returns, according to records.

    Prosecutors called Rangel’s actions “depraved.” Otero also used descriptive language when sentencing Rangel, saying that “taking investment money from the mother of a fallen soldier” was an example of the “callous disregard” he displayed for his fellow human beings.

    Rangel originally was jailed in August 2008 after investigators discovered his $30 million Ponzi and HYIP scheme and a companion mortgage-fraud and equity-stripping scheme that caused borrowers to lose their homes and lenders to issue more than $10 million in fraudulent loans.

    Rangel used “recruiters” and Spanish-speaking “street teams” to line up investors, prosecutors said.

    The mortgage scheme largely was targeted at Latino homeowners facing foreclosure. Rangel “drained the equity out of the properties” instead of assisting the distressed borrowers, and then sold the properties out from under them to “straw buyers,” using bogus documents to trick lenders into approving loans, prosecutors said.

    Rangel ran a company known as Financial Plus Investments that promised annual returns of up to 60 percent. He used infomercials and newspaper ads to promote his schemes and created more than 500 victims, according to records.

    “The victim-investors were mostly working-class families, and nearly all of them invested money that they could not afford to lose,” prosecutors said. “[Rangel] encouraged them to invest as much as possible and advised people against putting their money in the bank.”

    Otero is still determining the amount of restitution due victims and will conduct a hearing in May to determine the final sum.

    Rangel was convicted in a separate case in May 2009 of bribing a bank employee to help him pull off a scam. Rangel’s son, Harold Rangel, 22, also was charged in the bribery case. Because Harold Rangel did not show up for a pretrial hearing, a warrant has been issued for his arrest and he has been placed on the FBI’s “Wanted” list.

    Here is the “Wanted” poster for Harold Rangel, who purportedly has ties to Pachuca, Mexico. After failing to show for the hearing, Harold Rangel was charged with unlawful flight to avoid prosecution.

  • News, Notes And Updates: Jailed And Disbarred, Former Massachusetts Attorney Who Fleeced 95-Year-Old Client Arrested On New Charges

    EDITOR’S NOTE: This post distills recent news and development on the fraud and Ponzi fronts.

    CHARGED: Six people — including a disbarred attorney already in prison — have been charged in Massacuusetts in an elaborate mortgage-fraud scheme.

    Bruce Namenson, the former lawyer, was charged with 18 counts of of larceny for arranging bogus loan closings, sham notarizations and pocketing fraudulent proceeds from real-estate deals.

    Namenson, 47, of Walpole, Mass., already was in prison when arrested on the mortgage-fraud charges. In an earlier case, he was convicted of operating a complex scam in which both clients and insurance companies were bilked.

    One of the victims in the insurance-fraud case was a 95-year-old man, Massachusetts Attorney General Martha Coakley said.

    In the insurance case, which involved victims young and old, Namenson defrauded the 95 year-old client out of a $20,000 bodily injury settlement check.

    “The client had been injured in a car accident, and instead of paying the client a portion of the settlement, Namenson forged the client’s signature on a settlement release and settlement check, kept the money, and repeatedly told the client that his case had never been settled,” Coakley’s office said in 2008.

    Namenson also fleeced an injured, 15-year-old client out of most of a $100,000 settlement, prosecutors said.

    Charged in the new case with Namenson were Joshua Brown, 29, of Brockton, Mass; Brian Frank, 32, of New Hartford, N.Y.; John Sweetland, 28, of Yorba Linda, Calif; Linda Defeo, 28, of Springfield, Mass; and Brian Arrington, 39, of Boston.

    Brown, Frank and Sweetland are real-estate investors, Coakley’s office said yesterday. Defeo and Arrington are mortgage brokers.

    The real-estate scheme fleeced banks and borrowers out of $12.5 million, and involved bogus appraisals, submissions of bogus loan documents and misrepresentations to virtually every party in transactions tied to 26 distressed properties, prosecutors said.

    Brown, Frank and Sweetland skimmed $2 million from corrupt transactions, Coakley’s office said. Defeo and Arrington arranged for bogus loans, and Namenson presided over corrupt closings and pocketed money that was supposed to pay for title insurance.

    INDICTED: If you’re a Forrest Gump fan, this case might be one to add to a Bubba Blue list of the various ways to have a Ponzi scheme, instead of the various ways to have shrimp.

    John D. Terzakis, 52, of Hinsdale, Ill., and Robert E. Estupinian, 47, of San Jose, Calif., have been indicted in California on 12 felony counts of wire fraud, money laundering, and conspiracy to commit wire fraud and money laundering.

    A company operated by Terzakis and  Estupinian — Vesta Strategies of San Jose — was a Ponzi scheme, U.S. Attorney Joseph P. Russoniello said. Terzakis was the majority owner of Vesta and controlled its business activities. Estupinian, was the chief executive officer and minority owner of Vesta until December 2007.

    The scheme, according to prosecutors, involved the business of being a “qualified intermediary” in tax-deferred, real-estate exchanges under section 1031 of the Internal Revenue Service Code.

    “In general, a Section 1031 exchange allows taxpayers to avoid paying tax on capital gains by depositing the proceeds from an investment real estate sale, that would otherwise qualify as a taxable capital gain, with a qualified intermediary for up to 180 days,” prosecutors said.  “Under Section 1031, if the taxpayer purchases another investment property within those 180 days, the proceeds from the first sale may be rolled over into the new investment without being taxed as capital gains.”

    Although Vesta promised to hold funds as a qualified intermediary, Terzakis and Estupinian “stole client funds for their own use” and and also “used new client deposits to pay redemptions owed to earlier clients,” prosecutors said.

    Terzakis was arrested in Illinois. He made an initial appearance before a judge, who placed him on home confinement with electronic monitoring, pending a second appearance Jan. 13. Estupinian was arrested in California. He also made an initial appearance before a judge, and was placed on home confinement with electronic monitoring secured by a $1 million bond. His next appearance is scheduled Jan. 20.

    CONVICTED: Oren Eugene Sullivan, 63, of Rock Hill, S.C., has pleaded guilty to mail fraud in a Ponzi scheme.

    U.S. Attorney Walt Wilkens said Sullivan admitted that he ran a Ponzi scheme between 1995 and 2008 in which he sold false investments to 35 different individuals or groups of investors.

    “Sullivan told clients that he was managing their investment accounts, and paid small dividends to his investors,” prosecutors said. “However, he was actually converting their invested money for his own use, and paying the dividends with money he received from new investors. Over the course of the scheme, Sullivan took in approximately $2.5 million from unwitting investors.”

  • Bowdoin’s New Lawyer Has Another Big Case; Feds Charge Florida Home-Builder Scott Fawcett In Multi-Agency Operation Dubbed ‘The Mortgage Fraud Surge’

    Michael R.N. McDonnell is the attorney for a Florida man charged Tuesday with obtaining $388,000 in a mortgage-fraud scheme, according to the Naples Daily News.

    McDonnell, a lawyer for nearly 40 years, recently was retained to represent AdSurfDaily President Andy Bowdoin in a civil-forfeiture case involving tens of millions of dollars seized from Bowdoin’s bank accounts by the U.S. Secret Service last year in a wire-fraud, money-laundering and Ponzi scheme probe.

    Scott Fawcett, McDonnell’s client in the mortgage-fraud case, was accused of saying he had an account balance of $353.209.09 at Bank United when he had only $13.57 in the account, according to an information filed by federal prosecutors.

    The charge against Fawcett is part of a federal law-enforcement operation known as “The Mortgage Fraud Surge,” a joint effort by the U.S. Attorney’s Office for the Middle District of Florida, the FBI in Tampa and Jacksonville, “and numerous other federal, state, and local law enforcement agencies,” prosecutors said.

    Foreclosures are piling up in Florida, which has experienced nine bank failures this year, including three yesterday. Florida trails only California in foreclosure volume. Bank United’s predecessor company — Bank United FSB — failed in May 2009, costing the FDIC’s Deposit Insurance Fund an estimated $4.9 billion.

    The charge against Fawcett is filed in the Fort Myers Division of U.S. District Court for the Central District of Florida.

    Fawcett’s name is associated with more than a dozen foreclosure filings in Collier County, Fla., court records show. A person identified only as “H.F.” was named in the information as a co-applicant and co-owner of the account, but was not named a defendant.

    Fawcett is married to model Heather Fawcett, once listed as a member of the Miami Caliente of the upstart Lingerie Football League. Heather Fawcett’s listing on a website known as Model Mayhem includes a note that she was expecting a baby in September.

    Separately, Debra Landberg, a notary public, was indicted earlier in October — also in Fort Myers — on charges of fraud for helping “S.F.” and “H.F” get the loan that resulted in the charge against Scott Fawcett. The indictment against Landberg accuses her of helping “S.F.” get about $2.27 million in fraudulent loans by verifying fraudulent balances in accounts.

    Landberg was indicted on three counts of fraud and one count of lying to FBI agents. In the other fraudulent mortgage deals, according to the indictment, “S.F.” was said to have an account balance of $177,655.58, when the actual balance was $957.18, and an account balance of $146,264.77, when the actual balance was $1,774.50.

    Prosecutors are seeking forfeitures against Landberg and Scott Fawcett. The first fraudulent transaction involving Bank United occurred on July 19, 2006; the second transaction occurred April 17, 2007, according to court filings.

    The third — and largest fraudulent transaction — involved Citibank and the sum of $1.5 million, according to the indictment against Landberg.