Multi-Million Dollar Mortgage Fraud Scheme Verdicts – GUILTY! Austin, Texas Jury Finds Five Guilty

Every choice has a consequence. The rampant spread of mortgage fraud is no different. Unethical practices and outright blatant fraud brought a guilty verdict to several Texas area individuals.

• Cornelius Robinson, age 47, of Austin, Texas, who was the leader and organizer of the fraud scheme. Robinson was convicted of conspiracy to make false statements related to a loan, conspiracy to commit wire fraud, five substantive counts of wire fraud, 9 substantive counts of false statements related to a loan, one count of aiding and abetting the receipt of commissions or gifts from loans by a bank employee, conspiracy to commit money laundering and 7 substantive counts of money laundering.
• Michael Breon, age 39, formerly of Austin and a current resident of McKinney, Texas, and a straw purchaser. Breon was convicted of conspiracy to make false statements related to a loan, one count of wire fraud and one count of conspiracy to commit money laundering. Breon, a licensed loan officer and mortgage broker, was employed by several different loan origination and mortgage companies during the conspiracy.
• Sindu Sukumaran, age 36, wife of Michael Breon and a straw purchaser. Sukumaran was convicted of wire fraud.
• Marlon Nathan Torres, age 45, of Hutto, Texas, a licensed real estate agent and buyer and seller of real estate in the Austin area. Torres was convicted of one count each of conspiracy to commit money laundering and money laundering.
• Jeffrey Andre Wilkins, age 46, of Austin, a cousin of Cornelius Robinson and a straw purchaser. Wilkins was convicted of one count each of conspiracy to make false statements related to a loan, conspiracy to commit wire fraud, false statement related to a loan, conspiracy to commit money laundering and money laundering.

Eleven co-defendants plead guilty to other mortgage fraud related charges. They are:

• Silvia Seelig, age 45, of Austin, and wife of Cornelius Robinson who during the conspiracy, was a licensed real estate agent and a straw buyer;

• George H. Watson, age 55, of Austin, a licensed attorney who specializes in real estate transactions. Watson served as the closing attorney on most of the real estate transactions described in the Indictment;

• James Douglas Atwood, age 51, of Austin, Cornelius Robinson’s uncle and a straw buyer;

• Doris Ann Hill, age 40, of Austin, a personal banker employed at Wells Fargo Bank. For a fee, Hill agreed to provide a false verification of deposit to loan underwriters in relation to three real estate transactions involving defendant Snead;

• Julius Meyers Lofton, a 45-year-old licensed real estate agent living in Austin and a straw buyer;

• Roy Rivers, age 52, of Austin, and a straw buyer;

• Danielle Guice Rosas, age 40, of Austin, and a straw buyer;

• Stanley Ma, age 27, of Honolulu, Hawaii and a straw buyer;

• Leonard Brown, age 38, of Houston, Texas, who provided a false verification of employment in association with Onyx Consulting and defendant Ma;

• Russell Snead, age 43, of the Seattle, Washington area and a straw buyer; and,

• Leroy Williams, age 46, of Austin and a straw buyer.

According to the US Attorney’s office: From September 1999 to present, the defendants participated in a scheme to defraud mortgage lenders, including federally insured financial institutions, with regard to loans acquired to purchase 25 properties in the Austin and San Antonio area. The scheme centered upon the use of real estate “flips.” That is, the defendants purchased property at one price and would immediately sell, or “flip,” the property to a “straw buyer” at a higher price. In doing so, the mortgage lenders were deceived as to the true nature of the transaction and the financial status of the “straw buyer.” The straw buyers did not make the subsequent monthly mortgage payments
and all of the loans have gone into default. All of loans have been either foreclosed upon or are the subject of current foreclosure proceedings.

As previously reported on this blog – The Mostly Texas Sixteen have now seen the indictment turn into either guilty pleas or guilty verdicts. My guess is that most will face active prison sentences with the longest sentence being reserved for Cornelius Robinson who I suspect will face 10+ years – perhaps longer.

Every choice has a consequence. As a white collar crime and mortgage fraud speaker, I speak from first hand experience about the truth about consequences. Reality is – no one escapes the consequences of their choices. While Robinson and others may have avoided the consequences of their actions for a time, they did not avoid the consequences all together. One thing is for sure, you do reap what you sow.

As those who pleaded guilty will be sentenced on June 6th and those just found guilty will be sentenced on June 20th – they will soon know just what their fraudulent actions will bring to them in the form of prison consequences.

If anyone reading has any background on Robinson – feel free to comment as I study the behaviors and backgrounds of those who are accused of unethical conduct and white collar crime.

White Collar Crime and Business Ethics Speaker – Chuck Gallagher – signing off…

National Ethics Survey Released for Non-Profit Workers

Recently the Ethics Resource Center conducted a survey of nonprofit workers at the same time that public and private sector employees were asked to assess their ethical environments.

ERC’s 2007 National Nonprofit Ethics Survey, recently released, showed:

• As in the past, nonprofit organizations’ ethical standing remains superior to the other sectors.
• Nevertheless, integrity in the nonprofit sector is eroding; misconduct is rising — particularly financial fraud, which now is more prevalent among nonprofits than in business or government.
• Size makes a difference, with mid-sized nonprofits at greatest risk for misconduct.
• Boards, while very important in shaping the perceptions of employees with regard to ethics, are not taking advantage of their influence to set clear ethics standards for their nonprofit organizations. Where boards have heavy influence, there also are high levels of misconduct and lower perceptions that top leaders prioritize ethics.

“One would think that freed from the pressure to generate and distribute profits to shareholders, nonprofit organizations would rise high above the myriad ethics and compliance issues that have plagued the public and private sectors over the years,” said ERC President Patricia Harned, Ph.D. “Unfortunately, the 2007 National Nonprofit Ethics Survey (2007 NNES) paints a very different picture. The nonprofit sector that for so long enjoyed a better reputation with regard to its ethics now exhibits many of the shortcomings ERC found in its companion surveys of the public and private sectors.”

ERC found that the key ethical challenges for nonprofits fall along the same lines as for the private and public sectors. In 2007, the types of misconduct most widely observed by nonprofit employees were: putting one’s own interests ahead of the organization’s — 24%; lying to employees — 21%; abusive behavior and misreporting hours worked — each 19%.

For more information about Ethics Resource Center, visit http://www.ethics.org

Every choice has a consequence. As a business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is – no one escapes the consequences of their choices. Many major ethics lapses wind up with a conviction and possible prison sentence. Prison is no fun! You do reap what you sow.

As with most of my blogs – COMMENTS ARE WELCOME.

Have you witnessed any unethical behavior as a result participation in a non-profit organization.

Business Ethics Speaker – Chuck Gallagher – signing off…

Mortgage Fraud Crisis and House Stealing – How Widespread is the Criminal Activity?

Over the past several months I have written a number of blog articles about the consequences of what appears to be rampant mortgage fraud – especially in the subprime lending arena.

A wonderful article was written a week or so ago by Robert Schmidt, writer for Bloomberg.com. The article appears in full here. In the article Schmidt writes:

The U.S. Justice Department is conducting a broad review of the subprime lending crisis to see if there is a “larger criminal story” to the mortgage meltdown, Attorney General Michael Mukasey said.

Mukasey said the agency hasn’t decided if the turmoil merits a response similar to the Bush administration’s corporate fraud crackdown that began in 2002 after the collapse of Enron Corp. Still, he told reporters in Washington today, the department’s criminal division is now weighing how to address the issue.

“We’re considering information that’s coming in and possible legal theories,” Mukasey said. “People are looking at the law to see to what and to whom it might apply.”

The FBI, the Justice Department’s investigative arm, announced earlier this year it was investigating 14 corporations for possible accounting fraud related to the mortgage rout; the number now is almost 20. The collapse in the credit markets has forced people from their homes, shaken Wall Street and become a major issue in Congress and the presidential campaign.

In the White Collar Crime Blog the question has been asked if Mukasey will appoint a Mortgage Fraud Task Force much like the Corporate Fraud Task Force that was set up after the Enron – Worldcom – scandals? According to a report from the New York Times, “LAST month, almost 225,000 properties in the United States were in some stage of foreclosure, up nearly 60 percent from the period a year earlier, according to RealtyTrac, an online foreclosure research firm and marketplace.”

As a white collar crime and business ethics speaker, I have seen a dramatic up tick in the number of requests for information about this form of white collar crime. It seems that every week there is a new form of fraud revealed.

On March 25, 2008 the FBI issued an interesting article on one of the latest scams: HOUSE STEALING. The report reads as follows:

What do you get when you combine two popular rackets these days—identity theft and mortgage fraud? A totally new kind of crime: house stealing.

Here’s how it generally works:

… The con artists start by picking out a house to steal—say, YOURS.

… Next, they assume your identity—getting a hold of your name and personal information (easy enough to do off the Internet) and using that to create fake IDs, social security cards, etc.

… Then, they go to an office supply store and purchase forms that transfer property.

… After forging your signature and using the fake IDs, they file these deeds with the proper authorities, and lo and behold, your house is now THEIRS.

There are some variations on this theme…

… Con artists look for a vacant house—say, a vacation home or rental property—and do a little research to find out who owns it. Then, they steal the owner’s identity, go through the same process of transferring the deed, put the empty house on the market, and pocket the profits.

… Or, the fraudsters steal a house a family is still living in…find a buyer (someone, say, who is satisfied with a few online photos)…and sell the house without the family even knowing. In fact, the rightful owners continue right on paying the mortgage for a house they no longer own.

It can get even more complicated than this, as we learned in a recent case out of Los Angeles that we investigated with the IRS. Last year, a real estate business owner in southeast Los Angeles pled guilty to leading a scam that defrauded more than 100 homeowners and lenders out of some $12 million. She promised to help struggling homeowners pay their mortgages by refinancing their loans. Instead, she and her partners in crime used stolen identities or “straw buyers” (people who are paid for the illegal use of their personal information) to purchase these homes. They then pocketed the money they borrowed but never made any mortgage payments. In the process, the true owners lost the title to their homes and the banks were out the money they had loaned to fake buyers.

So how can prevent your house from getting stolen? Not easily, we’re sorry to say. The best you can do at this point is to stay vigilant. A few suggestions:

If you receive a payment book or information from a mortgage company that’s not yours, whether your name is on the envelope or not, don’t just throw it away. Open it, figure out what it says, and follow up with the company that sent it.

From time to time, it’s also a good idea to check all information pertaining to your house through your county’s deeds office. If you see any paperwork you don’t recognize or any signature that is not yours, look into it.

House-stealing is not too common at this point, but we’re keeping an eye out for any major cases or developing trends. Please contact us or your local police if you think you’ve been victimized.

If you think you’ve been a victim of mortgage fraud, feel free to comment and keep in mind report in appropriate activity to law enforcement.

Hurricane Rita Fraud – Bob Allen Hayes, Jr. Sentenced to Prison

Every choice has a consequence. Seems that some people feel that major disasters are the open door to make choices that they otherwise might not make. Perhaps this is the case with Bob Allen Hayes, Jr. who plead guilty to making false statements to FEMA when he applied for disaster relief.

Hayes, a 32 year old Houston, Texas man was sentenced to 6 months in federal prison and ordered to make restitution in the amount of $19,784.27.

According to the US Attorney’s office: Hayes claimed his primary residence in Port Arthur, Texas sustained damage during Hurricane Rita in September 2005. Hayes also claimed his personal property sustained damage during the hurricane. In fact, Hayes did not live at the residence in Port Arthur during the storm and did not suffer losses which entitled him to receive FEMA assistance. An investigation revealed that the residence in question was owned by the Port Author Housing Authority and was vacant at the time of the storm. Hayes fraudulently received approximately $20,000.00 in disaster related assistance for his claims.

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is – no one escapes the consequences of their choices. While Hayes avoided the consequences for a time – he did not avoid the consequences all together. Prison is no fun and will prove to be a dramatic change from his prior activities. You do reap what you sow.

If anyone reading has any background on Hayes – feel free to comment as I study the behaviors and backgrounds of those convicted of white collar crime.

White Collar Crime Speaker – Chuck Gallagher – signing off…

Ethics Violation Investigations – HUD Secretary Alphonso Jackson Resigns!

Ethics is a major branch of philosophy, encompassing right conduct and good life according to Wikipedia. In the case of someone stepping down from a significant position within the government, the “good life” portion may now be in question.

Having grown weary of multiple ethics investigations, HUD Secretary Alphanso Jackson has been hinting at the possibility of resignation for over a year.

According to a report by CNN: The FBI has been investigating allegations that Jackson steered a federal contract to a golfing buddy based in South Carolina. Jackson has denied wrongdoing and White House officials have said for months that the president still has confidence in Jackson. No charges have been filed against him.

A long time friend of President Bush, before being confirmed head of HUD, Jackson ran Dallas’ housing authority and lead a Texas power company – American Electric Power – Texas in Austin.

Jackson stated speaking to reporters, “As the son of a lead smelter and nurse midwife, and the last of 12 children, never did I imagine I would serve America in such a way. I am truly grateful for the opportunity. We have helped families keep their homes, we have transformed public housing, we have reduced chronic homelessness, and we have preserved affordable housing and increased minority homeownership.”

THE ALLEGATIONS:

Senator Chris Dodd, D-Connecticut, earlier in the month demanded Jackson’s resignation. Dodd said an inspector-general’s report recently stated that Jackson had advised staffers to “take political affiliation into account in awarding contacts,” and “serious allegations about his impropriety” are under investigation in three cases, although Dodd did not name them.

According to a CBS report: Jackson has been involved in a controversy over a Philadelphia redevelopment project, with accusations aired in a lawsuit that Jackson tried to retaliate against a city agency after it refused to award a contract to one of his friends. Jackson and other HUD officials have denied any wrongdoing.

The Washington Post states: The lawsuit alleges that Jackson, in a call to Philadelphia’s mayor in late 2006, demanded that the authority turn over the $2 million property to developer Kenny Gamble. Jackson’s top assistant secretaries insisted in numerous letters and calls in 2007 that, if Philadelphia didn’t give the property to Gamble, the housing authority would be found in violation of a federal contract. The housing authority’s director, Carl R. Greene, repeatedly refused.

Fox News reports: The FBI has been examining the ties between Jackson and a friend who was paid $392,000 by Jackson’s department as a construction manager in New Orleans after Hurricane Katrina.

Again, according to Fox News: Last year, the inspector general at Jackson’s department found what it called “some problematic instances” involving HUD contracts and grants, including Jackson’s opposition to money for a contractor whose executives donated exclusively to Democratic candidates.

The Dallas Business Journal writes: According to an internal copy of the IG’s findings, obtained by the DBJ through a Freedom of Information Act request, top aides to Jackson testified that they and other senior staff members were advised to take political leanings into consideration when awarding discretionary contracts.

ETHICS:

A number of issues surround Jackson’s work while at HUD. Often people find that power corrupts and that corruption can blur moral and ethics boundaries. It has been said that there is no such thing as business or political ethics, there are only ethical people. But “ethics” do exist. It is their application – or lack thereof – that is often called into question. What is being questioned is Jackson’s application of ethical and moral principles as they apply to his job as HUD Secretary.

Increasingly, with every choice being scrutinized, the application of choices in the ethical arena are under the microscope of conscience-focused public demand for fair and right. While politicians routinely make choices that benefit their constituents – it is generally deemed “unethical” to break the law or be so blatant about the political favors granted that one is accused of being “unethical.”

Every choice has a consequence. As a white collar crime and business ethics speaker, I speak from first hand experience about the truth about consequences. Reality is – no one escapes the consequences of their choices. While Jackson may have been supported by President Bush he did not avoid the consequences of how he handled his department. His resignation is not all related to personal and family matters – not when you resign under fire. What effect this has on any on-going criminal investigation is unclear at this time. One thing is for sure, you do reap what you sow.

If anyone reading has any background on Jackson – feel free to comment as I study the behaviors and backgrounds of those who are accused of unethical conduct.

Business Ethics Speaker – Chuck Gallagher – signing off…