Aryeh Schottenstein and Shawn A. Griffin Plead Guilty! And the Ohio Mortgage Fraud Guilty Pleas Keep on Coming…

As a mortgage fraud speaker, I observe what’s taking place in the mortgage fraud arena, but I have to say, the legal eagles in Ohio are working the mortgage fraud angles hard…

Two more Columbus-area people indicted as part of a mortgage fraud scheme that secured more than $7 million in mortgage loans pleaded guilty in United States District Court. Aryeh Schottenstein, age 34, of Columbus, pleaded guilty to one count of conspiracy to commit wire fraud and one count of money laundering, and Shawn A. Griffin, age 38, also of Columbus, pleaded guilty to two counts of conspiracy to commit wire fraud and one count of money laundering.

Schottenstein and Griffin were indicted along with Donald F. Green, Jeffrey Lieberman and George “Terry” Jordan for a mortgage fraud scheme in central Ohio in 2003 and 2004. COMMENT: It seems that at the height of easy money for mortgages - mortgage fraud was rising as well. See what these folks did below as their crime is becoming a common pattern.

According to statements of facts filed with Schottenstein’s and Griffin’s pleas, Schottenstein and Lieberman owned a company called Parkview Bank. One of Parkview’s business purposes was to locate financing for real estate investors seeking to buy and renovate houses in Columbus. Parkview needed a source for the financing for this venture. In 2003, Schottenstein and Lieberman met with the managing partners for Stillwater Asset Backed Fund to convince them to provide the funding. They were successful.

Parkview and Stillwater entered into an agreement whereby Stillwater would provide the funding for Parkview’s deals. Rather than abide by the agreement and locate legitimate investors, Schottenstein used Griffin to recruit straw-buyers to pose as real estate investors. Using straw-buyers was quicker and easier than locating legitimate real estate investors thereby making it easier to generate more loan origination fees. The straw-buyers were told by Griffin they did not need to renovate the houses or make monthly interest payments. Griffin assured them he would take care of all the details.

COMMENT: Two things stand out - (1) impatience with legitimate business became the foundation of the fraud; and (2) the “straw buyers” were motivated by quick money in order to participate in the scam.

Griffin also recruited straw buyers in 2002 and 2003 for Jeff Pearson, now deceased. Pearson bought dozens of low-income distressed houses in Columbus for amounts at or near their fair market value. The houses were in need of renovation. Very little if any renovation was done to the houses. The houses were sold to Griffin’s straw-buyers for two to three times the amounts Pearson had paid only a few weeks or months earlier. Despite having good credit, the straw-buyers usually had little income. At the closing on the straw-buyers’ purchases of the houses, the title companies issued large checks payable to Pearson as proceeds from the sales.

Green pleaded guilty on April 11. Lieberman and Jordan pleaded guilty on April 24. All are free pending sentencing. Judge Marbley will set a date for sentencing. Conspiracy to commit wire fraud is punishable by up to five years in prison and the money laundering charges carry a maximum sentence of ten years in prison.

According to the Columbus Dispatch a scheme that investigators say bilked millions from banks, lenders and investors was so involved that there were too many fraudulent home purchases to list in the 36-page federal indictment.

Those indicted originally were:

Donald F. Green, 48, of Columbus, real-estate investor

Shawn A. Griffin, 37, of Cleveland, real-estate investor

Aryeh M. Schottenstein, 33, of Oak Park, Mich., real-estate investor

Jeffrey M. Lieberman, 56, of Bexley, real-estate investor

George T. “Terry” Jordan, 50, of Canal Winchester, real-estate agent

Dwayne L. Carter, 37, of Columbus, loan officer

Jonathan L. Boyd, 38, of Columbus, loan officer

Kenyatta Johnson, 37, of Michigan, loan officer

James Darneil Gaither, 37, appraiser

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 Schottenstein and Griffin may have enjoyed the money for a time and avoided the consequences - they did not avoid the consequences all together. Prison is no fun and both are facing several years plus substantial restitution for this conviction. Likely they will serve time and that will prove to be a dramatic change from their prior activities. You do reap what you sow.

If you were a victim…please share your experience so other may benefit.

Mortgage Fraud Speaker - Chuck Gallagher - signing off…

White Collar Crime - So You Think You Invested Your Money? Mark Wayne Jaster Sentenced to Prison for Massive Fraud Scheme!

Some people have innate gifts. In the case of MARK WAYNE JASTER it must have been the power of persuasion, as this Texarkana, Texas man was successful at persuading investors to give him over $1.1 million dollars to invest.

PROBLEM: He invested none of it. Not one red cent! His skill to persuade was used in a misguided way and now he’s set to reap the rewards of his choices. Every choice has a consequence. In the case of MARK WAYNE JASTER, United States Attorney John L. Ratcliffe announced that 48-year-old Texarkana, Texas man, JASTER, has been sentenced to 78 months in federal prison for wire fraud.

MARK WAYNE JASTER was indicted on April 3, 2007 and charged with defrauding investors through a wire fraud scheme. He pleaded guilty to that charge on August 29, 2007 and was sentenced today to 78 months in federal prison by United States District Judge David Folsom. Jaster was also ordered to pay restitution in the amount of $1,134,623.30.

According to information presented in court, between 2002 and 2005, Jaster represented to investors that he was involved in the business of personal investment services. Jaster told those investors that he actively managed money through his InvestWise account at A.G. Edwards and Sons, Inc. in Texarkana, Texas. He claimed that through investing in various investments such as real estate, stocks, mutual funds, and pension funds, he achieved significant returns for his investors.

NOTE: There are many great investments out there, but, when someone tells you that they get great returns for their clients - “here, invest you money with me! Well, beware - there’s a fair chance it’s a scam. Use your common sense and check the investor out. It’s too easy these days to do that with the internet.

Jaster had some investors deposit money directly into his Mark Jaster DBA InvestWise account at Hibernia Bank. However, instead of using the money for investments, he would use it for his own personal expenses. Jaster had other investors open accounts at A.G. Edwards for the purpose of depositing funds for investments. After gaining signatory authority over these accounts, Jaster would then transfer the funds to his InvestWise account at A.G. Edwards to be used for his personal expenses.

During this time, Jaster would speak with the investors, advising them that their investments had grown significantly, and would send e-mails to the investors with false representations as to the status of their investments and legitimacy of the investments. None of the money Jaster received from investors was ever invested.

NOTE: If you’ve invested your money with an investment representative you should be able to get your account status on-line or at a minimum verify the investment status with someone other than the person who took your money to invest.

COMMENT: As a former white collar criminal (not something I am proud of) I did essentially the same thing as JESTER. I took clients money - used it for personal purposes (lifestyle) and ended up in exactly the same spot. Had either the clients done their “due diligence” by checking me and the investment I was representing out, or had they checked with someone other than me about the status of their investment, they would have found out the truth. In fact, the fraud was uncovered when ONE client sought information about his investment from someone other than me.

Every choice has a consequence. I am living proof that you do reap what you sow. And while JESTER is headed for prison, there is hope that he might learn from this experience. Today, as a speaker, I address college kids in business schools for free - it’s my way of warning them about the law of choices and consequences. This service was recently reported on in Business Week. See the article here.

For information on my presentations to colleges and universities or business associations, contact me at www.chuckgallagher.com.