Mortgage Fraud scheme by former SunTrust Mortgage leads to guilty plea by Javier Siveroni

ALEXANDRIA, Va. – Javier Siveroni, 48, of Springfield, Va., pleaded guilty today to using his position as a loan officer to help carry out a multi-million dollar mortgage fraud scheme involving more than 15 homes in Northern Virginia.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the plea was accepted by United States District Judge Liam O’Grady.

Siveroni pleaded guilty to one count of an indictment charging him with conspiracy to commit wire fraud.  Siveroni faces a maximum penalty of 20 years in prison when he is sentenced on Nov. 4, 2011.

According to court documents, Siveroni, a former loan officer at the Falls Church branch of SunTrust Mortgage, prepared and submitted false, fraudulent, and misleading mortgage loan applications for unqualified buyers – individuals who lacked the finances, credit rating, or legal status to obtain a certain loan amount.  The fraudulent mortgage loan applications contained false information regarding applicants’ employment, income, assets, immigration status, and intent to live in the property as a primary residence.  As part of the fraud scheme, Siveroni created, and taught his co-conspirators how to create, fake documents in order to corroborate false information contained in the loan applications.  The total amount of mortgage loans approved through the conspiracy exceeded $6.5 million.  The total loss attributable directly to Siveroni is over $2.5 million.

In related matters, three loan officers have pled guilty for their roles in the alleged conspiracy: Preston Cherouny, 45, of Washington, D.C.; John Leone, 44, of Vienna, Va.; Alejandro Alquinta, 35, of Springfield, Va. Maria Teresa Sanchez, 44, of Burke, Va., and Yolanda Salazar Camacho, 35, of Alexandria, Va., also pled guilty for their roles as loan officer assistants in the conspiracy.

This ongoing investigation was conducted by the FBI’s Washington Field Office.  Assistant United States Attorney Uzo Asonye prosecuted the case on behalf of the United States.

Mortgage Fraud scheme earns Tacoma, Washington man – Jeff McGrue – 25 years in Federal Prison!

A Tacoma, Washington man was sentenced today to 25 years in federal prison for running a scheme that defrauded owners of distressed Southern California homes by promising to prevent foreclosure through the paying off of their mortgages, but in reality doing no more than sending their lenders fake notes, totaling $55 million, that were supposedly backed by Treasury bonds.

Jeff McGrue, 51, who was found guilty by a federal jury in January 2011 of four counts of mail fraud and four counts of passing fictitious government instruments to lenders and loan servicers, faced a statutory maximum sentence of 180 years in custody.

At the sentencing hearing, United States District Judge Otis D. Wright, III, stated that the defendant intended to “bilk the financial institutions out of at least $55 million,” and he described defendant’s defrauding of the homeowners as “heartless.”

United States Attorney André Birotte Jr. stated:  “Schemes targeting homeowners who are losing, or are in danger of losing, their homes to foreclosure prey upon the most vulnerable among us. The Department of Justice is working with its partners in law enforcement to aggressively combat these schemes.  This sentence will send a strong message of deterrence to scam artists and other schemers who think they can steal from desperate, distressed homeowners and get away with it.”

The evidence presented during a four-day trial in United States District Court showed that McGrue orchestrated the foreclosure-rescue scheme from the fall of 2007 through the fall of 2008 through a company he called “Gateway International.”  McGrue worked with two others – Gerald Guidry, who owned a company called My Debt Solutions, and Ronald Morgan, who owned a company called Omnipoint – to defraud 250 Southern California homeowners by promising to delay or prevent foreclosures and to pay-off delinquent mortgages in exchange for the homeowners making payments and transferring title to Gateway International.

McGrue and the others identified homeowners who were facing foreclosure or who were “upside-down” on their mortgages.  Relying on a network of “consultants,” many of whom were real estate agents, McGrue recruited these homeowners into his “Gateway Program.” Through the Gateway Program, McGrue and the others falsely told homeowners that, if they paid an enrollment fee and monthly rent and signed over title of their homes to Gateway, McGrue would use “bonded promissory notes” purportedly drawn on a U.S. Treasury Department account to pay off their mortgages, thereby stopping foreclosure proceedings. The homeowners were falsely told that lenders were legally required to accept the notes, that they would be able to buy their homes back from Gateway International at a discount, and that they would receive up to $25,000, even if they chose not to re-purchase their houses.

In reality, McGrue did not own any bonds and did not have a U.S. Treasury Department account. Nor could he have the type of account described to homeowners because the Treasury Department does not maintain accounts that can be used to make payments to third parties.

McGrue and his co-schemers enrolled more than 250 victims in the “Gateway Program,” but McGrue did not save a single home. McGrue collected approximately $1 million in the form of enrollment fees and rent from these victims. The evidence at trial showed that McGrue signed bogus documents to make it appear the victims’ outstanding mortgages had been paid off so he could re-sell the victims’ properties, which had been re-titled in Gateway’s name, to unsuspecting buyers.

Guidry, a 44-year-old Lancaster resident, pleaded guilty last year to conspiracy and making false statements. He faces a statutory maximum sentence of 10 years in federal prison when he is sentenced by Judge Wright on October 17.

Morgan, a 52-year-old resident of Sumner, Washington, pleaded guilty last year to conspiracy.  He faces a statutory maximum sentence of five years when he is sentenced by Judge Wright on November 7.

A fourth defendant charged as a result of the investigation, John-Pierre Rivera, of Los Angeles, participated in part of the scheme with McGrue. Rivera pleaded guilty last year to tax evasion. Rivera is scheduled to be sentenced by Judge Wright on November 28, at which time he faces a statutory maximum sentence of five years in federal prison.

The investigation into this mortgage foreclosure scheme was conducted by the Federal Bureau of Investigation.

YOUR COMMENTS ARE WELCOME!

Jose Arnaldo Rosario pleads guilty to Mortgage Fraud – Straw Buyers and Fake Documentation – A Classic scheme!

Jose Arnaldo Rosario, of Miami-Dade County, pled guilty today to conspiracy to commit money laundering and wire fraud, all stemming from a mortgage fraud scheme.  At sentencing, Rosario faces a maximum term of imprisonment of five years. Sentencing is scheduled for August 3, 2011 at 1:30 PM in Miami, FL, before U.S. District Judge Jose A. Martinez.

According to the Information, from at least November 2005 to January 1, 2007, Rosario and his co-conspirators purchased two properties located at 1331 Brickell Bay Drive (Unit 3003 and Unit 803), Miami, Florida, by obtaining bank loans using false and fraudulent information, phony documentation, and falsely inflated property valuation levels. Rosario and his co-conspirators provided the lending institutions with the name of a straw buyer rather than the names of the true purchaser(s); provided false and fraudulent information concerning the intent of the straw buyer to live at the property; and provided false and fraudulent information concerning the employment history and financial resources of the straw buyer.

According to court documents, Rosario and his co-conspirators then used these loan funds to purchase the properties using little or no money of their own. A portion of the difference between the amount obtained from the lending institution and the fair market value of the property (or “true price”) would be distributed among the conspirators in the form of undisclosed kickbacks. Rosario set up a shell company named Empire Associates to receive the funds initially and to make subsequent transfers. To avoid detection, Rosario would make a limited number of monthly payments on the loan for approximately one year before he stopped making payments altogether and allowed the properties to go into foreclosure. At today’s plea hearing, Rosario acknowledged that the loss resulting from his actions is approximately $2.51 million.

As a business ethics and fraud prevention speaker, I often discuss with my audiences the types and forms of fraud and the above is a classic scheme.  The amazing thing is that they didn’t do more.  Seems they got in late to the party as the market was turning against them as the scheme unraveled.

If you know Rosarie and wish to comment on the motive know that – YOUR COMMENTS ARE WELCOME!

Former Loan Officer Michael Pahutski sentenced to 19 years in Prison for Mortgage Fraud Scheme

As you look over the reported facts of this case, it’s sad to see that so many could conspire to defraud.  Do I blame the perpetrators – Yes!  But, when you look more closely we have to evaluate what was happening at the time and how the environment created the opportunity to join together to create such a widespread fraud.

As a business ethics and fraud prevention speaker, I see, all to often, that when three things come together: (1) Need; (2) Opportunity and (3) Rationalization – it creates the PERFECT STORM for fraud.  To be clear, just because those three things are present does not mean that Fraud will occur, rather it means that the conditions are right for the ethical person to make the unethical choice that can lead to illegal activities and fraud.

Read the US Attorney’s news release below for more details…

DEPARTMENT OF JUSTICE

United States Attorney Anne M. Tompkins
Western District of North Carolina

FOR IMMEDIATE RELEASE
FRIDAY, MAY 6, 2011

CONTACT: Lia Bantavani
704.338.3140
Fax: 704.227.0264

LOAN OFFICER SENTENCED TO 19 YEARS IN PRISON CHARLOTTE, NC—Today, the United States Attorney’s Office for the Western District of North Carolina announced that Michael Pahutski, 48, of Gastonia, was sentenced to 19 years imprisonment to be followed by five years of supervised release. Pahutski was also ordered to perform 200 hours of community service and pay restitution of approximately $3.5 million. The sentence is the latest step in an ongoing investigation of mortgage fraud schemes carried out around the Charlotte area, which led to the charging of eight individuals with mail, wire and bank fraud conspiracy, money laundering conspiracy, and related charges in March 2008. The investigation also resulted in the trial of closing attorney and co-defendant Victoria Sprouse in March 2009. Pahutski pled guilty prior to trial, without the benefit of a plea agreement, to all twenty-one counts in the indictment then pending against him.

Joining the U.S. Attorney’s Office in making today’s announcement are Jeannine Hammett, Special Agent in Charge of IRS-Criminal Investigation Division; Chris Briese, Special Agent in Charge of the Federal Bureau of Investigation, Charlotte Division; Inspector In Charge of the U.S. Postal Inspection Service, Keith Fixel; and Wayne Goodwin, Commissioner, North Carolina Department of Insurance.

A federal indictment charging Michael Pahutski with mortgage-fraud- related offenses was originally filed in August 2007, followed by a superseding indictment adding charges and five other defendants in March 2008. To date, all six of those defendants have been either convicted at trial or have entered pleas of guilty. The charges represent the results of a local investigation which stemmed from the detection of an original mortgage fraud scheme in September 2002, and focused on a group operating in and around the Charlotte area. The indictment alleged, and the evidence presented at the sentencing hearing and elsewhere, showed that all the defendants participated in a series of mortgage fraud schemes involving more than $20 million in mortgage loans and hundreds of houses in Charlotte-area neighborhoods. The defendants included Pahutski who served as a loan officer, as well as a closing attorney, a real estate appraiser, another mortgage broker, and two realtors. The indictment also identified two other attorneys, three home builders (including one national homebuilder), and several real estate investors as co-conspirators in these schemes. One of the banks victimized by the schemes closed its doors in mid-2007 after 103 years of business in large part due to the scheme.

The indictment alleged that Pahutski participated in a “flip” mortgage fraud scheme where houses were purchased through fraudulent mortgage applications and use of other false documents. Pahutski was originally indicted in this case in connection with a scheme involving closing attorney Victoria Sprouse and real estate investor Stephen Hawfield, in which approximately 210 houses were purchased in a “flip scheme” through fraudulent mortgage applications to nBank for more than $15 million.

U.S. District Judge Martin Reidinger pronounced the 19 year sentence. In doing so, Judge Reidinger explained that he hoped others would note the sentence, and “see that they do not want to become mortgage fraudsters.” The Judge noted that the offense had caused substantial damage to nBank, which failed, and also had caused substantial damage to our financial system. Judge Reidinger said that the heavy sentence was based in part on the fact that Pahutski had been entrusted by the state of North Carolina with a license, and “was supposed to have been part of the firewall to prevent this [mortgage fraud] from happening, but instead became part of the problem.” Following the sentencing hearing, Judge Reidinger ordered that Pahutski be immediately taken into custody and
detained as a flight risk.

The case was investigated by Special Agents of the FBI, Charlotte, Special Agents of the IRS-CI, U.S. Postal Inspectors, and criminal investigative personnel of the NC Insurance Commission. The case was prosecuted by Assistant U.S. Attorneys Kurt W. Meyers and Jenny Sugar of the U.S. Attorney’s Office, Criminal Division, Charlotte, NC, as well as former Assistant U.S. Attorney Matthew Martens.

United States v. Pahutski, et al
Docket Number: 3:07CR211
Michael D. Pahutski, 48 (Loan Officer)
Charlotte, NC
Guilty plea entered 3/3/09
Sentenced 5/6/11 to 228 months imprisonment to be followed by a five-year term of supervised release, 200 hours of community service, and ordered to pay $3,563,125.27 in restitution

Victoria L. Sprouse, 40 (Closing Attorney)
Charlotte, NC
Jury trial 3/23/09 – 4/1/09
Guilty verdict by jury 4/1/09
Awaiting sentencing

Michael Gee, 61 (Appraiser)
Hilton Head, SC
Guilty plea entered 3/10/2009
Sentenced 6/24/10 to 24 months imprisonment to be followed by a three-year term of supervised release and ordered to pay $3,563,125.27 in restitution

Gregory A. Mascaro, 44 (Real Estate Agent)
Harrisburg, NC
Guilty plea entered 6/9/08
Sentenced 2/27/09 to 24 months imprisonment to be followed by a three-year term of supervised release and ordered to pay $62,361.21 in restitution

Jules Springs, 43 (Loan Officer)
Charlotte, NC
Guilty plea entered 7/7/08
Sentenced 5/19/09 to 24 months imprisonment to be followed by a three-year term of supervised release and ordered to pay $62,361.21 in restitution

Gregory D. Rankin, 36 (Real Estate Agent)
Charlotte, NC
Guilty plea entered 6/25/08
Sentenced 2/27/09 to five years probation, first 23 months under home confinement

If you have knowledge of any of these who were involved in this massive scheme…please feel free to share your insights.

YOUR COMMENTS ARE WELCOME!

Lee B Farkas – Received a 30 Year Prison Sentence – But “I did nothing wrong!”

Convicted of orchestrating a $3 billion fraud as chairman of one of America’s largest private mortgage companies, Taylor Bean & Whitaker, Lee B Frakas was sentenced to 30 years in prison.  Prosecutors sought a life sentence Farkas calling the case against him one of the most significant arising from the nation’s financial meltdown.

A jury convicted Farkas of all 14 counts leveled against him, including securities fraud and conspiracy. Farkas testified that he had done nothing wrong.  Nothing wrong?  Surely by the time he found himself facing a jury and judge he might have concluded that something was wrong – and the common denominator was him!

According to news reports the Farkas fraud began in 2002 and took multiple forms, according to prosecutors.   Taylor Bean overdrew its main account with Colonial Bank by several million dollars and eventually double- and triple-pledged mortgages it held to a variety of investors. Prosecutors also alleged that Taylor Bean sold hundreds of million in worthless mortgages to Colonial.

Prosecutors say Farkas led a lavish lifestyle that included multiple houses — including one on Key West — several dozen classic cars, a private jet and a seaplane.

Farkas, of Ocala, Fla., is the last of seven employees and executives from Taylor Bean and from Colonial to be sentenced. Taylor Bean collapsed in 2009 when the scheme unraveled, putting 2,000 employees out of work.

When the house of cards begins to fall – all I can say is get out of the way!  Reports states that Colonial and two other major banks — Deutsche Bank and BNP Paribas — were collectively cheated out of nearly $3 billion during a scheme that spanned more than seven years.

According to a Time Magazine report: Farkas and his co-defendants also tried to fraudulently obtain more than $500 million in taxpayer-funded relief from the government’s bank bailout program, the Troubled Asset Relief Program (TARP). Neither Taylor Bean nor Colonial ever received any TARP money, even though TARP at one point gave conditional approval to a payment of roughly $550 million, investigators say.

U.S. District Judge Leonie Brinkema told Farkas she detected no remorse as she sentenced him to 30 years — twice the 15-year sentence requested by his attorneys.

QUESTION:

How is it that someone who has some obvious intelligence can be so caught up in the illusion of their actions that they fail to accept reality and comprehend the gravity of their choices?

If you have insight into the mind of Farkas or were caught up in the inner operations of what brought down the private mortgage company…feel free to comment!

YOUR COMMENTS ARE WELCOME!

Michael Dokmanovich guilty in a Mortgage Fraud scheme!

Acting United States Attorney Robert S. Cessar announced that Michael Dokmanovich, a resident of Bethel Park, Pennsylvania, pleaded guilty in federal court to a charge of Wire Fraud conspiracy in connection with a mortgage fraud scheme.  Dokmanovich, age 36, pleaded guilty to one count before United States District Judge Donetta Ambrose.

Dokmanovich operated Brandy Financial Services Company, which was a mortgage broker company.  Dokmanovich participated in a conspiracy in which he submitted loan documents to lenders that overstated the borrowers’ financial condition, including their assets and income.

The conspiracy also involved appraisals that overstated the true fair market values of the properties serving as collateral for the loans.  In addition, the conspiracy involved fraudulent closings, in which the closing agent executed closing documents that falsely represented that the borrowers had made down payments associated with the purchases of the properties when the borrowers did not make down payments.

Judge Ambrose scheduled sentencing for August 24, 2010. The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both.  Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.

The Mortgage Fraud Task Force conducted the investigation that led to the prosecution of Dokmanovich.  The Mortgage Fraud Task Force is comprised of investigators from federal, state and local law enforcement agencies and others involved in the mortgage industry.  Federal law enforcement agencies participating in the Mortgage Task Force include the United States Secret Service;  the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Postal Inspection Service; and the United States Department of Housing and Urban Development, Office of Inspector General.  Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.

Prison for Real Estate Appraiser! Lila Rizk faces 3 years in prison and $46 Million in Restitution

Having been there (not proud of what I’m getting ready to say), but prison is no fun.  But, being ordered to pay $46 million in restitution – well…that’s a sentence that is impossible.

According to the US Attorney’s office, Lila Rizk, a former state-licensed real estate appraiser was sentenced to three years in federal prison and ordered to pay more than $46 million in restitution for her role in a massive mortgage fraud scheme that caused tens of millions of dollars in losses to federally insured banks.

Lila Rizk, 43, of Rancho Santa Margarita, received the three-year prison term after her conviction last summer on conspiracy, bank fraud and numerous loan fraud charges.

Rizk was sentenced by United States District Judge Dean D. Pregerson, who warned that other professional real estate appraisers should know that if they inflate appraisals and lie about the value of homes, “there is an overwhelming likelihood that they will be caught and go to prison.”

The evidence presented at Rizk’s trial last summer showed that she was part of a wide-ranging and sophisticated scheme that obtained inflated mortgage loans on homes in some of California’s most expensive neighborhoods, including Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Members of the conspiracy sent false documentation, including bogus purchase contracts and appraisals, to the victim banks to deceive them into unwittingly funding mortgage loans that were hundreds of thousands of dollars more than the homes actually cost. Lehman Brothers Bank alone was deceived into funding more than 80 such inflated loans from 2000 into 2003, resulting in tens of millions of dollars in losses.

The evidence presented at trial showed that Rizk profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the scheme.

STOP – TAKE NOTE:  Crime doesn’t pay.  Rizk gained hundreds of thousands of dollars in fees – but now she’d ordered to pay $46 million in restitution.  OUCH!

Her appraisals typically valued the homes three times higher than what the homes really cost. In order to supposedly justify these inflated values, Rizk used “comps,” or comparable homes, that were far bigger, more luxurious, and in better neighborhoods than the homes she appraised. Once she had inflated a few dozen homes, she then used those homes as “comps” to supposedly justify inflated prices for homes later in the scheme.

Ten other real estate professionals have been convicted of federal charges related to the scheme. They are:

scheme leader Charles Elliott Fitzgerald, a developer formerly of Newbury Park and Beverly Hills, who previously was sentenced to 14 years in prison;

Mark Alan Abrams, of Los Angeles, a mortgage broker who along with Fitzgerald orchestrated the scheme, who is scheduled to be sentenced on April 12;

Nicole LaViolette, of Palm Springs, a loan processor, who is scheduled to be sentenced on June 14;

Jamieson Matykowski, of Laguna Niguel, who found houses for the scheme, is scheduled to be sentenced on March 29;

Timothy Holland, of Santa Ana, an escrow officer, who is scheduled to be sentenced on July 19;

Richard Maize, of Beverly Hills, a mortgage banker, who is scheduled to be sentenced on June 28;

Thomas R. Schiff, of Brentwood, a mortgage banker, who was previously sentenced to 6 months in prison;

L. Scott Robinson, of Dana Point, an appraiser, who is scheduled to be sentenced on April 2;

Kyle Grasso, formerly of Santa Monica, a real estate agent, who is scheduled to be sentenced on February 19; and

Joseph Babajian, of Los Angeles, a real estate agent, who is scheduled to be sentenced on February 22.

FINAL NOTE:  You have to know that those who are awaiting prison must be quaking in their boots…as the restitution factor precludes the practicality of any reasonable life following prison.

YOUR COMMENTS ARE WELCOME!

John Richard Varner former President of Inland Empire Mortgage sentenced to 13 years in prison for Fraud costing nearly $30 Million in Losses at HUD

The former president of Mortgage One Corporation, John Richard Varner, 56, of Hesperia, was sentenced to 156 months in federal prison for defrauding the United States Department of Housing and Urban Development and private lenders by fraudulently obtaining hundreds of federally insured loans and selling those mortgages to private lenders in a scheme that caused tens of millions of dollars in losses to the federal housing agency.  In addition to the prison sentence, Judge Phillips ordered Varner to pay $29,749,239 in restitution.

Last April, following a nearly four-week trial, a federal jury convicted Varner of one count of conspiracy to defraud HUD, one count of bank fraud and two counts of subscribing to false income tax returns. Varner was the fifteenth defendant convicted in relation to the scheme. Varner and co-defendant Richard Elroy Giddens, 69, of Riverside, were at the center of the fraud that was run out of Mortgage One Corporation, which was based in Hesperia, and M-1 Capital Corporation, which was based in Riverside and Rancho Cucamonga. Giddens, the former CEO of Mortgage One, pleaded guilty to the same charges Varner was convicted of at trial and in September 2009 was sentenced to 78 months in federal prison.

From 1997 until 2002, Mortgage One and M-1 Capital were in the business of approving, funding and then selling home mortgage loans, typically obtaining mortgage insurance on the loans from the Federal Housing Administration, which is an agency within HUD. Mortgage One and M-1 Capital obtained FHA mortgage insurance for their loans without HUD review due to their status as HUD-approved Direct Endorsement Lenders. They obtained and kept Direct Endorsement Lender status by submitting false documents, including bogus audits, to HUD.

Varner and his co-defendants defrauded HUD by submitting fraudulent loan application documents in order to qualify the loans for FHA insurance. The loans went to borrowers who either did not meet the FHA requirements to qualify for the mortgages or were only “straw buyers.” Mortgage One and M-1 Capital sold the funded loans to banks, such as the FDIC-insured Firstar Bank, N.A. and Chase Manhattan Mortgage Corporation, using the same fraudulent documents.

As a result of the scheme, HUD lost $23,628,857 on 905 fraudulent loans, and a total of $29,638,011 when interest paid by HUD during the foreclosure and resale process is included.

Varner was found guilty of filing false tax returns for the years 1999 and 2000 when he failed to report income that he used for personal expenses such as a Corvette, a $153,000 RV, jewelry and more than $150,000 deposited into a personal investment account.

In sentencing papers, prosecutors argued that Varner’s testimony at trial last year “consisted of a series of breathtaking lies that appeared designed to shift responsibility for defendant’s crimes to others and to mislead the jury about the true facts.” For example, Varner “denied knowingly approving fraudulent loan applications, despite testimony from numerous brokers that they discussed the fraud in the loan files and [Varner] indicated they should continue to submit the fraudulent loan files,” according to court documents that concluded Varner “gave blatantly false testimony.” At this afternoon’s sentencing hearing, Judge Phillips agreed with prosecutors, finding that Varner’s testimony “was knowingly untruthful on a number of points.”

Every choice has a consequence…and the consequence here, beyond the monetary losses are lives that are financially, ethically and morally destroyed.  Not only did Varner earn a bed in federal prison, but those connected with his scheme have suffered as well.

If you worked for Inland Empire Mortgage, Mortgage One or M-1 – here’s a question.  Did you see any evidence that something was not right when it came to the business at hand?

Your comments are welcome.

Milton Retana Conman to Spanish Speaking Investors Guilty of $62 Ponzi scheme

Facing a potential 125 years in prison, jurors deliberated for less than an hour convicting Retana of preying on Spanish-speaking investors with promises of hefty returns in the real estate bubble bilking more than 2,000 victims out of more than $62 million.

Retana began soliciting investors in 2006 through his company, Best Diamond Funding, by telling them that their money would be used to buy and sell real estate.  Best Diamond Funding solicited money through advertisements in Spanish-language magazines, on the Internet, and during weekly investment seminars at locations across Los Angeles. The investment seminars often had as many as 300 potential investors and incorporated religious messages. Retana guaranteed returns as high as 84 percent each year, claiming that he would purchase properties in bulk at below-market prices and immediately sell them for a profit. However, records obtained by federal investigators showed that Retana used only a tiny fraction of the victims’ money to purchase real estate and that his company was actually losing money.

During the trial, several victims testified that they mortgaged their homes and drained their retirement accounts because they believed Retana’s promises that their investments would be safe. The victims who testified at trial were largely from working-class families in East Los Angeles, and they included a stone mason, a long-haul truck driver, and a roofer who was also a pastor at his local church.

Retana’s scheme was almost uncovered in the summer of 2008, when the California Department of Real Estate audited his company. But Retana stymied that investigation by ordering his employees to hide all of the investor files at the back of his wife’s religious bookstore, La Libreria Del Exito Mundial. His scheme was disrupted in October 2008, when federal agents from the United States Postal Inspection Service and the Federal Bureau of Investigation executed search warrants on the offices of Best Diamond Funding and the bookstore. During those searches, agents found $800,000 in cash stashed in Retana’s desk, as well as another $3.2 million in cash hidden in the back of the bookstore. The FBI also seized another $8 million from Retana’s bank accounts.

Soon after the execution of the federal search warrants, agents interviewed Retana, who lied about how much money he had received from the investors and claimed that he could pay all of them back. Retana was later secretly recorded telling a Best Diamond employee not to tell the government how much money Best Diamond had received from the investors.

DO PONZI SCHEME FRAUDSTERS TARGET ONLY THE WHITE OR RICH?

No…not a chance.  The Ponzi scheme fraudster looks for an opportunity.  Anyone who is lured by an UNREALISTIC PROMISE – dazzled by an ELABORATE ILLUSION and sucked in by TRUST is a target.  Bernie Madoff evidenced that through his focus on primarily Jewish clients – not because of race or money, but because of trust.  When a person is lured by the PIT (Promise, Illusion and Trust) they are susceptible to a Ponzi scheme fraud.

If you were a victim of Milton Retana’s fraud – feel free to comment on how you became a victim.

YOUR COMMENTS ARE WELCOME.

Oh, and Milton Retana is to be sentenced on April 26, 2010.  What do you think his sentence should be…

Clifford Wayne Robertson – Real Estate Radio Talk Show Host Pleads Guilty to Bank Fraud

He was heard on CNN 1190 in the Dallas, TX marketplace.  His topic – real estate investment strategies.  What folks apparently did not hear was “the rest of the story.”  It seems that, now former Dallas radio host, Clifford Wayne Robertson, 43, pleaded guilty to  charges of bank fraud.

The original indictment alleged that Robertson admitted to using the identity of another person to send fraudulent personal financial statements to a lending institution, the U.S. Attorney’s Office alleged. He submitted the statement to obtain money under false pretenses, prosecutors said in a statement.

The loss caused by his actions is estimated to be in the $3 million range.

Robertson was indicted by a federal grand jury on Sept. 10, 2009. He faces a maximum sentence of up to 32 years in prison. A sentencing date is still to be determined.

COMMENTS:  Since there are three components to the commission of a white collar crime like this – NEED, OPPORTUNITY and RATIONALIZATION – the question is, first, what motivated Robertson to commit such a fraud?  And, equally as important, how could he rationalize that statements issued under false pretenses would be O.K.?

I’m interested in your thoughts.

As a business ethics speaker and author, I know what Robertson is facing.  I, too, faced federal prison for crimes committed in the ’80’s.  Speaking from experience, the consequences of fraudulent actions are no fun.  And, the higher your profile the more likely you are to receive a more severe sentence – just ask Bernie Madoff.

If you have insight into what Robertson might have been thinking…feel free to share.