Press Release
UNITED STATES ATTORNEY ANNOUNCES RECENT MORTGAGE FRAUD CASES AND NEW FEDERAL-STATE MORTGAGE FRAUD INITIATIVE TO CRACK DOWN ON MORTGAGE FRAUD VIOLATORS
September 27, 2007
FOR IMMEDIATE RELEASE
R. Alexander Acosta, United States Attorney for the Southern District of Florida, Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, Michael E. Yasofsky, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS), Henry Gutierrez, Inspector in Charge, United States Postal Inspection Service, John Large, Acting Special Agent in Charge, United States Secret Service (USSS), Jon Rymer, Inspector General, Federal Deposit Insurance Corporation - Office of Inspector General (FDIC-OIG), Kenneth M. Donohue, Inspector General, U.S. Department of Housing and Urban Development - Office of Inspector General (HUD-OIG), Bill McCollum, Florida Attorney General, William N. Shepherd, Statewide Prosecutor for the State of Florida, Don B. Saxon, Commissioner, Florida Department of Financial Regulation, and Al Lamberti, Broward County Sheriff, announced today the launch of a Federal-State Mortgage Fraud Initiative to combat the growing problem of mortgage fraud in South Florida.
As reported by Fannie Mae in June 2007 and by the Mortgage Asset Research Institute in May 2007, Florida led the nation in mortgage fraud rates this past year. Within Florida, South Florida has the highest rate of mortgage fraud in the state.
The Federal-State Mortgage Fraud Initiative brings together the resources of federal and state law enforcement to investigate and federally prosecute mortgage fraud offenders. In cooperation with the Mayor's Mortgage Fraud Task Force announced last week and focused on the state prosecutions, this federal Initiative promises the aggressive investigation and federal prosecution of mortgage fraud.
As part of the Initiative, United States Attorney Acosta announced several recent mortgage fraud prosecutions, including two cases this week charging 18 individuals in mortgage fraud schemes that resulted in the issuance of more than $50 million in fraudulent loans:
1. United States v. Henry Quintero-Lopez, Lazaro Villalba et. al, Case No. 07-60207-Cr-Zloch
This joint federal-state investigation, spearheaded by the Internal Revenue Service and the Broward County Sheriff's Office, culminated in a 70-count indictment, unsealed today, charging 15 defendants in a wide-ranging mortgage fraud scheme. This scheme yielded 12 fraudulent loans, totaling approximately $8,300,000.
According to the Indictment, defendants Henry Quintero-Lopez and Lazaro Villalba orchestrated a scheme through which they located properties for sale in the Southwest Ranches area of Broward county. Quintero-Lopez and Villalba would offer the owners full asking price for the properties, and then inflate the contract purchase price submitted to the lender to allow their companies, New World International and D& H Investments of South Florida, to receive as a "fee" moneys in excess of the true purchase price.
To execute their scheme, Quintero-Lopez and Villalba would recruit individuals who, for a fee, would serve as "straw buyers" of the properties selected. Quintero-Lopez and Villalba would obtain fraudulent pay stubs, IRS forms W-2 ,verification of employment and verification of deposit forms from defendant Joaquin M. Perea, the owner of J.P.Accounting Service in Miami, Florida. These false documents would, in turn, be submitted to the mortgage brokers, defendants Antonio Ramos, at Home Mortgage Finance Group in Miami, and Ruben Jimenez, at Lenders Choice Mortgage Services in Miami.
According to the Indictment, Ramos and Jimenez knowingly assisted Quintero-Lopez and Villalba in obtaining the fraudulent mortgages from lenders in the names of the straw buyers. The Indictment further alleges that defendants Eric Garcia and Martine Yanisse Castrillon were licensed State of Florida registered trainee appraisers who knowingly prepared fraudulent appraisals at the request of Quintero-Lopez and Villalba.
The Indictment also alleges that defendants Felipe M. Nunez, Michelle Volcy, Luc Bruna, Maykel Clavero-Gonzalez, Iray Ponte, Nidia Rodriguez-Rial, and Iliana Lima were straw buyers who were paid thousands of dollars by Quintero-Lopez and Villalba to sign the purchase documents and appear at the closings to have the properties placed in their names.
Eight fraudulent mortgages are listed in the Indictment, which includes charges of conspiracy to commit mail and wire fraud, substantive mail and wire fraud, conspiracy to engage in money laundering, and substantive money laundering. Each defendant faces a statutory maximum sentence of five (5) years in prison and a fine up to $250,000 on the conspiracy count; a statutory maximum sentence of twenty (20) years in prison and a fine of up to $250,000 on each of the wire and mail fraud counts; and a maximum statutory sentence of twenty (20) years in prison and a fine of up to at least $500,000 on each of the money laundering counts.
Mr. Acosta commended the investigative efforts of the Internal Revenue Service and Broward County Sheriff's Office for their work on this case. The case is being prosecuted by Assistant United States Attorney Thomas Lanigan.
2. United States v, Richard Weldon Crowder,II, Gary Mark Mills, and Karen Lynn Sullivan, Case No. 07-20773-Cr-Martinez.
On September 26, 2007, the United States Attorney filed an Information charging defendants Richard Weldon Crowder, II, Gary Mark Mills, and Karen Lynn Sullivan with conspiracy to commit bank fraud for their participation in a multi-million dollar mortgage fraud conspiracy.
Crowder is a licensed mortgage broker and the former owner of America's Best Mortgage Services, Inc., located in Coconut Creek, Florida. Mills is a licensed title attorney and the owner of Four Star Title Inc., located in Deerfield Beach, Florida. Sullivan is a former loan officer for Wachovia Bank. In total, the defendants are alleged to have caused the fraudulent purchase of approximately seventeen (17) different luxury condominiums, involving more than $42,000,000 in fraudulently obtained mortgage loans.
Under the scheme, Crowder is alleged to have identified residential properties, including luxury condominiums on South Beach, that were available for purchase. Crowder then recruited buyers for the properties by representing to them that he could obtain 100% financing. After locating the buyers, Crowder applied for equity lines of credit on their behalf with Wachovia Bank. To induce Wachovia to issue the equity lines of credit, Crowder and Mills prepared fraudulent HUD-1 settlement forms that falsely stated that the buyers already owned the properties. The fraudulent HUD-1s were then given to Sullivan, who used them to facilitate the issuance of equity lines of credit from Wachovia.
Simultaneously, or sometimes soon after obtaining the equity lines of credit from Wachovia, Crowder applied for the first mortgages on the properties. These applications overstated the buyers' assets and income, and also included false verification of deposit forms prepared by Sullivan. To further induce the lenders to issue the loans, Mills prepared documents falsely representing that the buyers were using their own money for the down payments and closing costs. In fact, the buyers were using funds from the fraudulently obtained Wachovia equity lines credit or funds provided by Crowder.
If convicted, the defendants face up to thirty years' imprisonment, restitution and fines of up to $1,000,000.
Mr. Acosta commended the investigative efforts of the Federal Bureau of Investigation for their work on this case. This case is being prosecuted by Assistant United States Attorney Kimberly A. Selmore.
Other recent prosecutions include United States v. Yvette Scott Patterson, et. al, Case No. 06-60317-Cr-Dimitrouleas, and United States v. Richard Layfield, Case No. 05-20707-Cr-Gold.
The Patterson case was the result of a joint state and federal investigation conducted by the Florida Office of Financial Regulation, Florida Department of Law Enforcement, United States Secret Service, and the United States Postal Inspection Service. This investigation resulted in charges against eleven defendants involved in a massive mortgage fraud scheme involving 41 fraudulent loans, totaling over $10,000,000. Although two of the defendants remain fugitives, nine have been convicted. Eight pled guilty and one defendant was convicted at trial and sentenced in June 2007 to 120 months in jail.
In United States v. Richard Layfield, defendant Layfield pled guilty on June 11, 2007 to bank fraud. Layfield, a local real estate developer, is scheduled to be sentenced on October 29, 2007 for obtaining just under $24,000,000 in fraudulent mortgages.
According to court records, in April 1999, Layfield applied for a loan from Fremont Investment & Loan. Funds from the loan were to be used for the purchase and renovation/reconstruction of properties on Ocean Drive in Miami Beach. As a part of the application process, Layfield was required to complete a borrower's questionnaire and provide information regarding his financial background. In response to two questions asking about outstanding judgments in the past 10 years, Layfield knowingly failed to disclose four outstanding judgments, totaling $17,000,000, all of which had been entered within ten (10) years of the application. As a result of this fraudulent omission, Layfield and his limited partnership, Shops At Ocean Court, were approved for a loan of $23,700,000. Layfield faces a maximum statutory term of imprisonment of thirty (30) years.
United States Attorney Acosta stated, "The American dream of home ownership is under attack by mortgage fraudsters. Mortgage fraud puts lenders at risk and confronts homeowners with the possibility of foreclosures and the loss of their homes. As our prosecutions reflect, the perpetrators of mortgage fraud range from straw buyers posing as legitimate purchasers, to dirty mortgage brokers and appraisers, to complicit title agents, attorneys and bank loan officers. Through our Federal-State Mortgage Fraud Initiative, the United States Attorney's Office and our partner agencies will make criminal mortgage fraud prosecutions a top priority."
Jonathan I. Solomon, Special Agent in Charge of the FBI's Miami Office, noted "The FBI views mortgage fraud as a significant and growing crime problem. The mortgage lending and housing market have a considerable overall effect on the nation's economy and combating mortgage fraud will remain a top priority for the FBI."
IRS Special Agent in Charge Michael Yasofsky added, "Mortgage fraud adds secret dollars to the underground economy that erodes the integrity of our tax system and threatens the financial health of our communities. IRS-CI will continue to utilize its financial investigative expertise to aggressively investigate criminal activities that adversely affect our financial system."
John Large, Acting Special Agent in Charge of the U.S. Secret Service, noted, "The Secret Service Miami Field Office embraces this new initiative to address the full scope of mortgage fraud schemes that continue to emerge and victimize South Florida. We will bring to bear our expertise and that of law enforcement partners from our Electronic Crimes Task Force and Financial Crimes Task Force to assist in these significant investigations."
FDIC-OIG Assistant Inspector General Sara Gibson stated, "The FDIC-OIG is proud to participate in the U.S. Attorney's Office for the Southern District of Florida's mortgage fraud task force to help combat crimes that affect the nation's banks and public confidence in our financial system. We applaud the efforts of the U.S. Attorney's Office and our law enforcement partners in this endeavor."
HUD Inspector General Kenneth Donohue added, "Financial crimes involving the housing market undermine the economic infrastructure of our country. We will continue to investigate these cases to stop these destructive practices, deter these pernicious activities, and defend the American system of home ownership."
"The United States Postal Inspection Service is dedicated to working with the U.S. Attorney's Office and other agencies in the investigation and prosecution of persons who use the mail to engage in mortgage fraud," said U.S. Postal Inspector Henry Gutierrez.
"With threat of mortgage fraud on the rise, it is imperative that we address this issue as a united front on the local, state and federal levels," said Florida Attorney General Bill McCollum. "Our citizens deserve as much protection from this criminal activity as we can cooperatively provide and I am proud of the resources my Office of Statewide Prosecution can add to this effort."
"The Office of Financial Regulation has and will continue to work with law enforcement and prosecutors to combat mortgage fraud in the state of Florida," said Commissioner Don Saxon.
Acting Broward County Sheriff Al Lamberti stated, "While criminals like these rob the public using a pen rather than a gun, the damage they cause is just as devastating to their victims. Mortgage fraud and other economic crimes can cripple an individual's livelihood, and wreck havoc for years to come. The Broward Sheriff's Office is committed to preventing these kinds of crimes."
Mr. Acosta commended the investigative efforts of all the federal, state and local agencies participating in the Federal-State Mortgage Fraud Initiative, including the Federal Bureau of Investigation, the Internal Revenue Service, the U.S. Postal Inspection Service, the U.S. Secret Service, the Federal Deposit Insurance Corporation - Office of Inspector General, the U.S. Department of Housing and Urban Development - Office of Inspector General, the Florida Attorney General's Office, the Office of the Statewide Prosecutor for the State of Florida, the State of Florida Department of Financial Regulation, and the Broward County Sheriff's Office.
Attachments:
Indictment - USvQuintero-Lopez (PDF)
Information - USvCrowder et al (PDF)
Mortgage Fraud Rankings Chart (PDF)
Top 10 Mortgage Fraud Hot Spots (PDF)
Types of Mortgage Misrepresentations (PDF)
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
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