According to Assistant U.S. Attorneys
The indictment alleges that the defendants devised a scheme to defraud mortgage lenders and to obtain money and property by false and fraudulent means. According to the indictment, between
- Defendants identified properties for sale throughout
Southern Californiathat had been on the market for an extended period of time and for which the original asking price had been reduced.
- Defendants then recruited "straw buyers" who allowed their names and credit histories to be used to obtain mortgage loans and purchase properties in name only on behalf of the racketeering enterprise.
- Defendants prepared and submitted offers to purchase the identified properties that substantially exceeded the asking price for those properties.
- Defendants hired real estate appraisers, including co-defendant
Esteban Valenzuela, to prepare inflated appraisals for the identified properties; the inflated appraisals were then used to fraudulently induce lenders to believe that the loans being given to the "straw buyers" would be fully secured by the value of the properties being purchased.
- Defendants prepared and submitted false loan applications for the "straw buyers" in order to induce lenders to make loans to persons and at terms that the lenders otherwise would not have funded.
- Defendants prepared and submitted false documents and information in response to lender verification inquiries, including "CPA letters," verification of employment forms, verification of rent forms and "discrepancy letters."
- Members of the Enterprise ensured that the "straw buyers" purchased the identified properties with mortgages amounting to 100 percent of the purchase price of the property, thus ensuring that the defendants did not have any money at risk in the fraudulent transactions.
- Defendants arranged to have the amount of money that exceeded the asking price (i.e., the "kickback amount") paid at the close of escrow to a shell construction company maintained by the racketeering enterprise.
- Defendants falsely informed the lenders that the "kickback amount" would be used to pay for handicap accessing and property upgrades to the identified properties, thereby falsely inducing the lenders to believe that the entire loan amount would be secured by the value of the identified properties.
- Based upon the investigation to date, none of the properties that were purchased as part of the enterprise had any handicap accessibility or property upgrades performed by the defendants' shell firm, Bell Construction.
- Defendants disbursed the "kickback amount" to members and associates of the racketeering enterprise as payment for those individuals' participation in the fraudulent scheme.
- The "straw buyers" subsequently failed to make the required mortgage payments for the fraudulently purchased properties, which ultimately resulted in the properties being foreclosed and the lenders suffering severe financial losses.
The indictment also charges that several real estate professionals were members of the racketeering conspiracy, including:
An indictment itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
U.S. Attorney Hewitt said, "This indictment represents the largest mortgage fraud case ever prosecuted in the history of the Southern District of
FBI Special Agent-in-Charge Keith Slotter commented, "The individuals charged in this indictment have one thing in common: greed. They represent precisely those who have undermined our country's financial system by perpetuating such egregious schemes. The FBI and our law enforcement partners remain vigilant and will pursue those who engage in this type of criminal activity. The extent to which this group of people went to defraud lenders should also serve as a warning to the public. We urge people to come forward with information of suspicious activities they may encounter when engaged in real estate and mortgage transactions."
"Today's indictment of this criminal enterprise spearheaded by
The case is the product of an investigation by agents of the FBI and IRS Criminal Investigation and is being prosecuted in
SOURCE U.S. Department of Justice