Federal Deposit Insurance Corporation
Office of Inspector General

Mortgage Fraud Prosecutions and Additional Resources Buttress On-Going Mortgage Fraud Crackdown

 

June 19, 2008

The United States Attorney's Office

Southern District of Florida

MORTGAGE FRAUD PROSECUTIONS AND ADDITIONAL RESOURCES BUTTRESS ON-GOING MORTGAGE FRAUD CRACKDOWN

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 Fithen, Special Agent in Charge, U.S. 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), Henry Gutierrez, Inspector in Charge, U.S. Postal Inspection Service, Michael E. Yasofsky, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS), Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Don B. Saxon, Commissioner, Florida Department of Financial Regulation, and Robert Parker, Director, Miami-Dade Police Department, announced today a string of recent mortgage fraud prosecutions in Miami, Broward, and Palm Beach Counties, reaffirming their commitment to crack-down on mortgage fraud, as previously announced in September 2007.

On September 27, 2007, U.S. Attorney Acosta announced a joint Federal-State Mortgage Fraud Initiative, designed to combat the growing mortgage fraud epidemic in South Florida. The Federal-State Mortgage Fraud Initiative brings together federal and state law enforcement to investigate and prosecute federally a myriad of mortgage fraud offenders, from straw purchasers, to mortgage brokers, to complicit bank employees, title agents, and attorneys.

Since its inception, the Mortgage Fraud Initiative has yielded substantial results. Including the cases announced today, 102 individuals have been charged since Sept. 2007 for their involvement in mortgage fraud schemes that have resulted or were intended to result in the approval and issuance of more than $131,000,000 in mortgage loans.

Today, U.S. Attorney Acosta, joined by members of the Federal-State Mortgage Fraud Initiative, announced additional recent mortgage fraud prosecutions, including:

1. United States v. Evelyn Marrero, Jorge Bacallao, Marilyn De La Paz, a/k/a “Marilyn Martis,” Daisy Gonzalez, Aivet Loarca, Elena Garman, and Loaisa Rodriguez, Case No. 08-20567-CR-Jordan.

On June 17, 2008, seven defendants were charged in a 10-count Indictment for their participation in a mortgage fraud scheme, which resulted in the issuance of more than $2 million in mortgage loans.

According to the Indictment, defendants Evelyn Marrero, Jorge Bacallao and Marilyn De La Paz, a/k/a “Marilyn Martis,” operated a title closing company, J&E Universal Title Services, Inc., located in Miami-Dade. To effectuate the scheme, Marrero, Bacallao, and De La Paz conspired with co-defendants, mortgage fraud brokers Aivet Loarca and Daisy Gonzalez, to submit fraudulent applications for mortgage loans. The applications contained materially false information regarding the borrowers’ purported employment, income, available funds on deposit, and rent payment history. In this conspiracy, Marrero, Bacallao, De la Paz, Loarca, and Gonzalez recruited defendants Elena Garman and Loaisa Rodriguez to steal personal identifying information for use in a straw transaction and to serve as a straw buyer.

Upon approval of the fraudulent mortgage loan applications, the lending institutions wire-transferred the loan proceeds to the defendants’ title company for closing. Marrero, Bacallao, and De La Paz regularly used J&E Universal as the title closing agent. Defendants Marrero, Bacallao, and De La Paz used the loan proceeds to pay creditors, their co-conspirators, and for their personal benefit. Through this scheme, the defendants obtained four fraudulent mortgages.

These defendants were charged with conspiracy to commit wire fraud, wire fraud, and aggravated identity theft. Mr. Acosta commended the investigative efforts of the Office of Investigations of U.S. Immigration and Customs Enforcement. The case is being prosecuted by Assistant United States Attorney Jeffrey E. Tsai.

2. United States v. Jose E. Alvarez, Ishmett A. Nazario, Yadira Garrido, and Maritza Salan, Case No. 08-2000571-CR-Moreno.

On June 17, 2008, four defendants were charged in a 3-count Indictment for their participation in a mortgage fraud scheme, which resulted in the issuance of more than $1.3 million in mortgage loans.

According to the Indictment, defendants Jose E. Alvarez, Ishmett A. Nazario, Yadira Garrido and Maritza Salan fraudulently bought and sold residential property in Coral Gables, FL. To effectuate the scheme, Alvarez obtained title by quitclaim deed to a property, located at 1524 Cecilia Avenue, Coral Gables, FL. Alvarez subsequently arranged to sell the property to Salan, his mother, who acted as a straw buyer for the property.

Thereafter, Salan and the co-conspirators prepared and submitted fraudulent loan applications to the lenders to induce them to issue more than $1.3 million in loans. The applications contained materially false information regarding the borrowers’ purported employment, income, available funds on deposit, and rent payment history. Garrido’s role was to falsely confirm to the lender the purported accuracy of the fraudulent information submitted, thus concealing the fraud from the lender.

Upon approval of the mortgage loan applications, the lending institutions wire-transferred the loan proceeds to defendant Nazario’s title company for closing. Nazario improperly released these funds to Salan, who in turn used this money as part of her down-payment. After the closing, Salan failed to make payments on the loans, defaulting on the loan and causing the property to go into foreclosure.

The defendants were charged with conspiracy to commit wire fraud and substantive wire fraud. Mr. Acosta commended the investigative efforts of the U.S. Secret Service and the Miami Dade Police Department. The case is being prosecuted by Assistant United States Attorney Peter A. Forand.

3. United States v. Lazaro Quintana and Michelle Acevedo, Case No. 08-20569-CR-Cooke.

On June 17, 2008, defendants Lazaro A. Quintana and Michelle Acevedo were charged in a 17-count Indictment for their participation in a $7.6 million mortgage fraud scheme that lasted more than four years.

According to the Indictment, Quintana and Acevedo bought and sold at least seven residential properties, four of which were located in Miami-Dade County, two in the Florida Keys, and one in Marco Island. To fund these purchases, Quintana and Acevedo applied for mortgage loans and submitted supporting documentation that contained materially false information, including, among other things, false statements regarding: (1) the intended use of loan proceeds; (2) their intent to use the properties as a primary residence; (3) their rent histories; (4) their employment histories and salaries; (5) the amount of money they proposed to use as down payment; and (6) the amount of available funds on deposit. Upon approval of the mortgage loan applications, the lending institutions wire-transferred the loan proceeds to the title company, which released the funds to the defendants for their personal use and benefit.

The defendants have been charged with conspiracy to commit wire fraud and bank fraud, and substantive counts of wire and bank fraud. Mr. Acosta commended the investigative efforts of the FBI, FDIC-OIG, HUD-OIG. The case is being prosecuted by Assistant United States Attorney Peter B. Outerbridge.

4. United States v. Julio Diaz and Angel Barroso, Case No. 08-20568-CR-Ungaro.

On June 17, 2008, defendants Julio Diaz and Angel Barroso were charged in a 3-count Indictment for their participation in a mortgage fraud scheme, which resulted in the issuance of more than $1.4 million in mortgage loans.

According to the Indictment, Diaz and Barroso bought and sold residential property in Miami, FL. To effectuate the scheme, Barroso sold property to Diaz, who acted as a straw buyer. Diaz and his co-conspirators prepared and submitted fraudulent loan applications to the lenders to induce them to issue more than $1.4 million in loans. The applications included materially false information about the borrower’s employment, income, rent history, and available funds on deposit.

Upon approval of the mortgage loan applications, the lending institutions wire-transferred the loan proceeds to a title company, which released the funds to Barroso. Barroso used the funds to pay off two mortgages on the property, totaling more than $965,000, and pocketing more than $384,000 at closing. After the closing, Diaz defaulted on the loans, causing the property to go into foreclosure. The Indictment includes charges of conspiracy to commit wire fraud and substantive wire fraud. Mr. Acosta commended the investigative efforts of the U.S. Secret Service. The case is being prosecuted by Assistant United States Attorney Mark Dispoto.

5. United States v. Michael Acosta, Case No.08-80065-CR-Middlebrooks.

6. United States v. Evelyn Rivera, Case No. 08-80066-CR-Hurley.

7. United States v. William Louisma, Case No.08-80061-CR-Marra.

On June 17, 2008, Informations were filed against defendants Michael Acosta and Evelyn Rivera. On June 16, 2008, an Information was filed against defendant William Louisma. The three separate Informations charge the defendants with a mortgage fraud scheme, which was intended to result in the issuance of more than $18,500,000 in mortgage loans in connection with the intended purchase and sale of 55 condominium units in a development called the Rookery in Ft. Lauderdale, FL. The fraud was discovered after the purchase of the first two condominium units for which fraudulent mortgage loans were issued totaling more than $690,000.

In furtherance of the scheme, Evelyn Rivera executed a purchase and sale agreement as the buyer of the 55 condominium units for a purchase price of $11,884,565, or $216,083.00 per unit. To obtain the funds needed to purchase these units, Rivera and others agreed to sell the units to straw buyers, prior to actually obtaining ownership of these units, at an inflated price of $399,000 per unit. To make it appear that they already owned the units, Rivera created a shell company, Rookery Park Estates PH, LLC, to act as the seller of the units. Rivera and others would cause the straw buyers to submit mortgage loan applications for the purchase of these units that contained materially false information regarding the borrowers’ purported employment, income, and available funds on deposit.

Evelyn Rivera acted as the seller of the 55 units, while also acting as the Title Agent. Michael Acosta, a property appraiser, provided fraudulently inflated appraisals to lenders. William Louisma acted as a recruiter of straw buyers. Upon closing on all 55 condominium units, Evelyn Rivera and others agreed to split as much as $8 million, the difference between the fraudulent mortgage loan proceeds which were to be obtained by the straw buyers and the $11,884,565 purchase price for the units. The fraud was discovered after only two of the transactions, and $653,000 was seized and recovered.

The defendants were charged with wire fraud. Mr. Acosta commended the investigative efforts of the FBI. The case is being prosecuted by Assistant United States Attorney Nancy Vorpe Quinlan.

8. United States v. Berry Louidort, Ralph Michel, and Lauren Jasky, Case No.08-0042-CR-Middlebrooks.

On May 8, 2008, three defendants were charged in a 14-count indictment for their participation in a mortgage fraud scheme, which resulted in the issuance of 25 loans and an approximate loss of $6.5 million.

According to the Indictment, defendants Berry Louidort, Ralph Michel and Lauren Jasky fraudulently bought and sold residential property in Palm Beach County, FL. Defendants Louidort and Michel received large assignment and marketing fees and Jasky received mortgage brokerage fees. The defendants prepared fraudulent loan applications for the purchasers and submitted them to the lenders. The applications included materially false information about the borrowers’ employment verification, income, funds on deposit, and rent history.

The Indictment includes charges of conspiracy to commit bank and mail fraud, substantive bank fraud, mail fraud, false loan application and money laundering. Mr. Acosta commended the investigative efforts of the FBI. The case is being prosecuted by Assistant United States Attorney Lothrop Morris.

9. United States v. Joseph J. Weisenfeld, Case No. 08-20572-CR-Gold.

On June 18, 2008, an Information was filed charging defendant Joseph J. Weisenfeld, a local real estate attorney, with wire fraud in connection with a scheme to misappropriate almost $3 million in client funds purportedly held in escrow for authorized real estate transactions and related expenses.

According to the Information, Weisenfeld frequently acted as the closing agent for real estate transactions. As the closing agent, Weisenfeld would collect funds from buyers and lenders, and would represent to the parties engaged in the transaction that these funds were being held in escrow to be disbursed for various specified purposes, including the satisfaction of pre-existing mortgages. In fact, however, Weisenfeld misappropriated the escrowed funds for his use and benefit. Over the course of the scheme, Weisenfeld misappropriated almost $3million in client funds from his attorney trust account.

The defendant was charged with wire fraud. Mr. Acosta commended the investigative efforts of the U.S. Secret Service. The case is being prosecuted by Assistant United States Attorney Joan Silverstein.

Other recent prosecutions include:

10. United States v. Gregory Claude Brown, Monica Martinez, a/k/a “Monica Dolores Martinez,” and Wilfredo Martinez, Case No. 07-80187-CR-Middlebrooks.

On June 5, 2008, after a three-week trial in West Palm Beach, FL, defendant Gregory Claude Brown was convicted on all counts of an 18-count Superseding Indictment. Specifically, Brown was convicted of conspiracy, wire fraud, and mail fraud arising from a scheme to obtain more than $3 million in fraudulent mortgage loans by submitting materially false information on loan documents to induce banks to lend money for the purchase of more than 10 homes. Brown was also convicted of failure to timely file his federal income tax returns for the 2001 through 2005 tax years, and of income tax evasion with regard to his 1998, 1999, and 2001 through 2005 taxes. The evidence at trial showed, among other things, that Brown and others created false income tax returns to justify his claims of income on the mortgage applications submitted to lending institutions. Brown is scheduled to be sentenced on August 14, 2008.

Co-defendant Monica Martinez, defendant Brown’s girlfriend, pled guilty to filing a false tax return in connection with the charged mortgage fraud scheme. Sentencing is scheduled for July 21, 2008.

Co-defendant Wilfredo Martinez pled guilty to one count of wire fraud in connection with a fraudulent application for a mortgage loan for the purchase of a North Palm Beach, FL property. Sentencing is scheduled for July 21, 2008.

In all cases, the defendants face the following possible maximum terms of imprisonment if convicted: conspiracy to commit wire fraud and substantive wire fraud: 20 years’ imprisonment; aggravated identity theft: mandatory 2 years’ imprisonment; bank fraud: 30 years’ imprisonment; false loan application: 30 years’ imprisonment; money laundering: 20 years’ imprisonment; failure to file tax returns: 1 year imprisonment; tax evasion: 5 years’ imprisonment; filing a false tax return: 3 years’ imprisonment. More prosecutions are expected.

United States Attorney Acosta stated, "Although the number of federal mortgage fraud prosecutions is on the rise, the battle against mortgage fraud is far from over. It is evident that more is needed. We are designating additional attorneys in the Economic Crimes Section to devote their talent and time exclusively to the investigation and prosecution of mortgage fraud. Many of our federal and local law enforcement partners are taking similar steps. Together, we will make criminal mortgage fraud prosecutions a top priority."

Jonathan I. Solomon, Special Agent in Charge of the FBI's Miami Office, stated, “Mortgage fraud is a significant and growing crime problem in our area. Combating fraud is a priority because mortgage lending and the housing market have a profound overall effect on the nation’s economy.”

Michael Fithen, Special Agent in Charge of the U.S. Secret Service, noted, "The Secret Service Miami Field office embraces this initiative to address the full scope of mortgage fraud schemes that continue to emerge and victimize South Florida residents. We will bring 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 Inspector General Jon T. Rymer stated, "I am pleased that the FDIC-OIG can play a key role in ensuring the integrity of the financial services industry. To this end, we have joined our law enforcement and IG community to actively participate in the Federal-Sate Mortgage Fraud Initiative and in this Operation. In doing so, we leverage the resources needed to successfully combat mortgage fraud and rid the industry of those seeking to undermine the soundness of financial institutions and legitimate mortgage lenders. My office is committed to contributing to the continued success of the Federal-State Mortgage Fraud Initiative.”

“The Southern District of Florida’s Federal-State Mortgage Fraud Initiative, in conjunction with today’s national “Operation Malicious Mortgage” take-down, unequivocally demonstrate that those who attack America’s dream of home ownership and threaten its financial institutions will experience the full force of law enforcement. Today’s take-down also illustrates that fraudsters will not be allowed to enjoy their illegal proceeds,” said Henry Gutierrez, Inspector in Charge, U. S. Postal Inspection Service.

“We at ICE are pleased to have been able to assist in bringing about today’s indictments, which highlight some abuses in the real estate industry,” said Anthony Mangione, Special Agent in Charge of the ICE Office of Investigations in Miami. “Mortgage fraud costs lenders and purchasers millions of dollars and undermines the credibility of the real estate industry. The Miami ICE Office of Investigations will continue to work to uncover illicit transactions involving mortgage brokers and together with the law enforcement community is united in our resolve to disrupt criminal organizations that commit crimes against our society and the economy.”

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 use its financial investigative expertise to aggressively investigate criminal activities that adversely affect our financial system.” Commissioner Don Saxon, from the Office of Financial Regulation, said “The Office of Financial Regulation fully supports the efforts of all law enforcement and regulatory agencies involved in Operation Malicious Mortgage and the Federal-State Mortgage Fraud Initiative. My office is committed to uncovering and investigating mortgage frauds and we anticipate that these investigations will lead to future arrests and prosecutions of mortgage fraud perpetrators in Florida.”

"At a time when Miami Dade-County is working to help struggling homeowners, a number of unscrupulous individuals are scheming to profit at the homeowners' expense. The Miami-Dade Police Department is pleased to be part of this investigation and will continue to work closely with our federal and local partners now and in the future to target these fraudulent mortgage activities,” said Miami-Dade Police Department Director Robert Parker.

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 U.S. Immigration and Customs Enforcement, 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.

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.

Last Updated 2/19/08 contact the FDIC OIG
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