DALLAS—Plano, Texas, residents, Vathany Teng, 43, and Lina Ma, 55, were sentenced yesterday for their roles in a loan fraud scheme they ran from August 2007 to April 2008 that resulted in the total funding of more than $3 million in fraudulent loans, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
U.S. District Judge David C. Godbey sentenced Teng to 27 months in federal prison and ordered him to pay $4.2 million in restitution. Ma was sentenced to 18 months in federal prison and ordered to pay $2.1 million in restitution. Both must surrender to the Bureau of Prisons on July 7, 2014.
Both Teng and Ma pleaded guilty to one count of conspiracy to commit bank fraud. The other defendant in the case, Jerry Goh, 51, a lawyer who had offices in the Dallas-Fort Worth Metroplex and who acted as the escrow officer for the Prosper Bank loan, pleaded guilty to one count of misprision of a felony. He was sentenced in February 2014 to serve seven months in federal prison, and he must surrender to the Bureau of Prisons on May 26, 2014, to begin serving that sentence. Judge Godbey also ordered that he serve the first seven months of a one-year term of supervised release on home confinement, and he was ordered to pay more than $2.1 million in restitution.
According to documents filed in Teng and Ma’s case, Teng, Ma, and Goh participated in a scheme to defraud and deceive Prosper Bank, United Central Bank (UCB), and the Small Business Administration (SBA). The conspiracy involved one fraudulent SBA-guaranteed loan from Prosper Bank and two fraudulent loans from UCB.
The scheme involved making false representations and deliberate omissions of material information when fraudulent loan applications were submitted to these banks in connection with the three loans. According to Teng and Ma’s factual resumes, Teng, Ma, and Goh falsely represented to Prosper Bank and UCB and caused the HUD-1 Settlement Statement on all three loans to falsely represent that Ma was the true source of loan down payments.
Goh, acting in his capacity as the escrow officer on the Prosper Bank loan, and thus with control of the loan proceeds, concealed from lender Prosper Bank the fraudulent release of $498,720 of loan proceeds to provide funds for a $431,000 down payment. Goh wired $498,720 of lender Prosper Bank’s funds from an escrow account, knowing that these seller proceeds funds would later be used as the source of borrower Lina Ma’s down payment on her loan from Prosper Bank.
This case was prosecuted in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.
The case was investigated by the U.S. Small Business Administration-Office of Inspector General and the FBI. Assistant U.S. Attorney David L. Jarvis prosecuted.
Showing posts with label loan fraud. Show all posts
Showing posts with label loan fraud. Show all posts
Wednesday, April 9, 2014
Philadelphia Man Pleads Guilty in Multi-Million-Dollar Mortgage Fraud Scheme
PHILADELPHIA—Eric Sijohn Brown, 46, of Philadelphia, pleaded guilty today to 20 counts in connection with a mortgage fraud scheme involving KREW Settlement Services. Brown pleaded guilty to conspiracy, two counts of FHA loan fraud, 12 counts of loan fraud, and three counts of tax evasion. Between May 2004 and February 2009, Brown and his co-conspirators inflated purchase prices on loan documents for more than 100 Philadelphia properties, resulting in more than $20 million in fraudulent loan proceeds. A sentencing hearing is scheduled for July 8, 2014. Brown faces a maximum possible sentence of 486 years in prison, including a mandatory two year term, five years of supervised release, a fine of up to $15 million, and $2,000 special assessment. A forfeiture notice was also filed seeking more than $13.7 million from all defendants.
KREW As alleged in the indictment, KREW is an acronym of the first names of Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr. Settlement Services was a Philadelphia real estate settlement company, and Brown was a general contractor who worked with his co-defendants to identify distressed properties to purchase, typically in the West Philadelphia area. The scheme involved recruiting straw buyers whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take title to the properties, when, in reality, the properties were owned and controlled by the defendants. Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties. Mortgage brokers—including Roderick Foxworth, Walter Brown, and John William Polosky (charged separately in the Western District of Pennsylvania)—allegedly submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false.
Charged with Brown were Roderick L. Foxworth, Sr., Cynthia Evette Brown, Walter Alston Brown, Jr., and Kevin Joseph Franklin. Cynthia Brown is alleged to have falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not. Kevin Joseph Franklin, a title agent, is alleged to have falsely prepared two deeds and settlement statements (referred to as Form HUD-1)—one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price. Franklin is also alleged to have created false title insurance policies for the lenders.
After the loans funded, the seller was paid the agreed-upon purchase price, and the difference between the actual purchase price and the false purchase price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown, and many of these payments were not reflected on the HUD-1 forms.
In addition to the five defendants charged with Brown and the three defendants charged by the Western District of Pennsylvania, seven defendants were charged by information.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigations, and the Department of Housing and Urban Development’s Office of Inspector General. It is being prosecuted by Assistant United States Attorney Michael S. Lowe.
KREW As alleged in the indictment, KREW is an acronym of the first names of Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr. Settlement Services was a Philadelphia real estate settlement company, and Brown was a general contractor who worked with his co-defendants to identify distressed properties to purchase, typically in the West Philadelphia area. The scheme involved recruiting straw buyers whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take title to the properties, when, in reality, the properties were owned and controlled by the defendants. Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties. Mortgage brokers—including Roderick Foxworth, Walter Brown, and John William Polosky (charged separately in the Western District of Pennsylvania)—allegedly submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false.
Charged with Brown were Roderick L. Foxworth, Sr., Cynthia Evette Brown, Walter Alston Brown, Jr., and Kevin Joseph Franklin. Cynthia Brown is alleged to have falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not. Kevin Joseph Franklin, a title agent, is alleged to have falsely prepared two deeds and settlement statements (referred to as Form HUD-1)—one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price. Franklin is also alleged to have created false title insurance policies for the lenders.
After the loans funded, the seller was paid the agreed-upon purchase price, and the difference between the actual purchase price and the false purchase price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown, and many of these payments were not reflected on the HUD-1 forms.
In addition to the five defendants charged with Brown and the three defendants charged by the Western District of Pennsylvania, seven defendants were charged by information.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigations, and the Department of Housing and Urban Development’s Office of Inspector General. It is being prosecuted by Assistant United States Attorney Michael S. Lowe.
Federal Jury Convicts Pittsford Father and Son on Multiple Fraud Charges
ROCHESTER, NY—U.S. Attorney William J. Hochul, Jr. announced today that a jury has convicted Michael C. Kaufman and his son, Richard A. Kaufman, both of Pittsford, New York, of conspiracy to commit bank fraud, bank fraud, and loan fraud. The charges carry a maximum penalty of 30 years in prison, a fine of $1,000,000, or both.
Assistant U.S. Attorneys Bradley E. Tyler and Craig R. Gestring, who handled the trial of the case, stated that between 2002 and November 2007, the defendants directed the controller of American Industrial Sales, d/b/a RAK Industries, to provide false financial statements to Key Bank and to the company’s outside accounting firm. The false financial statements significantly overvalued the accounts receivable and inventory, which were the two assets that Key Bank relied upon as collateral for a total loan credit of $2,000,000.
The loan proceeds were used by the defendants to fund their personal lifestyles, including expensive homes, generous salaries, and country club memberships. After the defendants defaulted on the Key Bank loan in the summer of 2007, they converted to their personal use approximately $53,000 of accounts receivable proceeds that were the property of Key Bank. As a result of the fraud scheme, Key Bank suffered an immediate loss of more than $1.5 million.
The conviction is the culmination of an investigation on the part of special agents of the Federal Bureau of Investigation.
Sentencing is scheduled for July 16, 2014, at 3:00 p.m. before Judge Geraci.
Assistant U.S. Attorneys Bradley E. Tyler and Craig R. Gestring, who handled the trial of the case, stated that between 2002 and November 2007, the defendants directed the controller of American Industrial Sales, d/b/a RAK Industries, to provide false financial statements to Key Bank and to the company’s outside accounting firm. The false financial statements significantly overvalued the accounts receivable and inventory, which were the two assets that Key Bank relied upon as collateral for a total loan credit of $2,000,000.
The loan proceeds were used by the defendants to fund their personal lifestyles, including expensive homes, generous salaries, and country club memberships. After the defendants defaulted on the Key Bank loan in the summer of 2007, they converted to their personal use approximately $53,000 of accounts receivable proceeds that were the property of Key Bank. As a result of the fraud scheme, Key Bank suffered an immediate loss of more than $1.5 million.
The conviction is the culmination of an investigation on the part of special agents of the Federal Bureau of Investigation.
Sentencing is scheduled for July 16, 2014, at 3:00 p.m. before Judge Geraci.
Subscribe to:
Posts (Atom)