Home Portland Press Releases 2010 U.S. Attorney Announces “Operation Stolen Dreams”

U.S. Attorney Announces “Operation Stolen Dreams”
Prosecution of Mortgage Fraud Charges in 32 Cases Involving 39 Defendants Charges Relate to Approximately 140 Properties and $80 Million in Fraudulent Real Estate Loans

U.S. Attorney’s Office June 17, 2010
  • District of Oregon (503) 727-1000

PORTLAND—Following an announcement today by Attorney General Eric Holder in Washington, D.C., Dwight C. Holton, United States Attorney for the District of Oregon, announced a wave of new charges and convictions as Oregon’s contribution to “Operation Stolen Dreams,” a nationwide continuing effort to investigate and prosecute mortgage fraud. The national takedown was organized by President Obama’s interagency Financial Fraud Enforcement Task Force, which was established to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. In Oregon, since March 1, 2010, 39 individuals have been charged, pled guilty or been sentenced in 32 mortgage fraud cases—30 cases being prosecuted by the U.S. Attorney’s Office in Oregon, and two cases being handled by prosecutors at the Oregon Department of Justice.

Holton stated, “Home ownership is at the heart of the American dream—a safe, secure place for ourselves and our families. Mortgage fraud has stolen that dream from many Oregonians, and made it harder to sustain for many more. We aim to hold the criminals responsible.”

Holton was joined today by representatives of the Federal Bureau of Investigation, Internal Revenue Service, Department of Housing and Urban Development Office of Inspector General, the Oregon State Division of Finance and Corporate Securities, Oregon Department of Justice and City Commissioner Nick Fish. The event was hosted by 211info, a non-profit agency that acts as an information and referral service for community and health service programs, including housing and foreclosure assistance.

The Oregon cases highlighted in today’s announcement relate to fraud and false statements in mortgage loan transactions valued at over $80 million and involving approximately 140 commercial and residential properties in Oregon and Southwest Washington. Most cases involve allegations that individuals, often aided by mortgage brokers, realtors or other professionals, made false statements or submitted false documents in support of mortgage or construction loan applications to lenders. Among the 39 defendants named today are two real estate agents, 11 mortgage brokers, one bank loan officer, and one certified public accountant (CPA).

In many cases, the selling price of a property was falsely inflated. Such artificially inflated prices were used as “comparables” for other transactions, both legitimate and fraudulent, and tended to artificially drive prices higher and contribute to the “bubble” in housing prices in 2006 and 2007. Holton indicated that matters under investigation could bring the total number of properties involved to as many as 400, with loans totaling over $200 million.

From 2006 to 2008, the FBI saw a 366 percent increase in mortgage fraud reports from 463 in 2006 to 663 in 2007; 1,696 in 2008; another 1,492 reports in 2009; and 675 reports so far in 2010—a grand total of 4,989 reports of fraud from 2006 through today’s date. The FBI has responded by opening 118 separate investigations during the period from 2006 through today’s date, and the U.S. Attorney’s Office has accepted 62 cases for prosecution during the same period, many a part of the actions being reported today. Holton said that a substantial number of investigations are continuing and additional federal indictments are expected.

The Oregon Department of Justice reports more than 30 open mortgage fraud and foreclosure fraud investigations with additional state charges expected.

“Our focus is convicting those who would dare to take an elderly woman’s life savings through these scams or causing some young family to wonder where their children will sleep when their home is taken away,” said Arthur Balizan, Special Agent in Charge of the FBI in Oregon.

“Mortgage fraud is a modern day plague throughout the Portland, Vancouver and Bend areas that has burdened lenders with bad loans and neighborhoods with abandoned and deteriorating properties,” said Marcus Williams, the IRS Special Agent in Charge of the Pacific Northwest. “IRS Criminal Investigation is proud to lend its financial investigative skills to the law enforcement effort aimed at eradicating this scourge.”

“The last number of years have seen enormous and damaging developments in the mortgage and housing markets with an urgent reliance on the government to bolster unstable marketplaces and devastated communities,” said Kenneth M. Donohue, Inspector General of the Department of Housing and Urban Development. “The HUD OIG, in partnership with other federal agencies, is deeply committed to ensuring that scarce resources are not diverted to those who seek to enrich themselves at the expense of those who so desperately need assistance today.”

“We are happy to work with the U.S. Department of Justice to crack down on mortgage and foreclosure fraud,” said Oregon Attorney General John Kroger. “In this recession, we all have to do more to protect vulnerable Oregonians.”

Mortgage Fraud Working Group

Holton stated that the investigation and prosecution of mortgage fraud has been and remains one of the highest priorities of the U.S. Department of Justice. Unlike previous mortgage fraud sweeps, Operation Stolen Dreams focused not only on federal criminal cases, but also on civil enforcement, restitution for victims and increasing cooperation with state and local partners.

Holton praised the work of Oregon’s Mortgage Fraud Working Group, formed in July 2007, headed by the U.S. Attorney’s Office and made up of federal, state and local law enforcement partners. The case results announced today demonstrate the extraordinary cooperation among the participating law enforcement agencies. Oregon’s Mortgage Fraud Working Group, organized and headed by the U.S. Attorney, is comprised of the following agencies:

Federal Agencies

United States Attorney-District of Oregon
Federal Bureau of Investigation
Internal Revenue Service Criminal Investigation Division
United Sates Postal Inspection Service
U.S. Department of Housing and Urban Development-Office of Inspector General
Office of the United States Trustee

State Agencies

Oregon Department of Finance and Corporate Securities
Oregon Department of Justice
Oregon Department of Business and Consumer Services

Local Agencies

Portland Police Bureau

Report Mortgage Fraud

Anyone with information about mortgage fraud, or who is a victim of such fraud should contact FBI at 503-273-5813 or by e-mail at mortgagefraudtips@ic.fbi.gov. You may also contact the Oregon Attorney General’s Consumer Fraud Tip Line at 877-877-9392. For more information about how to protect yourself from fraud, visit www.stopfraud.gov.

Cases: Operation Stolen Dreams, March 1 - June 17, 2010

U.S. v. Ranes-Philliber, False statements to a bank, aggravated identity theft; Indicted 6-09-10; one loan, amount $71,000; Prosecutor: AUSA Stacie Beckerman/FBI

U.S. v. Bonner, Bank fraud; Indicted April 20, 2010; one loan, amount $120,000; AUSA Scott Asphaug/FBI

U.S. v. Han, Bank fraud; Sentenced April 6, 2010, three years supervised release; one loan, amount $260,000; AUSA Scott Asphaug/FBI

U.S. v. Huang, Bank fraud; Indicted June 2, 2010; one loan, amount $1,450,000; AUSA Scott Asphaug/FBI / Department of Finance and Corporate Securities

U.S. v. Kasprowicz, False statements; Indicted March 24, 2010; one loan, amount $170,000; AUSA Scott Asphaug/IRS/Department of Transportation

U.S. v. Kostenko, Bank fraud; Indicted June 2, 2010; one loan; amount $1,300,000; AUSA Scott Asphaug/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Lee, Bank fraud; Indicted May 4, 2010; two loans, total amount $523,000; AUSA Scott Asphaug/FBI

U.S. v. Richardson, Money laundering; Sentenced 37 months April 27, 2010; approximately 100 residential properties; loans totaling approx $20,000,000; AUSA Lance Caldwell/FBI/IRS/Oregon Division of Finance and Corporate Securities

U.S. v. Cooper, Wire fraud; Indicted June 3, 2010; one loan, amount $185,000; AUSA Scott Asphaug/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Marsten, Bank fraud; Indicted June 3, 2010; one loan, amount $204,000; AUSA Scott Asphaug/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Shute, Wire fraud; Indicted June 3, 2010; one loan, amount $249,000; AUSA Scott Asphaug/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Venable, Wire fraud; Indicted June 3, 2010; one loan, amount $185,000; AUSA Scott Asphaug/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Thomas, Bank fraud; Information June 16, 2010; one loan, amount $773,000; AUSA Scott Asphaug/FBI

U.S. v. N. Rzegocki, Wire fraud; Information June 15, 2010; one loan, $335,000; AUSA Scott Asphaug/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. J. Rzegocki; Wire fraud; Information June 16, 2010; one loan, $569,000; AUSA Scott Asphaug/FBI/Oregon Division of Finance and Corporate Securities

(Lighthouse Investigation)

U.S. v. Rosabal & Amsden
; Wire fraud, mail fraud, money laundering; Indicted May 18, 2010; six loans, total loans $3,022,777.73; AUSA Michelle Kerin/IRS/U.S. Postal Service

U.S. v. Amsden, Hills, M. Wallis, G. Wallis & Schermerhorn, Conspiracy to commit wire fraud, wire fraud, false statements to a bank, money laundering; Indicted May 18, 2010, one loan, loan amount approximately $1,400,000; AUSA Michelle Kerin/IRS/U.S. Postal Service

U.S. v. Hall & VanBeenan, Bank fraud and false statement to a bank; Indicted June 2, 2010; three loans, amount $652,500, AUSA Michelle Kerin/FBI

U.S. v. J. Shoop, Bank ffraud; Information filed April 30, 2010; Arraignment and change of plea June 14, 2010; one loan; loan total $559,920; AUSA Craig Gabriel/FBI

U.S. v. R. Shoop, Bank fraud; Guilty plea May 18, 2010; sentencing August 9, 2010; one loan, total $92,985; AUSA Craig Gabriel/FBI

U.S. v. S. Inouye, Bank fraud, Information filed May 28, 2010; arraignment June 14, 2010; one loan, total $150,000; AUSA Craig Gabriel/FBI

U.S. v. Kasalauskas, Bank fraud; Information June 9, 2010; one loan, total $559,920; AUSA Craig Gabriel/FBI

U.S. v. Morrell, False statement to a financial institution; Information June 15, 2010; one loan, amount $4,400,000; AUSA Lance Caldwell/FBI

U.S. v. Paradiso, Wire fraud; June 15, 2010; Rent-to-own fraud; AUSA Lance Caldwell/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Schlabowske, Wire fraud; Information June 15, 2010; Rent-to-own fraud; AUSA Lance Caldwell/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Bohn, Bank fraud; Sentenced April 6, 2010; 12 months and a day; two loans, total $763,200; Loss $288,000; AUSA Craig Gabriel/IRS

(Desert Sun Investigation)

U.S. v. Tyler Fitzsimmons, Shannon Egeland, Jeremy Kendall, and John Partin,
Conspiracy to commit bank fraud and loan application fraud, bank fraud, loan application fraud, money laundering; Indicted November 19, 2009. Egeland and Kendall pled guilty June 15, 2010. Fitzsimmons and Partin are scheduled for trial May 2011; number of loans: six charged; Loans total approximately $25 million for all commercial projects; Losses currently estimated in excess of $19 million for entire investigation; AUSA Scott Bradford/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Tyler Fitzsimmons, Shannon Egeland, Jeremy Kendall, Garret Towne, Shaun Little, Del Barber, Jr., Jeffrey Sprague, Barbara Hotchkiss and Kevin Palotay; Conspiracy to commit bank fraud and loan application fraud, bank fraud, loan application fraud, and wire fraud; Indicted November 19, 2009. Egeland, Kendall and Barber pled guilty June 15, 2010. Fitzsimmons, Towne, Little, Sprague, Hotchkiss and Palotay are scheduled for trial May 2011; 12 loans, total approximately $16 million; Losses currently estimated in excess of $19 million for entire investigation; AUSA Scott Bradford/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Robert Morely Brink, False statement to a financial institution; Indicted November 19, 2009, trial May 2011; loans: none charged, defendant submitted false inspection reports; Losses estimated at $181,276 as part of total loss in excess of $19 million for entire investigation; AUSA Scott Bradford/FBI/Oregon Division of Finance and Corporate Securities

U.S. v. Teresa Ausbrooks; False statement on a loan application and bank fraud; Indicted November 19, 2009, trial in May 2011; loans: two, total amount $736,930; AUSA Scott Bradford/FBI/Oregon Division of Finance and Corporate Securities

(Ruiz investigation)

State v. Ruiz, Aggravated theft in the first degree, aggravated identity theft, identity theft, mortgage fraud, forgery in the first degree, tax evasion, violation of House Bill 3630; pled guilty and sentenced; ordered to pay $469,500 restitution; loans: three loans, over 100 loan modifications, loan totals in excess of $1,300,000, illegal advance fees exceed $300,000; AAG Simon Whang/Oregon DOJ/Salem Police Dept./Oregon Department of Revenue

State v. Dyer, Mortgage fraud (Marion County), manufacture and possession of marijuana (Polk County); pled guilty, sentencing July 16, 2010; one loan, total amount $520,000 with co-defendant Ruiz; AAG Simon Whang/Oregon DOJ/Salem Police Dept./Oregon Department of Revenue

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