Defendants Charged as Part of $100 Million Loan Origination Fraud
Accountant Admits Creating Fake Records as Part of Scheme That Led to $14.5 in Kickbacks
|U.S. Attorney’s Office October 25, 2012|
United States Attorney Laura E. Duffy announced that Los Angeles-based accountant Audrey Yeboah, a participant in a nationwide loan origination and kickback scheme, pled guilty today to a felony information charging her with wire fraud. Yeboah admitted participating in the scheme by creating fake W-2 forms, pay stubs, and other records for straw buyers so that her fellow conspirators could collect millions of dollars in kickbacks from fraudulently-obtained mortgage loans. In entering her guilty plea, Yeboah admitted reviewing payment records that showed over $14.5 million in kickbacks were collected from the fraudulent purchase of $100 million in properties. A sentencing hearing is scheduled for February 4, 2012 at 9:00 a.m.
United States Attorney Duffy also announced that earlier, on September 20, 2012, a federal grand jury handed up a related, superseding indictment charging Laguna Hills loan processor John Allen for submitting fraudulent loan applications to mortgage lenders on behalf of the straw buyers in the same scheme. According to the indictment, Allen generated false records, including doctored bank account statements purporting to show significant assets (e.g., $150,000) that the borrowers did not really possess. In addition, Allen allegedly maintained what he called a “pipeline” of additional properties to purchase as part of the scheme, each of which included an additional $100,000 or more in potential kickbacks that he described as “profit.”
Yeboah and Allen join defendants Mary Armstrong, an unlicensed mortgage broker who was apprehended in Las Vegas, Nevada; Teresa Rose, a Ramona real estate agent; Armstrong’s assistant William Fountain; and Seattle businessman Justin Mensen—each of whom is already charged for participation in the scheme. As alleged in the charging documents and court records, the defendants carried out their scheme by recruiting “investors” through the Internet and advertisements in the Los Angeles Times, and encouraging them to purchase homes located in Southern California, Washington state, and elsewhere. In reality, these so-called investors were nothing more than straw buyers who were promised $10,000 for each property purchased as part of the scheme. The defendants were able to secure mortgages for the properties by falsifying loan applications for the straw buyers, falsely claiming exorbitant income from fake employers and using fake W-2s and pay stubs to support the claims. The defendants submitted these fraudulent loan applications to mortgage lenders to obtain 100 percent financing—and thus avoided having to make any down payment on the properties.
The indictment alleges that the defendants profited on these mortgages loans by inflating the purchase price of the properties by $100,000 or more. Although the conspirators claimed that the extra money would be used for construction to improve the properties, the indictment alleges that no construction work was ever performed; instead, the money was kicked back to the participants. United States Attorney Duffy commented that these latest charges exposing the wider extent of this loan origination fraud are the result of an active, ongoing criminal investigation. Mensen, Rose, and Yeboah have each pled guilty. Trial for Armstrong, Fountain, and Allen has not yet been scheduled.
United States Attorney Duffy explained that the American public is the very real victim of these types of widespread mortgage fraud that played such a significant role in destabilizing the country’s general financial situation. She emphasized that her office would aggressively prosecute such crimes and urged anyone in the community who has information relating to these charges to contact the San Diego Division of the Federal Bureau of Investigation at (858) 565-1255 or the Federal Housing Finance Agency-Office of Inspector General hotline at (800) 793-7724.
The public is reminded that an indictment 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.
Defendant, Criminal Case No. 12CR4322H
Los Angeles, CA
Summary of Charges
Count 1: Title 18, U.S.C., Section 1343—wire fraud; maximum penalty: 20 years in custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.
Defendants, Criminal Case No. 12CR1848-JAH
Las Vegas, NV
Los Angeles, CA
Laguna Hills, CA
Summary of Charges
Count 1: Title 18, U.S.C., Section 37—conspiracy to commit wire fraud and to launder money; maximum penalties: five years in custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment (all defendants).
Count 2: Title 18, U.S.C., Section 1343—wire fraud; maximum penalties: 20 years in custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment (Mary Armstrong).
Counts 3-5: Title 18, U.S.C., Section 1956(a)(1)(B)(I)—money laundering; maximum penalties: 15 years in custody, a maximum fine of $500,000 or twice the value of the property involved in the transaction, and $100 special assessment (Mary Armstrong).
Defendant, Criminal Case No. 12CR1458-JAH
Summary of Charges
Count 1: Title 18, U.S.C., Section 371—conspiracy to commit wire fraud and to launder money; maximum penalties: five years in custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.
Federal Bureau of Investigation
Federal Housing Finance Agency-Office of Inspector General