Ninth Defendant Sentenced in Elk Grove Mortgage Fraud Case
SACRAMENTO, CA—Dana Faulkner, 48, resident of Oakland, CA, was sentenced today by United States District Judge John A. Mendez to one year in prison for conspiring to commit mail fraud and make false statements in loan applications, United States Attorney Benjamin B. Wagner announced. In addition, Faulkner was ordered to pay over $3 million in restitution to defrauded financial institutions.
Faulkner is the ninth defendant to be sentenced as the result of a large scale mortgage fraud scheme operating out of the Elk Grove headquarters of Liberty Real Estate & Investment Company and Liberty Mortgage Company. Hoda Samuel, the owner and principal operator of both companies, was convicted after a jury trial in January of 2013, and is currently serving a ten year prison sentence.
According to Faulkner’s plea agreement, and to the evidence presented at Samuel’s trial, in 2006 and 2007 the defendants participated in a scheme to defraud whereby misrepresentations were made to various financial institutions to convince them to finance the purchase of residential properties. Loan applications prepared by Liberty Mortgage Company misrepresented borrowers’ abilities to pay back loans, by overstating and/or falsifying employment, income and assets. In addition, the defendants drafted purchase contracts making offers significantly above what the sellers were asking for their properties. The excess amounts were paid back to the purchasers at escrow, disguised as payments for fictional repairs and remodeling to the properties. In many cases, these kickbacks were falsely described as payments to render the properties compliant with the Americans with Disabilities Act. Although the indictment identified 30 such fraudulent residential real estate transactions, the evidence at trial was that the fraud at Liberty was pervasive.
Although she was unlicensed, defendant Faulkner acted as both a real estate agent and loan officer as a Liberty employee. She recruited people to serves as buyers, sometimes of more than one property. She convinced the buyers that they could qualify for home loans, and added that they would receive cash payments at the close of transactions to help cover mortgage payments and pay off other bills. She filled out fraudulent loan applications, and she helped to arrange for the disguised kickback payments to be made to her clients.
Almost all of the 30 properties listed in the indictment went into foreclosure, resulting in a loss of over $5 million to financial institutions.
“Mortgage fraud is an incredibly destructive crime that leaves many victims in its wake,” said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “The defendant played a significant role in a scheme that hurt so many people and affected so many of our communities. IRS-CI is committed to pursuing those who line their pockets with profits from these schemes.”
“Faulkner made false promises and statements to benefit from a scheme that left ruin in its wake,” said Special Agent in Charge Monica M. Miller of the FBI’s Sacramento field office. “These sorts of schemes damaged neighborhoods and the regional economy, flooding the market with foreclosed homes. The FBI will continue to work with its law enforcement partners to ensure such crimes do not go unpunished.”
This case was the product of an investigation by the Internal Revenue Service—Criminal Investigations, and the Federal Bureau of Investigation. Assistant United States Attorneys Philip Ferrari and Todd Pickles prosecuted the case.