Five Defendants in California Charged with Foreclosure Rescue Scheme
|U.S. Attorney’s Office December 02, 2011|
SACRAMENTO, CA—Five people have been charged in a federal indictment, unsealed today, in connection with a foreclosure rescue scheme, announced U.S. Attorney for the Eastern District of California Benjamin B. Wagner. The five defendants, Jewel L. Hinkles, aka “Cydney Sanchez,” 61, of Los Angeles; Bernadette Guidry, 43, of Irvine, Calif.; Jesse Wheeler, 34, of Roseville, Calif.; Cynthia Corn, 58, of Oakland, Calif.; and Brent Medearis, 45, of Modesto, Calif., were charged in an indictment returned by a federal grand jury on Dec. 1, 2011. Hinkles and Guidry are charged with eight counts of mail fraud. Each of the defendants except Guidry is charged with 16 counts of bankruptcy fraud.
Hinkles was arrested in Los Angeles this morning by special agents with the FBI, the U.S. Postal Inspection Service and the Federal Housing Finance Agency, Office of Inspector General, and will be making an initial appearance before a U.S. Magistrate Judge today in Los Angeles. Medearis was arrested by FBI special agents in Modesto this morning and will be appearing before U.S. Magistrate Judge Gregory G. Hollow in Sacramento this afternoon. Arrest warrants have been issued for the remaining defendants.
According to court documents, Hinkles was the founder and general manager of Horizon Property Holdings LC, located in Beverly Hills, Calif. From 2008 through 2010, Hinkles offered to the public a service called the “Save My Home” or “Homesaver” program that promised to rescue financially distressed homeowners from foreclosure and reduce the principal on homeowners’ mortgages. Guidry was Horizon’s office manager and assisted Hinkles with promoting the foreclosure and principal reduction program. Horizon offered its program directly to clients and also through several layers of affiliates, who promoted and sold the program to clients, mostly in northern California. These affiliates included Property Relief!, operated by Cynthia Corn in south San Francisco, and JW Financial Solutions, operated by Jesse Wheeler in Roseville. Brent Medearis sold the program out of Modesto as an affiliate of Property Relief!.
The defendants allegedly told homeowners that for a substantial up-front payment and a monthly fee they would save the homeowners’ residences from foreclosure by arranging for investors to purchase their existing mortgage at a discounted price or would reduce the homeowners’ monthly payment by negotiating a mortgage reduction with the lender. The indictment alleges that contrary to the defendants’ representations, they failed to arrange for the purchase of clients’ mortgages or to negotiate reductions in the mortgage debt owed by clients.
To prevent foreclosure and defraud the existing lenders, the indictment alleges that the defendants filed fraudulent deeds transferring an interest in the homeowners’ property to a fictitious entity called Pacifica Group 49/II. In many instances, the defendants also filed fraudulent petitions in bankruptcy court, often naming both the homeowner and Pacifica Group 49/II as the debtor. The purpose of these petitions was to invoke the automatic provisions of federal bankruptcy law that bring to an immediate halt any foreclosure actions against a debtor’s property. The fraudulent deeds and bankruptcy petitions delayed foreclosure proceedings, during which the defendants collected fees from defrauded homeowners. The indictment alleges that the defendants collected at least $5 million in fees from more than 1,000 clients.
“The defendants in this case stand accused of profiting off of the desperation of people who were trying to hold on to their most valuable asset—their homes,” said U.S. Attorney for the Eastern District of California Benjamin B. Wagner. “This office is deeply committed to tracking down and prosecuting those who prey on vulnerable homeowners. Homeowners should be wary of those who solicit fees based on promises that they can prevent foreclosure or modify your loan. To learn more about foreclosure rescue and loan modification schemes, go to www.StopFraud.gov/protect-mortgage.html.”
This case is the product of an investigation by the FBI and the U.S. Postal Inspection Service. Assistant U.S. Attorney Dominique N. Thomas is prosecuting the case.
If convicted, the defendants face a maximum statutory penalty of 20 years in prison for each mail fraud count, five years in prison for each bankruptcy fraud count and a $250,000 fine on each count. If convicted, however, the actual sentence will be determined at the discretion of the court after consideration of any applicable statutory factors and the federal sentencing guidelines, which take into account a number of variables.
The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
This law enforcement action is part of the work being done by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. Mortgage fraud is a priority area for the President’s Financial Fraud Enforcement Task Force. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov.