Federal Charges Filed in "Operation Stolen Dreams"
|U.S. Attorney’s Office June 17, 2010|
United States Attorney John E. Murphy; Ralph G. Diaz, Special Agent in Charge of the Federal Bureau of Investigation, San Antonio Division; and, William “Bill” Cotter, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigation in San Antonio, announced that 29 people have been indicted in the Western District of Texas under "Operation Stolen Dreams"—a nationwide crackdown on mortgage fraud.
“It is often said that home ownership is the American dream. Far too often these dreams are stolen and hopes are dashed through predatory schemes perpetrated by selfish and greedy fraudsters who victimize the innocent simply to enrich themselves. We will continue to investigate such fraudulent activities and aggressively prosecute those who unlawfully manipulate financial institutions,” stated United States Attorney John E. Murphy.
In the first indictment, a nine-count indictment returned by a San Antonio federal grand jury yesterday, 43-year-old Robert Brooks and his wife, Cheryl, age 41, of Lantana, Texas, along with 20 other individuals are charged with conspiring to commit wire and mail fraud in a series of “property flip” schemes. The indictment alleges that from May 17, 2005, until February 21, 2008, the defendants, under the direction of Brooks, participated in a mortgage fraud scheme whereby he purchased properties at fair market value then resold at an artificially inflated price to straw purchasers. According to the indictment, Brooks recruited his co-defendants—appraisers, loan processors, title company employees, straw purchasers, etc.—and provided them with kickbacks from loan proceeds for their participation in the scheme. Brooks also used the proceeds from the purported sales to various nominees to pay for his initial purchase of real estate, to pay closing costs for both his purchase and sale to the nominee, to pay the nominee’s down-payment, to pay the nominee for the nominee’s participation, and to pay the mortgage for the first 12 months, after which each mortgage went into default. The indictment charges that Brooks’ mortgage loan scheme involved 40 properties primarily located in the Dallas area and defrauded financial institutions in Dallas, San Antonio and Houston of approximately $20 million. The indictment also seeks the criminal forfeiture of approximately $127,000 in U.S. Currency as well as a 2007 21' Liberator boat and trailer belonging to the Brooks purchased with proceeds from the illegal scheme. The indictment also seeks a monetary judgement against all of the defendants in the amount of $1 million. Court summonses have been issued for these defendants. Conviction on this conspiracy charge is punishable by up to 30 years in federal prison
“FBI and it’s law enforcement partners will continue to pursue white collar criminals who pose a continued threat to our economy by undermining the mortgage industry. This ongoing crime problem is considered by the FBI to be a national security threat,” stated Ralph G. Diaz, Special Agent in Charge of the Federal Bureau of Investigation, San Antonio Division.
In the second indictment, a three-count indictment also returned by a San Antonio federal grand jury yesterday, 54-year-old Bruce Irving Redfield of San Antonio, is charged with two counts of mail fraud and one count of wire fraud based on an estimated $365,000 mortgage loan fraud scheme. The indictment alleges that in the spring of 2006, Redfield provided fraudulent documentation while soliciting a Houston mortgage broker for a $365,000 loan to purchase a San Antonio residence. The indictment further states that Redfield solicited the loan knowing that the actual purchase price for the residence was approximately $45,000 less than the loan amount. The indictment further alleges that Redfield received a kickback of $44,635.62 from the homebuilder after closing on the property. The residence was later foreclosed. Upon conviction, Redfield faces up to twenty years in federal prison per charge.
“These types of crimes create a significant loss of tax revenue, drive buyers into foreclosure, leave lenders burdened with bad loans and neighborhoods with abandoned and deteriorating properties. IRS CI is committed to pursuing individuals who create such havoc,” stated William “Bill” Cotter, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigation in San Antonio.
Finally, three San Antonio residents have pleaded guilty and three other San Antonio residents are awaiting a July 19th jury selection date in connection with an indictment returned last December. Former mortgage broker Justin Zhu; Darnell Mason, owner of PLV Realty and Property Management, L.L.C.; and Diego Rodriguez face wire fraud charges based on an alleged mortgage fraud scheme. According to the indictment, Mason, through Zhu, recruited the other defendants including Rodriguez, Juan Solis, Jimmy Elizondo, and Eli Mendiola as straw purchasers for real estate properties he wanted to buy. Zhu paid the straw purchasers a kickback—usually between $1,500 and $3,000—for their individual roles in the fraudulent scheme. Authorities estimate that this mortgage loan scheme defrauded financial institutions in San Antonio of approximately $1 million. Upon conviction, Zhu, Mason, and Rodriguez each face up to 20 years in federal prison per charge. Solis, Elizondo, and Mendiola each face up to 20 years in federal prison after pleading guilty earlier this year to one count of conspiracy to commit wire fraud. No sentencing dates have been scheduled.
These cases are being investigated by agents from the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. They are being prosecuted by Assistant United States Attorneys William R. Harris, James Blankinship and Tom McHugh.
Operation Stolen Dreams 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. 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 StopFraud.gov.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendants are presumed innocent until proven guilty in a court of law.