Mortgage Fraud Ringleader and Title Agent Convicted in Multi-Million-Dollar Fraud Scheme
|U.S. Attorney’s Office April 29, 2014|
ORLANDO, FL—United States Attorney A. Lee Bentley, III announces that yesterday, a federal jury found James Fidel Sotolongo (48, Port Orange) guilty of one count of conspiracy and 11 counts of bank fraud. The jury found Stephanie Musselwhite (52, Daytona), a title agent in Orlando, guilty of one count of conspiracy, nine counts of bank fraud, and one count of making false statements to a federally insured financial institution. Realtor Ramara Garrett (35, Port Orange) was acquitted of conspiracy and making false statements to a federally insured financial institution. Sotolongo and Musselwhite each face a maximum penalty of five years in federal prison on the conspiracy count and a maximum of 30 years’ imprisonment on each of the remaining counts. In addition, both face fines of $250,000 and a five-year term of supervision. The sentencing hearing is scheduled for July 28, 2014.
Sotolongo and Musselwhite were indicted on April 24, 2013.
According to testimony and exhibits presented at trial, Sotolongo and Musselwhite were part of a scheme that recruited straw buyers with high credit scores to apply for and obtain 11 mortgages (first and second mortgages were obtained) totaling approximately $10 million. The purpose of the scheme was to obtain the properties with no money down and no money at closings, rent the properties, and then sell the properties for a profit. To carry out the plan, Sotolongo enlisted the straw buyers and told them that they did not need to bring a deposit or cash to the closing, and that they only needed to be involved in the loan application process. The straw buyers testified that the loan applications submitted in their names contained false information, including the use of the property as a primary residence, their income, their assets, and their liabilities. For example, the monthly income was stated as being $35,000 to $48,000, when the straw buyers’ monthly income ranged from $3,000 to $10,000. Other false information included grossly inflated checking and savings account balances.
Mortgage broker Christopher Mencis (53, North Carolina) previously pleaded guilty to his involvement in this case. According to his plea agreement, he prepared the loan applications and submitted them through his brokerage company, Real Estate Mortgage Professionals (REMP). REMP has since gone out of business. Mencis also used a former bank branch manager at SunTrust bank, at the direction of Sotolongo, to falsely verify the incomes and assets for the straw buyers. The loan applications were sent off to several lenders, all of whom testified that they would not have funded the loans had they known that the information contained in the loan applications was false and grossly inflated.
After the loans were approved, the title agent prepared settlement statements listing closing costs and payments to a company called American Signature Homes, which was partly owned by Sotolongo. Musselwhite, who owned Orlando Title and Abstract of Florida, Inc., would wire lender money to American Signature Homes, and Sotolongo would use a portion of the lender money to finance the deposit and closing costs that Musselwhite would collect after the closings. The banks did not know that they were actually funding 100 percent of the loans on the multi-million-dollar homes.
This case was investigated by Federal Bureau of Investigation, Florida Department of Financial Services, and the City of Daytona Beach Shores Department of Public Safety. It was prosecuted by Assistant United States Attorneys Tanya Davis Wilson and Shawn P. Napier.