10 Companies, 15 Individuals Sued for Mortgage Fraud in Central Florida
A criminal investigation is underway and future arrests are possible in the case involving $37 million in mortgage loans and 60 home purchases.
Palm Coast, Florida – September 24, 2008 – Last Thursday, Attorney General Bill McCollum announced that his office has sued ten companies and fifteen individuals for their alleged roles in a significant mortgage fraud scheme in Central Florida. The ring obtained more than $37 million in mortgage loans for at least 60 home purchases and siphoned off more than $6 million of those loan proceeds for their own use. The lawsuit was filed September 17, 2008 in Orange County Circuit Court by the Attorney General’s Mortgage Fraud Task Force. The Office of Statewide Prosecution is pursuing criminal charges and future arrests are possible. The Office of Statewide Prosecution was created because organized criminal activity does not respect the geographic boundaries imposed by judicial circuit lines. The Office is housed within the Department of Legal Affairs.
With his announcement, McCollum unveiled a story likely to be repeated several times in various forms in the coming months. Real estate transactions are very paperwork intensive, involving several parties; sellers, buyers, real estate agents, real estate brokers, appraisers. loan originators, title companies, and lenders. They are also likely to be cross-jurisdictional. Investigations are necessarily labor intensive and complex. There will be more investigations and more charges as foreclosures expose deceit.
“In this particular situation, the economy is the victim,” said Attorney General McCollum. “This group of individuals systematically defrauded banks and mortgage lenders, stealing millions for their own personal use and leaving a gaping hole in the system.”
Beginning in July 2005 and continuing through at least January 2007, three of the ring’s leaders allegedly defrauded banks by recruiting straw buyers with good credit and using these straw buyers to create false loan applications to purchase homes. They also allegedly created and provided fraudulent supporting documentation for the mortgage loan applications including false employment information and verifications for the straw buyers, whose purpose was to conceal the true identity of those behind the purchasing process. The lawsuit claims the ring conspired with realtors to artificially inflate the purchase prices of homes, thus enabling them to obtain larger mortgage loan amounts.
The lawsuit names:
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American Heritage Mortgage Group, Inc.
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Security One Mortgage Corp.
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Security Trust Title LLC
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Trincity Trucking Inc.
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Allen Boyarsky
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Stephen Mahadeo
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E. Brooke Co. LLC
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Longdenville Investment & Management Inc.
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American Heritage Commercial Capital
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P & R Funding Corporation
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Steele Property Investments, Inc.
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Bethann Schuldiner
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Anthony Didonato
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Steve Groden
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Brad Frank Groden
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1st Capital Mortgage Associates, Inc.
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Heather Showalter
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Jeanette Lugo
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Magdalene Williams
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Norma Lopez
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Kenneth West
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Marcus Habeeb
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Luis Delgado
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Aziz Mohammed
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Betty Bedeau.
According to the lawsuit, American Heritage Mortgage Group, Inc. and Security One Mortgage Corp. processed the fraudulent loan applications. The participants allegedly used companies they owned or controlled to divert more than $6 million from the fraudulently obtained mortgages at the homes’ closings. Further, in many cases, the defendants allegedly failed to make the required mortgage payments on behalf of straw buyers and allowed 50 properties to fall into foreclosure.
Notable lenders including IndyMac Bank and New Century Mortgage are among those banks affected by the scheme. The Attorney General’s lawsuit requests injunctive relief prohibiting the defendants from continuing the alleged behavior and seeks damages for those who were targeted by the scheme. Civil penalties of $10,000 per violation of Florida’s Deceptive and Unfair Trade Practices Act are also being sought.
These dirty theives…
…are exactly why our market and economy are in a shambles. They should all be hung by their thumbs…or worse.
Why not a sting operation?
This listing of crooks is only going to make sure they head for the hills. It would be better to do a sting operation, cuff them, and then list their names, if they can find them.
inadequate remedies
For the scope of this fraud and the damage done to society and individuals, the penalties under law seem inadequate. Yeah! for the Attorney General for taking the action. Now the legislature needs to amend the penalties to be commensurate with the scope of the fraud.
SETTLEMENT OF CLAIM AGAINST BRAD GRODEN
The claim against Brad Groden were settled with the State of Florida 10 years ago.