| | |  Puerto Vallarta Real Estate 
California Real Estate Broker Convicted
 Michael Richardson - Examiner
go to original
May 24, 2010
 |  | The defendants obtained 47 fraudulent loans from 13 lenders on 35 properties in excess of $17.5 million through the use of the fraudulently obtained identities. |  | | |
A California, a real estate broker, was convicted of conspiring with her boyfriend and his brother to commit $17.5 million in real estate fraud by purchasing 35 properties using stolen identities and intentionally defaulting on loans in order to steal the loan money.
Kathy Chen's boyfriend, Richard Salgado Gonzalez, and his brother, Daniel Gonzalez, face the same charges and sentence. The brothers are fugitives and have outstanding arrest warrants, it is believed that both may currently be living in Puerto Vallarta, Mexico.
She worked as a real estate broker and owned several businesses including Chen Financial, Western Escrow, Nationwide Tax Services and SBC Financial. She conspired with her then-boyfriend, Richard Gonzalez, and his brother, Daniel Gonzalez, to commit over $17.5 million in fraud by using the identities of unsuspecting or unqualified victims to obtain mortgage loans for the purchase of multiple properties. Chen and her co-defendants recruited these victims in order to hide their own identities. These victims often spoke little or no English, were unemployed or had limited incomes, and had no intention of ever residing in or repaying any loan on properties in their names.
The defendants obtained 47 fraudulent loans from 13 lenders on 35 properties in excess of $17.5 million through the use of the fraudulently obtained identities. These properties included 13 in Orange County, California, 16 in San Bernardino County, California and six in Kern County, California.
The Fraudsters used the personal and credit information of the straw buyers (fake), including a 92-year-old woman, on several occasions without their knowledge or consent. They would acquire city business licenses using the stolen identities for nonexistent businesses in order to obtain higher income loans. They completed fictitious loan applications to reflect higher incomes for the fake buyers, forged the fake buyers' names and signatures on various deeds and loan documents, and forged seals and notary stamps on a variety of notarized documents and deeds. They fraudulently filed these fabricated and forged documents with the Orange County, California Clerk-Recorder's Department.
A "straw buyer" is someone whose credit is used to purchase a property in order to secure financing. Sometimes the straw buyers will cooperate for financial gain, sometimes a straw buyer will be offered thousands of dollars for the use of their information and sometimes they are victims of identity theft, although either way it's always illegal.
Acting as the escrow company, the defendants made some monthly payments on the loans to prevent suspicion by the lenders. They then defaulted on the loan and kept the remaining loan money.
One red flag in recognizing mortgage fraud is if the lender is also the escrow company. If title/escrow agent knows there is fraud, fraudulent disbursements, or “straw man” purchasers”, they are assisting in the fraud by failing to disclose practices associated with the loan closing such as disbursements from seller to buyer, double escrows to hide the identity of the true seller, etc. This will likely depend on the Lender’s instructions to escrow and the extent of the knowledge and participation of escrow/title agent. In some cases an escrow officer may carelessly fail to follow the lender’s escrow instructions.
She was found guilty by a jury of 136 felony counts and faces a sentence up to 111 years in state prison at her sentencing.
This case was investigated by the Orange County District Attorney's Office. The California Franchise Tax Board assisted in the investigation into the filing of false tax returns. Deputy District Attorney Bill Overtoom of the Major Fraud Unit is prosecuting this case.
There’s no doubt that homeowners pay the price of real estate fraud emotionally and monetarily. The only way such costs can be avoided is to eliminate, or greatly reduce, the problem.
While the total dollar loss attributed to mortgage fraud is unknown, at least 63 percent of all pending FBI mortgage fraud investigations during fiscal year 2008 involved dollar losses of more that $1 million each. During 2009, the FBI investigated more than 2,100 mortgage fraud cases, up 400 percent from five years ago.
The costs are significant at the local level, like inflated appraisals, they really drive up the property taxes in a neighborhood or county. A lot of communities across the country have seen their neighborhood prices distressed and sometimes become a blight because of real estate fraud.
The real estate and mortgage industry is saturated with “Willful Blindness”, and an “it is not my problem” mind-set at an every level. The ethical honest “Real Estate and Mortgage Industry Professionals” need to step up and assist the “American Homeowners” that are being victimized and assist our governmental agencies catch these fraudsters, as the “Real Estate Industry” can prevent mortgage fraud.
You know when the government gets involved in a problem, not only is it big but very costly. Someone has to pay those agents to track down fraud, someone has to pay to the court costs all those fraudsters, and if convicted someone has to pay to feed, clothe, and shelter them.
The faster we all help prevent real estate fraud; the sooner all of these costs could be reduced, thus saving homeowners and tax payers money … and people will not be unlawfully evicted from their homes because of the paper work shuffle by the fraudsters at the closing table.
When we believe in the existence of fraud could affect us individually, more will then start taking active steps, every day, to combat against it. It may be an everyday battle, but the longer we fight the stronger we get, and once something becomes a habit the less difficult it is to achieve; and the harder it is to forget.
We can prevent mortgage and real estate fraud one transaction at a time!
Michael S. Richardson is the author of "An American Epidemic, Mortgage Fraud a Serious Business"
www.preventmortgagefraud.com
Follow him on Twitter at FocusonFraud |
|
| |
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us