Two brothers have been busted in a widespread real estate fraud ring, including 40 properties in San Diego County, according to San Diego County District Attorney Bonnie Dumanis.
David Zepeda, 57, and John Zepeda, 59, both from San Bernadino, have each been charged by Dumanis’ office with more than 100 separate felonies, including identity theft, forgery, grand theft, rent skimming and conspiracy. The office says the brothers allegedly created false or faulty quit-claim deeds on several properties in California and Nevada. The Zepedas allegedly rented out these foreclosed homes to unsuspecting renters pocketing the rent money for themselves.
“First the defendant identified a property in foreclosure, then they would acquire the property, they did this illegally either by forging a quit-claim deed or convincing home owners to transfer the property to them by promising that homeowner they would help them avoid foreclosure,” Dumanis said. “Once they had acquired the title, the Zepedas would rent out the property, in order to forestall the foreclosure process and to extend the period over which they collected rent, the brothers also filed bankruptcy petitions.”
Investigators said they found more than 300 victims in both states, including homeowners and mortgage banks. San Diego Deputy District Attorney Valerie Tanney estimates the brothers stole more than $1.5 million. The office says it is continuing to search for more of the brothers’ bank accounts, including ones that may be offshore.
The District Attorney’s office has seen several cases of foreclosure fraud scams across the county. Tanney says people are vulnerable and will try to do anything in their power to keep their homes.
“You are dealing with people are very vulnerable, when their homes are facing foreclosure and they have a chance to get out of the foreclosure, they believe,” Tanney said.
The Zepeda brothers found some of their victims by holding foreclosure seminars to teach people how to avoid foreclosure, Tanney said. Some of their victims who willingly turned over their property paid the Zepedas a monthly fee. “It wasn’t just turning over the property to them, they were paying a program fee and a monthly amount to these people,” Tanney said.
Tanney and her colleagues suspect there are more victims out there. “We believe there are additional victims in this case,” Dumanis said. “If someone believes they have dealt with the Zepeda brothers and feel they have been scammed they should contact our office.”
Investigators said they served a search warrant at the brothers’ residence and seized $335,000 in un-cashed checks; a gold Geneva watch; a gold Rolex watch; diamond bracelets and rings; $33,000 cash; more than 8,000 silver coins; gold troy ounces; boxes of rolled half-dollar coins; and a Bentley automobile.
John Zepeda will be arraigned in a San Diego Courtroom on Tuesday. David Zepeda is currently hospitalized, but will be arraigned in San Diego as soon as possible.
Dumanis says she suspects prosecutors from other counties in California and Nevada will file more charges against the brothers.
If convicted both brothers face up to 72 years in prison.
Love this story from the baseball world, about the Spaceman pitching a victory at age 63:
Two more down, a couple hundred thousand more to go.
You do have to give the brothers credit, though, for fully embracing the concept of “go big, or go home.”
There are some creative people in real estate.
When I moved to CA to Riverside in 1973, I ran into a guy doing the exact same thing. When does it stop? Where is our elected guberment? Oh…Jerry Brown was governator then…OMG!!
Least they bought some gold and silver with that money…thinking those dollars may crash eventually…
Regulations and enforcement build confidence in the stability of a system, enabling and encouraging calculated risks. The first steps in this housing recovery will begin with a perp walk.
You said it all. First, there are still way, way too many criminals running around doing “real estate”. HUNDREDS, MAYBE MILLIONS more are going to have to do jail time to restore some sense of order to the system.
Second, about that system, we’re going to have to get rid of securitization of mortgage loans. Period. Securitizing mortgage loans is basically a housing Ponzi scheme.
Consultant – “Securitizing mortgage loans is basically a housing Ponzi scheme”
IMHO, Quite an irresponsible statement which you should attempt to expand upon and enlighten us instead of dropping bombs and running away.
Securitization is just a way to distribute risk.
Instead of one entitiy assuming all the risk. You “slice and dice” the risk and sell it off in smaller chunks. While this all makes sense and if multiple investors own smaller chunks of the risk the overall risk is hypothetically spread out.
Here’s the problem…
“Investors” are typically representing a group of people’s money they make money by buying and selling risk (stocks, bonds, securities, etc) and winning more than losing. With mortgage securitization businesses that sliced and diced the mortgages were also valueing the risk. (while trying to say their valuations were independent) The sliced mortgages were sold to investors who ended up losing money when the loans defaulted. There’s also investors that invested in securities heavily not thinking about the overall picture assuming they were safe because the risk was distributed. Fortunately you can’t die from a papercut. But you can die from thousands of papercuts.
Overall is there anything wrong with securitization? No not at all (if we all were computers) The problem with securitization is that it’s difficult to estimate the value of risk. Also securitization incentivizes lenders to make more an more deals good or bad it doesn’t matter becasue the money is in slicing them up and selling to investors.
shadash – don’t disagree. If one doesn’t understand the investment they shouldn’t be doing it. Wall st got way over their ski tips with the complexity of these securities.
Still, nowhere close to a Ponzi.
If banks were forced to hold every loan they originated the mess we are in would NEVER have happened.
Agree with the anti-securitization stance. Personally, I think a world with far less credit/debt would be a good thing. Securitization simply pushes more debt into the system, potentially driving prices to levels that are not based on fundamentals, especially if the originators of those loans are not held personally liable (permanently) for the failure of those loans. It places a buffer between borrowers and lenders that masks risks and gives a false sense of security.
IMHO, it doesn’t “spread risk around.” It increases risk because the securitized market can grow too large, and rates might not reflect the actual risks taken (because the players believe the “risks are spread around” when, in reality, it just spreads liability/responsibility around). I would also argue that mixing credit default swaps with the securitization market makes for a very toxic financial environment that engenders “systemic risk,” not “limited risk.”
It increases risk because the securitized market can grow too large, and rates might not reflect the actual risks taken (because the players believe the “risks are spread around” when, in reality, it just spreads liability/responsibility around).
To clarify, with securitization, there is more leverage in the system, and more overall credit…more money available to the same pool of borrowers, so rates go down due to the “excess supply” of credit. When lenders are competing for the same borrowers, rates go down and standards are lowered which **increases** risk while lowering the premium (interest rates) for taking on that risk. That’s how you get a credit bubble, IMHO.