Back in 2006-2007 when you could borrow 100% of the purchase price up to $1.5 million with only a 700+ FICO score, there was a team of scammers working the Carlsbad area. They hosted seminars where they offered to help unsuspecting marks get a piece of the booming-real-estate pie.
John was the lead guy, and Jenae was the broker who arranged for them to purchase Carlsbad homes at prices inflated by $100,000 over the list price. Then they promised to rent out the homes, and when sold in a few years, everyone would split profits. The extra $100,000 was laundered into their own accounts, and they told the buyers that the money would be used for property management.
Jenae claimed she was duped too, and that no one bothered to verify that they could rent out the homes for enough to cover the payments.
I filed a 20+ page report with the FBI office in Carlsbad that detailed the whole account, and four years later, it looks like it may have helped. Here are some of the details:
From the nctimes.com:
A Carlsbad-based real estate consultant was sentenced to five years in prison for a multimillion dollar mortgage fraud scheme involving properties in Georgia, Florida and California, according to the U.S. Attorney’s office.
John J. Borzellino was also ordered by U.S. District Court Judge Janis Sammartino to pay $4.1 million in restitution, federal prosecutors said on Friday.
Borzellino, 53, arranged to purchase homes by offering more than the seller’s asking price with the understanding that the money above the asking price would be funneled to an account under his control, according to court documents.
Prosecutors said Borzellino disguised the funds diverted to him by falsely claiming them as “commission” or “consulting fees” to be paid by the sellers at closing, according to prosecutors. He also assumed several false identities to disguise his role in the transactions. He defrauded lenders into making more than $8 million in mortgage loans to purchase properties in the name of his wife and others, prosecutors said.
Borzellino also admitted that he failed to declare almost $1 million in income to the Internal Revenue Service, prosecutors said.