These are the crimes and attitude required to actually go to jail for real estate fraud:
A former Fannie Mae employee will spend more than the next six years in prison after being found guilty of accepting more than a million dollars in bribes and kickbacks in exchange for selling Fannie Mae-owned foreclosures for less than market value.
Back in January 2018, Shirene Hernandez was charged with accepting bribes for steering foreclosures to certain brokers and even allegedly buying some foreclosures herself at below market value. And nearly a year ago, Hernandez was found guilty of two wire fraud counts that involved the deprivation of honest services as a result of the scheme.
Hernandez formerly worked at Fannie Mae in California as an REO foreclosure specialist and was tasked with the sale of properties foreclosed on by Fannie Mae.
As a sales representative, a position she held from 2010 through 2015, Hernandez would assign Fannie Mae-owned properties to certain real estate brokers and approve sales of the properties based on offers the brokers submitted.
But, court documents showed that Hernandez demanded and received bribes – mostly in the form of cash – in exchange for brokers getting the listings and commissions those brokers earned on real estate sales in question.
Hernandez also approved sales of Fannie Mae REOs at discounted prices to both herself and to brokers who paid her kickbacks.
As part of the scheme, Hernandez also received bribes for approving below-market sale prices of Fannie Mae properties to the brokers, all of which were violations of Fannie Mae rules and federal law.
Hernandez also helped several family members become Fannie Mae-approved brokers, and then steered nearly $80 million in Fannie Mae listings to them, resulting in nearly $2 million in commissions in less than three years.
According to court documents, Hernandez received more than $1 million in benefits from the scheme, including cash kickbacks and equity in a Fannie Mae property she bought using said kickbacks.
And, according to court documents, Hernandez paid for that property using a duffle bag filled with $286,450 in cash, which she gave to her sister-in-law to bring to the closing.
“The crime that [Hernandez] committed was egregious,” the prosecutors wrote in their sentencing memorandum. “Rather than act in the public’s best interests…she used her position to line her own pockets. [She] is unremorseful and unrepentant, and would seemingly do it all again if she could avoid being caught.”
In addition to the 76-month prison sentence, Hernandez was also ordered her to pay $982,516 in restitution to Fannie Mae.
Link to Article
The most susceptible to home thievery are those properties that are paid off, and all you need is a crooked notary. This was more of a vengeful act by an ex-boyfriend that could be unwound a little easier because it had a mortgage and harder to re-sell. Hat tip to SM for sending!
Rohina Husseini had no idea someone could steal a house, but the first small clue that the home she owned for nearly a decade was no longer hers was a piece of junk mail that most of us ignore.
The Springfield, Virginia, mother said she initially tossed the mortgage refinancing offers that began arriving over the summer in the trash, but one detail bugged her: The letters were addressed to another woman. Curious, Husseini said she finally opened one.
“You bought a new house, congratulations,” read the letter addressed to Masooda Persia Hashimi.
“I was like, ‘Wow, this doesn’t seem right,’ ” Husseini said. “I don’t know this person at all. She never lived in my house even before [I moved in].”
In the frantic hours that followed, Husseini discovered the total stranger was now the legal owner of the brick Colonial worth about $525,000 that forms the center of her life with her husband and daughter.
Another fellow realtor made headlines this week – hat tip GM!
Washington D.C., Aug. 29, 2019
The Securities and Exchange Commission today announced it has filed charges and obtained a consented-to asset freeze against San Diego-based ANI Development LLC, its principal, Gina Champion-Cain, and a relief defendant, for operating a multi-year $300 million scheme that defrauded approximately 50 retail investors.
According to the SEC’s complaint, beginning in 2012, defendants fraudulently raised hundreds of millions of dollars from investors by claiming to offer investors an opportunity to make short-term, high-interest loans to parties seeking to acquire California alcohol licenses. In truth, the SEC alleges, the investment opportunity was a sham. Contrary to defendants’ representations, the SEC asserts, defendants did not use investor funds to make loans to alcohol license applicants. Instead, Cain directed significant amounts of investor funds to a relief defendant that she controlled.
“The SEC took emergency action to stop what we allege is an egregious fraud,” said Los Angeles Regional Director Michele Wein Layne. “Importantly, the agreement we reached with the defendants to freeze their assets during the litigation will give investors the best chance to maximize their recovery going forward.”
The SEC’s complaint, filed in federal district court in San Diego on August 28, 2019, charges defendants with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. Without admitting any violations of federal law, defendants have agreed to preliminary injunctions against violations of these provisions of the federal securities laws, asset freezes, and the appointment of a receiver over ANI and the relief defendant to marshal and preserve assets. The stipulated order is subject to court approval. The complaint seeks disgorgement of allegedly ill-gotten gains and prejudgment interest, monetary penalties, and permanent injunctions.
SEC case vs Cain
This scam is very real – confirm with escrow company before wiring funds.
A local family lost their entire life savings to scammers while they were in the process of buying a home after they unknowingly wired their money to a fraudulent escrow account.
Andrew Batson and Erika Urry were close to finally living in their dream home. The just needed to send their down payment. When Andrew received an email from the escrow company asking for a wire, he obliged.
“I did so that day thinking I was under pressure and we were supposed to close in that week,” said Andrew.
However, the next week, Andrew received a call from their real estate agent asking for the money because it was missing and was needed so they could close. It was at that moment when Andrew and Erika realized they had been scammed.
“I had to call Erika to let her know all the money was gone,” said Andrew.
It’s happening everywhere – hackers are stealing funds thought to be wired to escrow companies. It’s a real threat – be careful! Hat tip GW:
James and Candace Butcher were ready to finalize the purchase of their dream retirement home, and at closing time wired $272,000 from their bank following instructions they received by email.
Within hours, the money had vanished.
Unbeknownst to the Colorado couple, the email account for the real estate settlement company had been hacked, and fraudsters had altered the wiring instruction to make off with the hefty sum representing a big chunk of the Butchers’ life savings, according to a lawsuit filed in state court.
A report by the FBI’s Internet Crime Complaint Center said the number of victims of email fraud involving real estate transactions rose 1,110 percent between 2015 to 2017 and losses rose nearly 2,200 percent.
Nearly 10,000 people reported being victims of this kind of fraud in 2017 with losses over $56 million, the FBI report said.
The Butchers, forced to move into their son’s basement instead of their dream home, eventually reached a confidential settlement in a lawsuit against their real estate agent, bank and settlement company, according to their lawyer Ian Hicks.
The problem is growing as hackers take advantage of lax security in the chain of businesses involved in real estate and a potential for a large payoff.
“In these cases, the fraudster knows all of the particulars of the transaction, things that are completely confidential, things they should not know,” said Hicks, who is involved in more than a dozen similar cases across the United States.
Numerous cases have been filed in courts around the country seeking restitution from various parties. One couple in the US capital Washington claimed to have lost $1.5 million in a similar fraud scheme.
Real estate is just one segment of what the FBI calls “business email compromise” fraud which has resulted in some $12 billion in losses over the past five years. But for home buyers, the fraud can be particularly catastrophic.
“In these cases, the loss can be devastating and life-altering,” Hicks said.
Real estate transactions have become a lucrative target for hackers “because they handle a lot of money and because they have employees who are not the most technically savvy,” said Sherrod DeGrippo, director of threat research for the security firm Proofpoint.
Additionally, hackers often do their homework and “sometimes they know more about the business than the employees do,” she said.
Link to Full Article
Those with a paid-off home are only one signature away from losing it. This former attorney was convicted of a similar fraud, gets out of jail and does it again – but worse. Hat tip to daytrip for sending this in:
Authorities have charged a West Hills woman with perpetrating a real estate fraud scheme that netted her $2 million, primarily by duping numerous elderly property owners into transferring over their property titles.
Angela Fawn Wallace allegedly befriended the elderly victims — or found properties where the owners were deceased — then obtained the property titles, the Los Angeles County District Attorney’s Office said, according to KTLA. She then allegedly used those titles to secure herself loans.
Wallace faces 72 felony counts, including identity theft and forgery. She pleaded not guilty to the charges Thursday, and faces up to 40 years in prison if convicted on the top charges, KTLA reported.
Wallace’s alleged scheme lasted from June 2014 to January 2017, and involved four properties and two dozen victims including the property owners, estates, trusts and investment companies.
Wallace took out loans secured by the properties and in some cases sold them off to unknowing purchasers, then kept the proceeds. The district attorney said in one case she rented out several units of a multifamily building and kept the money herself instead of handing it to the estate of the deceased owner.
Wallace was previously convicted of forgery in 2003, and recording false documents in 2007.
Link to Article
Glenn Kelman of Redfin has been deceiving the public since the day they started the company, and he gets away with it because we don’t have a watchdog department or any enforcement of truth-in-advertising. We live in a society where anybody can say anything and never be accountable to the truth.
I’ve had enough, and I’m not going to take it any more.
Here are examples:
- He says Redfin agents sell houses for $3,000 more than traditional agents. But you can only measure that if we sold the same house on the same day! He is using averages of different sets of homes, which is apples and oranges – yet it was one of their featured statements on their website for a long time.
- He says that his sellers save $9,000 over traditional agents. You can say you charge a lower rate, but you can’t calculate the actual savings until you have the sales price. Agents don’t sell houses for the same price – houses sell for different prices depending on the agent’s method and expertise. If I sell the house for $10,000 more than you, then the sellers would MAKE an extra $1,000. It is deceitful for him to make such claims.
- He says you will ‘close without a hitch’. A Redfin agent told me yesterday that 100% of his deals have a hitch.
- He says they are full service. But then you send out the $50 girl with the least experience of anyone on your team to show buyers around? If you are ‘full service’, then you should have your BEST agents showing homes.
- His home-flipping device, Redfin Now, is the biggest conflict-of-interest in the history of real estate. With Zillow’s Instant Offers, at least they send their staff people to give you a quote to purchase your home, and then direct an independent agent to give you a second quote. But Redfin offers the whole package together. But you can’t have it both ways – either you advertise that you are a full service realtor, and thus have a fiduciary duty to get the best deal possible for the seller, OR you are a cash buyer. But they run their flipping platform off their same website.
They know it’s a conflict too, and have a disclaimer at the bottom of the page:
Can you read print that small? Me neither, so I got out my magnifying glass.
This is what it says:
Redfin Now is a separate company owned by Redfin. Agents representing Redfin Now represent Redfin Now only and do not represent sellers in the sale of your home. If you decide to sell to Redfin Now, neither Redfin nor Redfin Now will represent your interests regarding the sale of your home. For this reason, it is recommended that you seek independent representation in the sale of your home. You may be able to sell your home on the open market for more money than Redfin Now’s offer price.
People who are drawn to a ‘full-service realtor’ website should get a fiduciary consultation only – that is what’s in their best interest. If you are running a separate company that buys homes, then it should be on a separate website.
- The latest is Glenn saying that portals should include links that direct the consumer back to the listing agent. He says that it will encourage listing agents to stop ‘pocketing’ their listings, and sell them on the open market instead. But Redfin does the ‘Sold Before Processing’ to their sellers too, so you can’t help but think Glenn has an ulterior motive.
He has lost millions of dollars every quarter since they started 13 years ago – it seems like he will say anything to try to catch up.
Nick at the WSJ has a good piece on the Tan Man – with one of Angelo’s emails from three years prior to the Countrywide failure and fire-sale to BofA:
An excerpt from an old article:
Mister Mozilo, a mortgage industry maverick who co-founded Countrywide in 1969, and nearly 30 years later co-founded the dramatically collapsed IndyMac Bank (now OneWest Bank), is widely regarded as one of the more Machiavellian sub-mortgage-men who helped march the U.S. (and global) economy straight off the cliff in the mid-Noughts.
While Mister Mozilo and his mortgage-making army pushed and pedaled sub-prime home loans, he talked up the then-flourishing company’s stock price, earned hundreds of millions in compensation, and cashed out more than $400,000,000 worth of Countrywide stock, a large portion of it during the last couple of years of his tattered tenure as the king of Countrywide.
Alas, the sub-primed fueled real estate bubble burst sometime around 2007 and Mister Mozilo left Countrywide in 2008 after the crippled company was sold for $4.1 billion to Bank of America.
In June 2009 the Securities and Exchange Commission (SEC) charged Mister Mozilo with insider trading and securities fraud and in September 2010, Mister Mozilo settled with the SEC and agreed to pay $67,500,000 in fines, $45,000,000 of which was paid by Bank of America. Despite the sizable payout, settlement terms allow Mister Mozilo to circumvent acknowledgement of any misconduct. We can’t vouch for or confirm it but online idle chatter says he has a net worth well in excess of half a billion dollars.
Link to Full Article
Mozilo, in his deposition, continues his long standing defense of his former company. “I have no regrets about how Countrywide was run,” Mozilo said. “We were a world-class company in every respect.“
“We never made a loan knowingly — and it would be stupid to do so — that we knew the borrower could not pay. Never,” Mozilo said. “All our loans had that one standard from 1968 to the end of my rein at Countrywide.”
The diverting of money being wired into escrow accounts to close real estate transactions is a real problem, but the authorities are on it – they have recovered $350 million! Unfortunately, they also mention here that $3.7 billion in losses have been reported:
DOJ Press Release
Federal authorities announced today a significant coordinated effort to disrupt Business Email Compromise (BEC) schemes that are designed to intercept and hijack wire transfers from businesses and individuals, including many senior citizens. Operation Wire Wire, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury and the U.S. Postal Inspection Service, was conducted over a six month period, culminating in over two weeks of intensified law enforcement activity resulting in 74 arrests in the United States and overseas, including 29 in Nigeria, and three in Canada, Mauritius and Poland. The operation also resulted in the seizure of nearly $2.4 million, and the disruption and recovery of approximately $14 million in fraudulent wire transfers.
BEC, also known as “cyber-enabled financial fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments.
The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly, and others, by convincing them to make wire transfers to bank accounts controlled by the criminals.
DOJ Press Release
Our San Diego MLS quietly removed our complaint button recently. I’m sure they had heavy volume, but they aren’t the realtor police – nobody is. Hat tip to SM for sending this in:
VANCOUVER – The province is hoping to make it easier for you to report suspected misconduct in the local real estate market by launching a new tool.
A new anonymous tipline has been launched by the Real Estate Council of BC, as part of, what it describes, a way to protect potential homeowners.
“This is a way for people who have information about potential misconduct of real estate agents, that perhaps they’re uncomfortable identifying themselves, they have this as a tool to report information to the council anonymously,” explains Executive Officer Erin Seeley.
The tipline is one of the recommendations made by an Independent Advisory Group two years ago. “The council set up this group as a way to report on the improvements the Real Estate Council can make in overseeing licensees and in protecting the public.”
This new tool allows people to report things like a conflict of interest, failure to disclose information, or even the mishandling of money.
There is a complaints process already in place and Seeley adds the new tool is part of the process currently available to the public.
“It’s anonymous, it’s more accessible with the 1-800 number, and it’s a secure forum,” she says. “And it allows people, regardless of whether they’re a real estate licensee or a consumer, they can use this to report misconduct and not have a fear of reprisal.”
Seeley says just like the current process, all complaints are investigated and reviewed to determine whether a full investigation is required. “If there [are] grounds for misconduct and evidence, we’ll take action as appropriate through the channels of investigating. We have administrative fairness and natural justice as key parts of our process.”
Processes to resolve complaints are available, and if a case warrants it, Seeley says hearings can be held by a tribunal.
“We have financial penalties, significant penalties up to $250,000 for licensees per infraction under the Real Estate Services Act.”
According to Seeley, the council receives a number of complaints and has investigated claims of significant misconduct in the past.
Link to Article
The only recourse around here is to file a complaint with the Association of Realtors, and have the Ethics panel hear your case.
I did file a complaint recently, which meant I had to compile and submit six copies of the evidence. The agent was found guilty, and received the maximum penalty for a first-time offender – a letter in their file for 12 months.