Mortgage Fraud Cases in Real Life
In our last blog, “Is Mortgage Fraud a Felony?” we provided a quick explanation of what constitutes mortgage fraud and the forms of mortgage fraud that are typically performed. In this blog, we will look at some recent mortgage fraud cases.
Eric Hill | Mortgage & Real Estate Commission Fraud
Eric Hill is a real estate agent in Atlanta, Georgia. He was jailed in early 2022 for his role in a mortgage fraud scam that netted more than $21 million in bogus mortgage loans. The majority of the fraudulent loans were also insured by the Federal Housing Administration (FHA), which resulted in over $850,000 in paid claims for defaulted mortgage loans. Hill is also accused of defrauding his company out of almost $480,000 in real estate commissions.
Eric Hill and Robert Kelske were real estate agents who allegedly assisted hundreds of ineligible consumers in purchasing homes. They specifically instructed the homebuyers on what types of assets they should claim to have, as well as what employment and income they should state on the application.
Hill and Kelske collaborated with the other defendants, who were document fabricators, to change their buyer’s bank statements and other financial documents. The document forgers not only boosted the assets on buyers’ bank statements, but they also:
Fake bank entries were created that showed bogus direct deposits from employers (that Hill and Kelske selected).
Fake profits statements were created to match the forged bank deposit information.
Other defendants also served as employers, fielding calls and emails from lenders in order to verify the bogus information in the buyers’ applications. Hill and Kelske also collaborated with Anthony Richard and Cephus Chapman, both real estate brokers; they falsely claimed to represent buyers in order to collect a fee from the sale; however, they never worked with any of the homebuyers they claimed to represent.
The agents would advise the closing attorney that they would be unavailable for the home closing and would send their bank information and wire instructions for their commission. When they received the commission, they would give a big amount of it to Hill and Kelske in exchange for adding them to the contract.
Hill pled guilty and was sentenced to two and a half years in jail, as well as three years of supervised release. His co-conspirators have also been charged and sentenced for their roles in the fraud.
George Kritopoulos | Decade-Long Mortgage Fraud Plot
George Kritopoulos, a Salem, MA resident, was convicted on May 27, 2022, for his role in a 10-year mortgage fraud scheme that resulted in at least two dozen fraudulent loan transactions totaling $6.5 million and $3.8 million in mortgage lender losses.
From 2006 until 2015, Kritopoulos and his co-conspirators, Joseph Bates II and David Plunkett, scammed banks and other financial organizations. They provided fraudulent information to those institutions on behalf of borrowers recruited to purchase properties in Salem—typically multi-family structures with two to four units that were transformed into condos by the co-conspirators. Kritopoulos encouraged the borrowers to buy individual units, which were subsequently financed by fraudulent mortgage loans.
Falsified information on the borrowers’:
Jobs Income Assets Intention to occupy the property
Many of the bogus job information claimed that the applicants were workers of shell companies owned by Kritopoulos and considerably inflated their income based on misleading information about their salary. Because the borrowers did not have sufficient income to repay their house loans, 19 of the 21 borrowers fell behind on their payments.
While under investigation, Kritopoulos urged Bates and Plunkett to fabricate fraudulent statements and papers to make the shell businesses appear more real, which is why he was charged with obstruction. However, Bates and Plunkett pled guilty for their roles in the mortgage fraud schemes.
Kritopoulos was convicted of:
One count of conspiracy, two counts of wire fraud, six charges of bank fraud, one count of obstruction of justice, and one count of assisting in the preparation of a false income tax return.
The punishments for each of these violations are severe, and they are as follows:
Bank and wire fraud are both punishable by up to 30 years in jail and five years of supervised release (for each count).
Conspiracy involves a maximum sentence of five years in jail and three years of supervised release.
Obstruction of justice is punishable by up to 20 years in prison and five years of supervised release.
Aiding in the preparation of false tax returns carries a penalty of up to three years in jail and a year of supervised release.
All of the aforementioned charges also carry a $250,000 fine or double the amount of gross gain or loss, whichever is larger.
Mortgage Fraud and Identity Theft Case Worth $10 Million
Six South Floridians and one New Jersey resident were sentenced to federal prison for their roles in a fraud operation that involved producing and utilizing phony passports, stealing identities, impersonating homeowners, and fabricating loan paperwork. The defendants amassed over $10 million in home equity by convincing lenders to offer millions of dollars in loans on unencumbered residential properties.
According to the DOJ, the defendants began the scam by finding residential residences in high-end South Florida communities with no mortgage and missing owners. Then, using the genuine homeowner’s details, they forged foreign passports with photographs of the accused and co-conspirators. The forged passports were used to apply for mortgage loans from private lenders and to open bank accounts in the names of the real homeowners, and when the loans were approved, the funds were transferred to these accounts.
Each of the seven defendants was condemned to prison:
Alejandro Boada Oliveros was sentenced to 46 months in prison.
Carlos Rafael Castaneda Mendez was sentenced to 78 months in prison.
Isbel Rodriguez Batista was sentenced to 30 months in prison.
Jonnathan Jesus Gonzalez was sentenced to 44 months in prison.
Katherine Hansen Mendoza was sentenced to seven months in prison.
Lilia Rosa Morales Moreno was sentenced to 30 months in prison.
Yanjeisis Alejandra Pompa Villafane was sentenced to 28 months in prison.
