Minnesota Mortgage Fraud Ring Convicted Of Lining Up Straw Buyers, Originating Fraud Mortgages, And Then Selling Properties At Inflated Prices

22 12 2008

“…Shinon Lindberg would allegedly recruit “straw buyers” for pieces of real estate. They had a third accomplice, a mortgage broker who would secure fraudulent loans, and then Scott Rosenlund would use his company 10Spring Homes to buy and sell the properties at inflated prices…”


http://www.myfoxtwincities.com/myfox/pages/News/Detail?contentId=8104640&version=2&locale=EN-US&layoutCode=TSTY&pageId=3.2.1

Two men were found guilty Thursday in a big mortgage scam that’s made headlines for a year. Prosecutors say they defrauded banks and investors all over Hennepin County.


Shinon Lindberg and Scott Rosenlund allegedly masterminded the largest mortgage fraud case in
Minnesota‘s history. They were found guilty Thursday of racketeering and seven counts of theft by swindle.”We’re seeing too many schemes. This is one time the bad guys got caught and they’re doing time,” says Mike Freeman, Hennepin County

Attorney.

Shinon Lindberg would allegedly recruit “straw buyers” for pieces of real estate. They had a third accomplice, a mortgage broker who would secure fraudulent loans, and then Scott Rosenlund would use his company 10Spring Homes to buy and sell the properties at inflated prices.

For instance, court documents show that one parcel of land was bought and sold the same day for a $100,000 mark-up.

Deals like this were done time and time again over three years, eventually bilking banks and unwitting investors out of more than $100 million.

Freeman says the properties were scattered all over southwest Hennepin County, and investors never saw any of the money they were promised.

Rosenlund and Lindberg will be sentenced in February. They face up to 100 months in prison.

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Stockton, CA Mortgage Fraud

4 11 2008

http://www.mercurynews.com/breakingnews/ci_10889139

pirates-of-the-caribbean-johnny-depp-49008311A Stockton man has been sentenced to 15 months in federal prison for his part in a mortgage fraud scheme during the height of the housing boom.

Prosecutors say 45-year-old Jose Serrano recruited fake buyers for homes in the Stockton area between 2003 and 2005.

He pleaded guilty to helping 37-year-old Iftikhar Ahmad of Stockton sell 10 homes to fraudulently obtain more than $1.5 million in loans. Two mortgage brokers and two former employees of Long Beach Mortgage, a subsidiary of Washington Mutual Bank, were among others charged in the case. All but one have pleaded guilty and are awaiting sentencing.

Serrano was ordered to pay more than $219,000 in restitution to the bank as part of his sentence Monday.





Washington Mutual Paid Mortgage Brokers Excessive Fees On Loans

3 11 2008

“They started giving loan officers free trips if they closed so many loans, fly them to Hawaii for a month,” Ms. Cooper recalls. “One of my account reps went to Jamaica for a month because he closed $3.5 million in loans that month.”

 http://www.nytimes.com/2008/11/02/business/02gret.html?_r=1&oref=slogin&ref=business&pagewanted=print

AS a senior mortgage underwriter, Keysha Cooper was proud of her ability to spot fraud and other problems in a loan application. A decade of vetting mortgage documents had taught her plenty, she says.

But as a senior mortgage underwriter at Washington Mutual during the late, great mortgage boom, Ms. Cooper says she found herself in a vise. Brokers squeezed her from one side, her superiors from the other, she says, and both pressured her to approve loans, no matter what.

“At WaMu it wasn’t about the quality of the loans; it was about the numbers,” Ms. Cooper says. “They didn’t care if we were giving loans to people that didn’t qualify. Instead, it was how many loans did you guys close and fund?”

Ms. Cooper, 35, was laid off a year ago and is still unemployed. She came forward to discuss her experiences at the bank in order to help shareholders recover money from WaMu executives.

Ms. Cooper is one of 89 employees whose stories fill a voluminous complaint filed against officers of the company by the Ontario Teachers’ Pension Plan board, a big shareholder. Topping the list of defendants is Kerry K. Killinger, the WaMu chief executive who was ousted in mid-September.

WaMu was seized by federal regulators in late September, the biggest bank failure in the nation’s history. It was sold to JPMorgan Chase for $1.9 billion.

The shareholder complaint depicts WaMu’s mortgage lending operation as a boiler room where volume was paramount and questionable loans were pushed through because they were more profitable to the company.

When underwriters refused to approve dubious loans, they were punished, she says.

MS. COOPER started at WaMu in 2003 and lasted three and a half years. At first, she was allowed to do her job, she says. In February 2007, though, the pressure became intense. WaMu executives told employees they were not making enough loans and had to get their numbers up, she says.

“They started giving loan officers free trips if they closed so many loans, fly them to Hawaii for a month,” Ms. Cooper recalls. “One of my account reps went to Jamaica for a month because he closed $3.5 million in loans that month.”

Although Ms. Cooper couldn’t see it, the wheels were already coming off the subprime bus.

“If a loan came from a top loan officer, they didn’t care what the situation was, you had to make that loan work,” she says. “You were like a bad person if you declined a loan.”

One loan file was filled with so many discrepancies that she felt certain it involved mortgage fraud. She turned the loan down, she says, only to be scolded by her supervisor.

“She told me, ‘This broker has closed over $1 million with us and there is no reason you cannot make this loan work,’ ” Ms. Cooper says. “I explained to her the loan was not good at all, but she said I had to sign it.”

The argument did not end there, however. Ms. Cooper says her immediate boss complained to the team manager about the loan rejection and asked that Ms. Cooper be “written up,” with a formal letter of complaint placed in her personnel file.

Ms. Cooper said the team manager told her to “restructure” the loan to make it work. “I said, how can you restructure fraud? This is a fraudulent loan,” she recalls.

Ms. Cooper says that her bosses placed her on probation for 30 days for refusing to approve the loan and that her team manager signed off on the loan.

Four months later, the loan was in default, she says. The borrower had not made a single payment. “They tried to hang it on me,” Ms. Cooper said, “but I said, ‘No, I put in the system that I am not approving this loan.’ ”

Brokers often tried to bribe Ms. Cooper to approve loans, she says. One offered to pay $900 to send her son to football summer boot camp if she would approve a loan that had been declined by a host of other lenders. “I told him no and not to disrespect me like that again,” Ms. Cooper says.

Hidden fees meant brokers could easily make between $20,000 and $40,000 on a $500,000 loan, Ms. Cooper says.

“WaMu was allowing brokers to get 6 to 8 percent off one loan,” she says. “If I had a loan where the borrower was already tight and then I saw the broker is getting $10,000 or $20,000, I would cut their fees back. They would get so upset with me.”

Ms. Cooper says that loans she turned down were often approved by her superiors. One in particular came back to haunt WaMu.

Vetting a loan one day, Ms. Cooper says she became suspicious when a photograph of the house being bought showed one street address while documents deeper in the file showed a different address. She contacted the appraiser, and recalls that he said that he must have erred and that he would send her the correct documents.

“So then he sent me an appraisal with a picture of the same house but this time with the right number on it,” Ms. Cooper recalls. “I looked the address up in our system and could not find it. I called the appraiser and said, ‘Please investigate.’ ”

The appraiser came back, reporting that a visit to the California property had found everything in order and in agreement with the original appraisal. “I was so for sure that it was fraud I wanted to get on an airplane,” Ms. Cooper says.

The $800,000 loan was approved, but not by Ms. Cooper. Six months later, it defaulted, she says. “When they went to foreclose on the house, they found it was an empty lot,” she recalls. “I remember clear as day this manager comes over to me and asks, ‘Do you remember this loan?’ I knew just what she was talking about.”

Rejecting loan after loan, however, gave her battle fatigue. “The more you fight, the more you get in trouble,” she says. She was written up three or four times at WaMu.

After WaMu’s mortgage lending unit laid her off, she applied for work in its retail banking division. She was turned down, she suspects, because of the critical letters in her personnel file.

Ms. Cooper’s biggest regret, she says, is that she did not reject more loans. “I swear 60 percent of the loans I approved I was made to,” she says. “If I could get everyone’s name, I would write them apology letters.”

CHAD JOHNSON, a partner at Bernstein, Litowitz Berger & Grossmann, is lead counsel for shareholders in the suit. He said: “Killinger pocketed tens of millions of dollars from WaMu, while investors were left with worthless stock.” With WaMu gone, he added, “it is all the more important that Killinger and his co-defendants are held accountable.”

The lawyer representing WaMu and Mr. Killinger did not return a phone call seeking comment.

Ms. Cooper hopes to return to the mortgage business soon. “I loved underwriting because it’s about being able to put a person in their dream home,” she says. “But messing these borrowers around was wrong.”