Denver Real Estate Agent, Broker, and Appraiser Sentenced to Federal Prison as Part of $4 Million Mortgage Fraud Scheme
|U.S. Attorney’s Office December 06, 2011|
Cedric Lipsey and Philip Martinez were both indicted by a federal grand jury in Denver on August 27, 2009. Lipsey pled guilty to wire fraud on November 18, 2010 and was sentenced on November 23, 2011. Phillip Martinez pled guilty to wire fraud on October 7, 2009 and was sentenced on March 11, 2011. David Vukovinsky was charged by Information on July 7, 2010. He pled guilty before Judge Brimmer on July 15, 2010. He was sentenced on March 31, 2011.
According to information contained in court documents of all three defendants, beginning in April 2004 and continuing until March 2006, Cedric Lipsey, aided and abetted by Philip Martinez, did knowingly devise and intend to devise a scheme to defraud lending companies that funded residential mortgage loans and to obtain money from them by means of materially false and fraudulent pretenses, representations, and promises. To implement the scheme, the defendants utilized Vukovinsky’s inflated appraisals.
Lipsey orchestrated the purchase and resale or refinancing of numerous residential properties, including the sale of one of his own homes, by paying individuals to participate as “investors” in what he referred to as an investment “opportunity.” Lipsey and Martinez arranged for these so-called “investors” to use their good credit to obtain mortgage loans to purchase the properties. Shortly after the first set of loans that helped these individuals purchase properties, Lipsey caused them to sell the properties to a second set of buyers at substantially higher prices, with Lipsey and Martinez taking a combination of commissions, fees, and proceeds from the first and second transactions.
Lipsey falsely represented that the first buyers would be purchasing and had purchased the properties for less than their actual market value. The first sales were not “distressed”, as the defendants represented to facilitate their fraud. In fact, the first buyers purchased the properties at or near their market value, and there was no legitimate reason for the substantial increase in price when the same properties were resold shortly thereafter.
Lipsey and Martinez arranged to have a variety of fraudulent documents submitted to the lenders in support of the loan applications. These consisted primarily of documents purporting to show proof of the borrowers’ employment, proof of the borrowers’ assets, and sources of the borrowers’ asset, and incomes. The defendants also used forged signatures where necessary to facilitate the scheme. Furthermore, Lipsey enabled certain appraisers to create false reports which reflected that the subject properties were “comparable” to the higher quality or otherwise more valuable properties, when they were not.
“The conduct in this case is especially egregious because a licensed real estate agent, a mortgage broker and an appraiser worked together to defraud banks, the government, and the mortgage system generally,” said U.S. Attorney John Walsh. “The work of the team that investigated and prosecuted the defendants, leading to their incarceration, is important to protect the integrity of the mortgage lending process.”
“This sentencing is a strong reminder of how serious our courts consider this criminal activity,” said Sean P. Sowards, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “IRS Criminal Investigation is committed to identifying and pursuing individuals who through callous greed have contributed to the decline of our economy.”
“The mortgage crisis has caused considerable harm to our Nation’s economy,” said FBI Special Agent in Charge James Yacone. “The FBI will continue to investigate real estate and mortgage industry professionals who have ignored their fiduciary responsibilities and commit fraud for their own financial benefit.”
The case was investigated by the Federal Bureau of Investigation (FBI), and the Internal Revenue Service-Criminal Investigation (IRS CI).
The case was prosecuted by Assistant U.S. Attorney Linda Kaufman.