David Saks: San Diego Loan Originator Admits Fraud Scheme

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San Diego Loan Originator Admits Fraud Scheme

                                                             Loan Originator Admits Fraud Scheme

Thomas Gregory Alexander, San Diego, California, a loan originator, pleaded guilty to 10 felony counts for his role in a multi-million-dollar mortgage fraud scheme. Alexander entered guilty pleas for one count of Conspiring to Commit Wire Fraud and nine counts of Wire Fraud before U.S. Magistrate Judge David K. Duncan. He will be sentenced on September 19, 2011, before U.S. District Chief Judge Roslyn O. Silver.

Alexander's mortgage fraud scheme induced Mesa Bank (now known as Sunrise Bank of Arizona) to issue over $40 million dollars in loans, and caused millions of dollars in losses to the bank.

Between 2005 and 2007, Alexander worked as a loan originator for American Mortgage Funding ("AMF"). Through AMF, Alexander assisted third-party borrowers to qualify for loans from Mesa Bank. These loans were used to acquire parcels of land in Maricopa County, Arizona, and to fund the construction of a custom home on the parcel. Starting in 2005, Alexander concocted a scheme to defraud Mesa Bank by creating fraudulent documents for unqualified third-party borrowers. In many cases, Alexander directed the third-party borrower to sign blank Uniform Residential Loan Applications. Alexander and his co-conspirators fraudulently completed the blank applications by overstating the borrower's monthly income, overstating the amount of money in the borrower's bank accounts, falsely representing that the borrower would make a down payment at closing, and misrepresenting the intent of the borrower to use the property as a primary residence. Alexander and his co-conspirators would alter Verification of Deposit documents to falsely overstate the amount of money in the borrowers' bank accounts, and they would alter a borrower's credit report to falsely represent a higher credit score.

During the time of the conspiracy, Mesa Bank required borrowers to pay 5 to 10 percent of the total project cost at the time of closing. Because Alexander's third-party borrowers were financially unqualified to obtain the loans, Alexander and his conspirators submitted false documents to Mesa Bank to show that a down payment was deposited into escrow. None of Alexander's third-party borrowers, as part of his scheme, actually paid a down payment.

In addition, Alexander obtained a significant amount of cash back from his scheme by selling lots to some of the third-party borrowers at an inflated price. Alexander operated a company called Sea Rock, L.L.C., which owned several parcels of land. Alexander directed many of the third-party borrowers to acquire loans to purchase lots from Sea Rock. The borrowers were unaware that they were purchasing lots that were actually owned by Alexander, their loan originator. Alexander ultimately received a significant amount of profits after the sale, because he inflated the price of the lots, and directed a co-conspirator to create a false appraisal to support the loan amounts.

A conviction for Conspiracy carries a maximum penalty of five years in federal prison, a $250,000 fine, or both. A conviction for Wire Fraud which affects a financial lending institution carries a maximum penalty of 30 years in federal prison, a $1 million fine, or both. In determining the sentence, Chief Judge Silver will consult the U.S. Sentencing Guidelines, which provides advisory sentencing ranges. The judge is not bound by these guidelines in determining a sentence.

Alexander's prosecution is part of an initiative called "Operation Stolen Dreams" in which dozens of defendants-including many real estate professionals-were indicted in the summer of 2010. To date, 26 defendants have been convicted through guilty pleas.

The investigation in this case was conducted by the United States Internal Revenue Service and the Federal Bureau of Investigation. The prosecution is being handled by Raymond K. Woo and Jennifer F. Levinson, Assistant U.S. Attorneys, District of Arizona, Phoenix.

"Virtually nothing this defendant put into his loan documents was true-not the borrower's income, their credit worthiness, their savings or even their desire to live in the house-but the damage to our community and to our banking system was very real," said U.S. Attorney Dennis K. Burke. "We have seen an epidemic of mortgage fraud cases emerge from the economic downturn and implosion of our housing and real estate market, and I commend our partners at the IRS and the FBI for bringing this shameless scheme to a halt." 

"The plea of Thomas Gregory Alexander is the result of the collaborative efforts of the Arizona Mortgage Fraud Task Force, the United States Attorney's Office, and the FBI," said John A. Strong, Acting FBI Special Agent in Charge, Phoenix Division. "The utilization of the Arizona Mortgage Fraud Task Force is a force multiplier in addressing the rampant mortgage fraud over the past few years. The FBI and our law enforcement partners are committed to exposing those individuals who intentionally and woefully defraud consumers and the mortgage industry. Mortgage fraud remains a top criminal priority of the FBI."

Courtesy Rachel Dollar - Mortgage Fraud Blog




David Saks



Time&Temp Memphis

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Comment balloon 0 commentsDavid Saks • June 15 2011 02:03AM

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