David Saks: 7 Sent to Federal Prison in Multi-Million-Dollar Mortgage Fraud Scheme

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

7 Sent to Federal Prison in Multi-Million-Dollar Mortgage Fraud Scheme

Seven Sentenced to Federal Prison in

Multi-Million-Dollar Mortgage Fraud Scheme

U.S. Attorney’s Office July 29, 2014
  • Southern District of Texas (713) 567-9000

HOUSTON—The final two defendants charged for their roles in a multi-million dollar mortgage fraud scheme operating in the Houston area have been ordered to prison, announced United States Attorney Kenneth Magidson.

Din Chaney, 36, and

Lisa Lipton, 50,

admitted to participating in a conspiracy to commit bank, mail and wire fraud as did

Catherine Sanoubane, 35,

Jose Batista, 36,

Dennis Hannah, 43,

Nathaniel Gordon III, 32, and

Shawn Lewis Washington, 38.

All were convicted of the conspiracy.

Chaney, Sanoubane, Hannah and Gordon also admitted to conspiracy to commit money laundering

Today, U.S. District Judge Lee H. Rosenthal sentenced Chaney to a total of 36 months, while Lipton received a 52-month-term of imprisonment. Lipton and Chaney were also ordered to pay $3,499,129.06 and $4,551,917.65 in restitution, respectively.

Sanoubane, Hannah, Gordon, Washington and Batista were all sentenced earlier this year to respective terms of 115, 46, 24, 97 and six months in federal prison. All were also ordered to pay restitution in varying amounts ranging from more than $1.6 million to more than $6.3 million.

The scheme involved the recruitment of straw borrowers to purchase residential properties at an inflated value.

Financing was obtained from various lenders who were provided false and fraudulent information meant to induce them to fund the loans.

The defendants arranged to be compensated with a portion of the loan proceeds.

Ultimately, the loans fell into default which resulted in a substantial loss to the lenders.

Sanoubane, Lipton, Chaney and Gordon

were all licensed loan officers in the State

of Texas engaged in mortgage lending

during the commission of the fraud.

In addition, Lipton was also a licensed

mortgage broker doing business as TWMC

Inc.

The criminal investigation was led by the FBI, U.S. Postal Inspection Service and Internal Revenue Service—Criminal Investigation. Assistant U.S. Attorney Melissa Annis is prosecuting.

This content has been reproduced from its original source.
 



David Saks



Time&Temp Memphis

Legal Disclaimer
Please be advised that:

 The information and notices contained in this blog are intended to summarize recent developments and news. The posts are presented as general research and information. These posts are not intended, nor should be regarded, as legal advice. Some blog posts concern allegations made in civil lawsuits and in criminal indictments in United States Courts. All persons are presumed innocent until convicted of a crime and proven guilty. Readers who have particular questions or who believe that they need legal counsel should seek the advice of a qualified attorney. It is neither the editor's or author's intention to create a confidential relationship or any broker-client relationship via communication from this site at any time. Please consult with your state real estate board if questions & answers in the education section conflict with the laws of your region or if you need clarification regarding their applicability or how they may govern the services that you provide.

By entering this web site, you understand the following:
When you select a link to an outside Web site, you are subject to the privacy, copyright, security, and information quality policies of that Web site. David Saks:
1.DOES NOT control or guarantee the accuracy, legality, relevance, timeliness, or completeness of information contained on a linked Web site;
2.DOES NOT endorse linked Web sites, the views they express, or the products/services they offer unless linked web sites, the views they express, or the products/services they offer endorse or support David Saks in accordance with the standards of the Tennessee Real Estate Commission and the Federal Government's laws regarding commerce and the application, solicitation and transmission of internet-related concerns, commerce or social networking;
3.CANNOT authorize the use of copyrighted materials contained in linked Web sites;
4.IS NOT responsible for transmissions users receive from linked Web sites;
5. That DavidSaks.Com is biographical & real estate related. Some links within will leave this site.
6. http://activerain.com/profile/davidsaks is internet-compliant & abides by the rules & regulations of the Tennessee Real Estate Commission, Eve Maxwell, Executive Director.
7. Unless indicated otherwise, ActiveRain does offer listings, or IDX and is provided for licensed salespersons, brokers, buyers & sellers of real property as a community & professional service.
8. David Saks is a retired / licensed real estate broker in the State of Tennessee, license #290452, and an independent contractor.
9. Information is believed to be accurate, but not guaranteed, at any realty link or document connected to the World Wide Web & viewable by anyone connected to the internet who has a web browser.
10. Brokers, buyers, sellers, agents & anyone should independently verify any information prior to submitting any offer to purchase goods & services from any link.
11. Please Visit The American Real Estate Alliance or Memphis.8k.Com for additional information regarding property issues for real estate professionals and consumers.

 

Photos © & Licensed by Nova Development

All Content Protected © 
Before you even think about
committing a real estate crime
click this red button.
Real Estate Crimes

© All Rights Reserved.

 

 

 

 

"Information generated by the Department of Justice is in the public domain and may be reproduced, published or otherwise used without the Department’s permission. Citation to the Department of Justice as the source of the information is appreciated, as appropriate."

Department of Justice Legal Policies


 

  Real Estate Crimes

 

Click "HERE" For Today's Question

 

 

TheListen Now!

David Saks Show

Saturday Nite

9pm-12am Central

University of Memphis

WUMR

 

Support
America's Hobby

Click Elvis

Mr.Saks' participation in ActiveRain ended April 13, 2015.

His blog archives will remain online.

May God bless you.

Comment balloon 11 commentsDavid Saks • July 30 2014 08:48AM

Comments

Wow, money makes people do crazy things.  I hope this isn't a trend, but I saw another post earlier today about someone getting charged with accepting payments to push through short sales. 

Posted by Jen Silverman, Consider it...Sold. Cape Cod & Plymouth Specialist over 5 years ago

Jen, it's as common in this business as aspirin is for a headache.

Here's the proof. Click the button.

Posted by David Saks ((retired)) over 5 years ago

David - May they have a truly miserable time behind bars for what they did.

Posted by AJ Heidmann ~ CRS, YOUR Alexandria & Arlington, VA Real Estate Expert (McEnearney Associates, Inc.) over 5 years ago

I'm sure they will. A J.

Posted by David Saks ((retired)) over 5 years ago

doh! It's interesting... I would expect just a bit more informed comments on cases such as these. Being very familar with this case specifically and with the mortgage industry and environment when this allegedly occured, most professionals should understand that this was commonplace and more importantly encouraged by the lending institutions themselves. The banks were complict in these transactions but had no moral barriers because all they did is package up these loans and resell in the marketplace.  There is no transaction or distribution of funds that happened (at least in this case) outside of what the institutions (banks and title comapnies) were already well aware of from the HUD statements. Furthermore, if you really think you can "steal" millions of dollars in this fashion, you are seriously mistaken. These reported amounts are "intended loss" based on property values.  In the end many times there was no realized loss as the homes have intrinsic value especially now that the market has turned around.  The banks didn't/don't do their due dillegence on borrowers or the transactions themselves as there is no harzard not to. Of course when the economy goes to sh*t then the fall guys become the little people and not the banks and corporations themselves becasue they are the easist targets. This doesn't excuse the illegal activity itself, but those in the institutions should be tried and put behind bars too.

Posted by Mark Adderly over 5 years ago

Mr. Adderly, did you miss something in the DOJ press release that mentioned that:

"The scheme involved the recruitment of "straw borrowers" to purchase residential properties at an inflated value.

Financing was obtained from various

lenders who were provided false and fraudulent information

meant to induce them to fund the loans.

The defendants arranged to be compensated with a portion of the loan proceeds.

Ultimately, the loans fell into default which resulted in a substantial loss to the lenders..." ?

The banks didn't recruit the straw borrowers.

The loan officials did.

Lipton was also a licensed mortgage broker

doing business as TWMC Inc.

Not a banker !

The loan officials prepared phony loan documents to fleece the lenders with.

Documents from "licensed" loan officials the lenders trusted.

What part of the two words

"mortgage fraud"

don't you understand ?

Posted by David Saks ((retired)) over 5 years ago

I didn't say fraud didn't take place. Fraud should be unacceptable at any level, my point was that the focus by the fed in almost all of these cases has not been on the institutions, who like I said were well aware of the compensation disbursments from loan proceeds and who they were distributed to (at least in this specific case and I'm sure many like it). They just didn't care. That's my only point, not that fraud wasn't committed.  But a couple of details about this case specifically that are not necessarily public but interesting nonetheless...

(1)  Straw borrower is an overstatement here.  You are talking about an environment where "no doc" loans were common. Sure the borrowers mostly didn't qualify and docs were prepared (fraudulently) to appear that they were, but again the banks didn't really care enough to do a deep dive nor verify much.  Most loans in general involve borrowers overstating qualifications or moving money around to show more assets than are really there, in the end it usually doesn't matter as long as they can actually make the payments.  The majority of the props in this case were model home demos sold as leasebacks to the builders. The builders wanted loans off the books, they sold the properties and agreed to lease the properties back for 6-12 months at a lease payment that more than paid the mortgage. In the end the "straw borrowers" just took the lease payments and never paid the mortgage causing foreclosure. But not one of these "victims" were ever indicted.

(2) There was no inflated value of any property and there is nothing illegal about a double closing. If a lender agrees to fund a property, they are well aware of the market value, this isn't a hidden variable. Valuation in this case was not fraudulent, it was independently obtained.  Why would the bank over-lend on an inflated value? Again no moral barrier for the banks to even care and again complicit in the so called "conspiracy".

(3) Ultimately, in what manner do the banks lose money on any of these transactions?  They are using borrowed money to lend, on foreclosure they reposess property of real value, and in a conviction where the "criminal" may have profited tens of thousands of dollars per transaction, they are held to repay millions of dollars back to the bank based on the home market values at the same time the banks are getting bailed out by the govt. for their bad practices. Ridiculous.

But ok, let's put these people under the jail and give them years in prison and a lifetime of restituion payments, but do nothing all about the system defects that continue to cause this fraud.  Great...

Posted by Mark Adderly over 5 years ago

Why would the banks not care once the disbursement of fraudulent loan proceeds had occurred and ultimately discovered ? 

Sounds like you're determined  to shuffle the core of the responsibility to the lending institutions with a skewed sense of the reality of this crime.

How do you know so much about how the banks viewed the loan documents or how thorough the banks were able to determine the validity of the documents that they were processing ?

Appraisals had to have been prepared before loans were issued on the subject properties.

Who performed the appraisals to justify the amounts of the loans ?

How were those appraisals carried out and under what types of market conditions were they subjected to ?

This isn't about "no doc" or "low doc" loans.

It's about a mortgage fraud conspiracy perpetrated by several individuals, including licensed loan officials.

Were any of those individuals appraisers ?

It wasn't mentioned in the DOJ press release.

I think you're blowing smoke.
 
Who are the "victims" you're referring to ?

The defendants in this case ?

Have you reviewed the market data on the subject properties or seen any of the comparatives based on a fair market appraisal performed by any licensed appraiser ?

You stated that the valuations were independentaly obtained.

How do you know this and who performed those valuations ?

The bank would only over-lend, as you've stated, if it relied on the  data based on a fraudulent appraisal prepared with deceitful examples of comparative properties and fallacious market values.

It would be most evident, even to an outsider, that The banks lose money on these transactions when the borrowers default on the loans.

Sounds like your trying hard to defend some friends that got into some bad trouble.

Much of the money the banks lend come from the secondary mortgage market and not the FED.

That's why pools of mortgages in varying degrees are sold at a discount in order to replenish the supply of available lending resources for homebuyers.

I don't disagree that there are criminals within the banking system.

However, the people you're trying to defend carried out a dirty mortgage scheme based on filthy lending tactics and fraudulent documentation.

Many bankers have been prosectuted for lending fraud and continue to be prosecuted.

The fact that the bankers involved in the loan process in this case haven't been prosecuted is up to the government to determine whether or not that will occur.

It's not the dominion of an anonymous blogger with conspiracy theories about why his friends got busted for mortgage fraud and yet can't understand why the bank manager didn't.

Posted by David Saks ((retired)) over 5 years ago

why would the banks not care once the disbursement of fraudulent loan proceeds had occurred and ultimately discovered ?

They care of course, but most times it's not worth them caring too much because ultimately their losses are minimal. The very fact of how documents are collected in this process proves this. If you verify employment by a simple phone call and that's it then what does that say. If bank statements are taken via fax never verified, same thing, etc. etc.


Sounds like you're determined  to shuffle the core of the responsibility of this crtime to the lending institutions with a skewed sense of the reality of this crime.

Again, those convicted in this case committed a crime, so should have been punished, maybe not to the extent they were, but also some culpibility should be on the banks, thats all I'm saying. If not the problem continues.


How do you know so much about how the banks viewed the loan documents or how thorough the banks were able to determine the validity of the documents that they were processing ?

 

Pre-financial crisis, you were able to get a loan if you could breathe lol. If a borrower was submitted, and didn't qualify, typcially the institution would provide "hints" on how to they could qualify if certain items were "modified". This is fraud encouragement. The reason it didn't matter much is because any losses were pushed on to the financial marketplace. This is why the banks didn't fail, the entire marketplace and economy failed as it cascade thru.

Appraisals had to have been prepared before loans were issued on the subject properties.

Who performed the appraisals to justify the amounts of the loans ?

How were those appraisals carried out and under what types of market conditions were they subjected to ?

In this case at least, the appraisals were all independent and were assessed without any under the table compensation. None of the convicted were involved in appraisals and the indictment includes no activity of this sort.

 

This isn't about "no doc" or "low doc" loans.

It's about a mortgage fraud conspiracy perpetrated by several individuals, including licensed loan officials.

Were any of those individuals appraisers ?  No.

It wasn't mentioned in the DOJ press release.
I think you're blowing smoke.
Who are the "victims" you're referring to ?
The defendants in this case ?

I'm not saying this is victimless and certainly the defendants aren't the victims, they committed fraud. Again only the banks are excluded from any penalty and this type of fraud will continue until they are.


Have you reviewed the market data on the subject properties or seen any of the comparatives based on a fair market appraisal performed by any licensed appraiser ?
You stated that the valuations were independentaly obtained.
How do you know this and who performed those valuations ?


The bank would only over-lend, as you've stated, if it relied on the  data based on a fraudulent appraisal prepared with deceitful examples of comparative properties and fallacious market values.
It would be most evident, even to an outsider, that The banks lose money on these transactions when the borrowers default on the loans.
Sounds like your trying hard to defend some friends that got into some bad trouble.

I am very very familiar with many of these transactions...more directly than not. Yes I do know a few of these defendants personally. I'm not defending their actions at all, I'm just saying this not uncommon, especially then. And it was not an evil conspiracy...more like aggressive business transactions. Nevertheless, still criminal and still should be prosecuted. The upseting part is the govt. ignoring the role of the lenders in all of this, my only point.


Much of the money the banks lend come from the secondary mortgage market and not the FED.

That's why pools of mortgages in varying degrees are sold at a discount in order to replenish the supply of available lending resources for homebuyers.

I don't disagree that there are criminals within the banking system.

However, the people you're trying to defend carried out a dirty mortgage scheme based on filthy lending tactics and fraudulent documentation.

Agreed 100%. But will continue until you fix the system or the gov. stops playing this game that the banks don't know what is going on.  In reality if you truly believe the avg. person has 3-4x their mortgage payment in discrentionary income then...I mean it's laughable. The lenders want the loans closed, and will try to do anything to make it happen. And this is what caused the crisis.


Many bankers have been prosectuted for lending fraud and continue to be prosecuted.

Don't disagree, but very rarely in relation to mortgage professionals...

The fact that the bankers involved in the loan process in this case haven't been prosecuted is up to the government to determine whether or not that will occur.

This case is closed completely.  All defendents plead guilty, after being threatened with 20+ year sentances, many co-operated and many leads were generated, on other fraud cases like this...none to date have been followed and mortgage fraud is now out of fashion and the gov. moves on to the next high profile, politically motivated crimes to pursue. There is legislation being debated now on stopping the intended loss calculation by the gov. only because this no longer is in the public eye.  We don't care because everyone's homes are now worth more and the economy is good. :)  This was alluded to several times by judge Rosenthal in not so many words during this case...

It's not the dominion of an anonymous blogger with conspiracy theories about why his friends got busted for mortgage fraud and yet can't understand why the bank manager didn't.

 

Could be. But again, you are naive if you think the banks aren't without fault here nor they couldn't do more to stop it. There are no moral barriers or motivation for them to...

Posted by Mark Adderly over 5 years ago

I'm not interested in engaging in a war of attrition with see-saw attempts at derailing your reasons for discrediting the nations banks.

 

If you believe that losses are minimal then you're clueless.

 

The people that have to make up these losses include credible investors, insurance agencies that indemnify  and secure against future loss, damage, or liability, and stockholders who endure financial losses associated with criminal acts.

Based on the methods of verification you described, any licensed loan official would be permitted by the governing authority of the respective state to prepare the documents for verification, just as any real estate agent could witness an agency agreement or an offer to purchase.

Your first argument has no merit unless it was discovered that the authorizing bank official colluded with a mortgage broker to approve phony documents like the documents these people were convicted of submitting for the purpose of obtaining fraudulent loan proceeds.

Unless that was the case the loan offical responsible for the preparation of the mortgage documents should be held liable for it's original contents.

 

Not the banker.

 

The banker accepts the document in good faith based on the information that's included, which includes the fair market appraisal prepared for the consideration of the loan.

The sentences that were handed down by the judge were most likely sentences that were based on federal sentencing guidelines as warranted by the Department of Justice or the court of jurisdiction.


Banks are held accountable where connivance is clearly in play with the originating party.

 

In some cases, the banks have been the originating parties involved in fraudulent mortgage conspiracies.

There was, and is, a great level of fraudulent misrepresentation in the lending process and loan officials received gratuitous kickbacks from supervisors for making egregiously fraudulent subprime loans to borrowers whose debt to income ratios greatly exceeded the maximum levels.

 

These lenders knew full well that those borrowers would default on the loans they approved.

As you've claimed that they didn't, banks did fail.

 

And they failed miserably all over the nation.

 

Hundreds of mortgage brokerages were shut down.

 

Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac and others were taken over by the government or closed.

In one paragraph you allude that appraisals were independent without kickbacks.

 

It's ludicrous, completely devoid of wisdom or good sense when you state that none of the defendants were involved in appraisals when the residential properties that were held as securities for the mortgages were purchased at inflated values by straw buyers that the defendants provided.

You state that this act of fraud was "....an aggressive business transaction"....???

That's bullshit.
It was a greed-driven mortgage fraud conspiracy carried out by ruthless swindlers.

The government never ignores the lender's position as you've inferred and concluded by reasoning emanated from your emotions and prejudices.

Again, lenders didn't create the crisis.

 

Ad valorem taxation created it in 1999.

 

Municipalities capitalized on phony assessment values for revenue enhancement.

You said that "mortgage fraud is now out fashion".


That's an infuriating and worthless conjecture.


Click this red button for the proof you need that your comment is derisory:


click this red button.
Real Estate Crimes

Banks can be faulted.

I know that very well.

In this case, it's the people the bank depended upon to perform an integrity-minded service.

People who cheated the bank.

Posted by David Saks ((retired)) over 5 years ago

Adderly (anon) , you're banned from further posting here. Further posts from you will result in their deletion.

Posted by David Saks ((retired)) over 5 years ago

This blog does not allow anonymous comments