Four indicted in Central Valley mortgage fraud scheme

From the Central Valley Business Times:

Four Sacramento area men have been indicted by a federal grand jury on charges of bank fraud and conspiracy to launder money in connection with what prosecutors are calling a mortgage fraud scheme involving at least 19 homes with loans of more than $8 million.

Accused are James Martin, 36; Mario Fellini III, 38; Gabriel Viramontes, 44; and Joseph Gallo, 34.

According to Assistant U.S. Attorney Matthew Stegman, who is prosecuting the case, the indictment charges that from June 2006 through October 2006, the men individually and through VFM Investment Group, Esnian Mortgage Realty, and Freedom Capital Mortgage, engaged in a mortgage fraud scheme by asking people to act as straw purchasers of single family homes on behalf of others with bad credit who wished to purchase homes.

Those solicited were told they would benefit financially from the transactions, prosecutors say.
The defendants defrauded lenders such as Washington Mutual Bank and Fremont Investment and Loan by submitting fraudulent loan applications, representing straw purchasers of homes as actual purchasers of homes, the government contends.

The indictment further charges that the fraudulent loan applications submitted on behalf of the straw purchasers falsely inflated the buyers’ income, falsely stated that a buyer was employed at a specific job, and falsely stated that the properties would be owner-occupied.

The indictment alleges that the purpose of the scheme was to ensure that the home purchase transactions closed, so that defendants would receive substantial loan broker commissions and illegal kickbacks from real estate sales commissions.