Sacramento Feds Get Guilty Pleas From Foreclosure Rescue Operator; Two Straw Borrowers

Christopher Craig, of Auburn, California, pleaded guilty in a Sacramento Federal Court last week to bank fraud relating to foreclosure rescue deals he entered into with a number of Sacramento-area homeowners facing foreclosure, according to a Sacarmento U.S. Attorney's Office Press Release. In addition, co-defendants Donald Edgecomb, of Trevor, Wisconsin, and Jacob Esteves, of Auburn, who allegedly acted as straw borrowers in the scam, also pleaded guilty today to misprision of a felony, admitting that they knew of Craig's felony bank fraud scheme and took affirmative steps to conceal the scheme from detection by law enforcement.

According to the Press Release, Craig admitted to a scheme in which he approached homeowners facing foreclosure, promised to loan them money, and instead, he created documents deeding away their homes. As part of the scheme, Edgecomb and Esteves acted as straw borrowers and applied for home equity loans from Washington Mutual Bank claiming falsely that they were the true owners of the properties and that there were no pending mortgages on the properties. Only part of the $1.2 million of fraudulently obtained proceeds was paid back; WaMu ultimately was stiffed on approximately $975,000.

The homes used in this scheme are located in Auburn, Lincoln, Stockton, Elk Grove, Sacramento and Manteca. Sentencing is scheduled for July 19, 2007. For more, see:

• U.S. Attorney's Press Release
• Indictment - U.S.A. vs. Christopher Craig, et al.
• Plea Agreement - U.S.A. vs. Craig (see pages 13-14)
• 'Foreclosure specialist' pleads guilty to fraud (Sacramento Business Journal)

Editor's Note

In reading over both the Indictment and the Craig Plea Agreement, it seems that, because the homeowners signed away their homes to the defendants without realizing they were doing so, the Government took the position that the homeowners (and not the defendants) were still the "true owners" of the homes when the defendants applied for the loans from Washington Mutual. Accordingly, when the defendants submitted the loan applications to WaMu holding themselves out as the "true owners" of the homes, that assertion was treated by the Government as a "false statement made on a loan or credit application" (even though legal title was signed over to the defendants at that point), and served as a partial basis for the criminal prosecution.

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