Friday, June 10, 2016

Foreclosure Rescue Operator Gets Nearly Eight Years For Peddling About 50 Bogus Sale Leaseback Deals To Financially Strapped Homeowners; Purported Mortgage Help Was Nothing More Than Disguised Equity Stripping Racket, Followed By Rent Skimming Scam That Left Victims' Homes In Foreclosure

From the Office of the U.S. Attorney (Los Angeles, California):
  • The chief executive officer and owner of a Westwood-based mortgage brokerage company that falsely promised to help distressed homeowners avoid foreclosure – but instead stole the equity in the homes and served as the homeowners’ impostor landlord – was sentenced [last week] to 94 months in federal prison.

    David Singui, 52, of Inglewood, the former CEO of Direct Money Source (DMS), was sentenced after pleading guilty to conspiracy, loan fraud, aggravated identity theft and tax evasion charges.

    United States District Judge Christina A. Snyder sentenced Singui and ordered him to pay just over $4 million in restitution.

    The scheme related to DMS caused distressed homeowners to lose more than $4 million and lending institutions to suffer losses of more than $11 million. Homeowners suffered losses when they were induced to sell their homes to straw borrowers sponsored by DMS, which was supposedly going to hold these properties for one year while the distressed homeowners repaired their credit and would then be in a position to repurchase these properties from the straw borrowers.(1)

    In fact, DMS and Singui took permanent title to these properties and misappropriated the distressed homeowners’ equity, while DMS and Singui ended up serving as the landlord of these distressed properties and collected rent from the homeowners for over five years.

    Previously in this case, Aziz Meghji, 37, of Los Angeles, who was the second-in-charge at DMS, was sentenced to four years in federal prison.
    ***
    DMS offered a “Fresh Start Program” that purportedly could assist distressed homeowners avoid foreclosure by arranging to have their homes purchased by so called “credit investors,” who would hold the properties for a year and then sell them back to the original homeowners after they restored their credit ratings. In reality, DMS was an equity-skimming operation that took possession of distressed homeowner’s equity under fraudulent pretenses.

    As part of the scheme, DMS told distressed homeowners that it would provide “credit investors” who would provisionally purchase the properties for one year, thereby allowing the homeowners to avoid foreclosure. During the one-year period, the distressed homeowners could remain in their homes and repair their credit. At the end of the 12-month period, the homeowners were promised that they could repurchase their homes at a lower interest rate.

    The distressed homeowners were told that DMS would draw down on the equity in their homes and use the revenues to make monthly mortgage payments during the one-year period.

    DMS took title to about 50 distressed properties and misappropriated the existing equity in the homes. The “credit investors” were nothing more than “straw borrowers” whose names were used to access the equity in the homes. DMS and its principals falsified the employment, bank account and income information of the straw borrowers on the loan applications.

    At the conclusion of these transactions, DMS usually ended up with approximately $100,000 equity per transaction, plus around $35,000 in fees and commissions associated with each loan.

    In the meantime, each of the straw borrowers ended up owing approximately $300,000 or more on loans that went into default because DMS did not make the mortgage payments as promised. This led to banks suffering more than $11 million in losses and the homeowners suffering losses of over $4 million as a result of the theft of the equity in their homes.
Source: CEO of Mortgage Brokerage Engaged in Equity-Skimming Scheme Sentenced to Nearly Eight Years in Federal Prison.
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(1) For more on this type of foreclosure rescue ripoff, see:

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