Friday, November 11, 2016

Short Sale Fraud Racket Among Bad Acts Landing Two Real Estate Agents 37 Month Prison Sentences; Unwitting Lenders Duped Into Taking 'Haircuts' On Loans Secured By Underwater Homes While Original Owners/Borrowers Remained In Possession Of Properties

From the Office of the U.S. Attorney (Sacramento, California):
  • Lillian Marquez, 41, of Stockton, was sentenced [...] to three years and one month in prison for conspiring to commit mortgage fraud, Acting U.S. Attorney Phillip A. Talbert announced.

    Marquez pleaded guilty on June 14, 2016. On September 20, 2016, co-defendant Michael Keatts, 59, of Stockton, was also sentenced to three years and one month in prison for his role in the conspiracy. Both Marquez and Keatts were ordered to pay $193,134 in restitution to financial institutions harmed by their scheme.

    According to court documents, from February of 2006, through at least August of 2012, Marquez and Keatts operated Colonial Home and Business Services in Stockton. Both defendants were licensed real estate agents who assisted clients in purchasing and selling homes. They both participated in supplying false information to mortgage lending institutions indicating that clients were employed by various businesses that the defendants set up and controlled. In fact, these clients were not employed by those businesses and their actual income from their true employment was far less than what was represented to lending institutions. To support these false claims, the defendants created and submitted fraudulent paystubs and tax documents falsely stating that their clients were so employed.

    In addition, both defendants engaged in short sale fraud, in which they assisted clients facing default on their current loans to arrange for short sales of their properties. Unbeknownst to the lending institutions, the defendants arranged for the properties to be sold to straw buyers. The original owners would remain in the properties, and enjoy the benefits of the new loans that the lenders assumed were made to other individuals.

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