California Foreclosure Rescue Operator Faces Felony Charges

The Santa Cruz Sentinel is reporting that Leonard Bernot, a man who over three years ago offered to help a local, financially strapped Santa Cruz homeowner with foreclosure rescue services and ended up owning her home, is now facing felony charges on the grounds that he induced her into entering into an unlawful "equity purchase" contract, in violation of California state law and is also charged with grand theft. Bernot was charged in May of this year and pleaded not guilty on June 13.

According to county prosecutor William Atkinson, a grant deed turning over ownership of the home to Bernot was among the paperwork he had the homeowner sign; he also refinanced the property with a loan large enough to pay off the existing mortgage and to allow him to pocket $90,000.

The criminal charges allege violations of what is long standing California law (passed in 1979) regarding equity purchasers (Section 1695 - 1695.17, Cal. Civ. Code) and foreclosure consultants (Section 2945 - 2945.11, Cal. Civ. Code).

After being victimized, the homeowner retained the assistance of Soquel attorney Bill Purdy, who filed a notice of rescission (possibly a Federal Truth In Lending claim here; the article doesn't say) on her behalf in April 2005 and is representing the homeowner in a civil lawsuit against Bernot. Reportedly, Bernot trnsferred title to the home back to the victim in March of this year. (Inasmuch as it wasn't until May of this year that Bernot was charged criminally for conduct that took place three years ago, I suspect that it may have been the civil lawsuit -- and the facts that may have come out of it -- that possibly served as the impetus for the criminal action by the local prosecutor.)

For more, see Santa Cruz resident says her home was stolen in foreclosure scam (no longer available online).

Go here for more on attorney William Purdy.

Go here for more on Leonard Bernot.

Go here for more posts on homeowners who have refinanced into bad mortgage loans and are now using the Federal TILA to try and undo the bad loans. undo mortgage loans TILA alpha

Sale Leaseback Peddler Cops Plea For Role In 'Head' Nationwide Equity Stripping Foreclosure Rescue Scam

From the Office of the U.S. Attorney (Sacramento, California):

• [L]eonard Bernot, 46, of Laguna Hills, pleaded guilty [] to conspiracy to commit mail fraud for his part in a wide-ranging "foreclosure rescue" scheme involving Head Financial Services Inc.
• Originally indicted on February 28, 2008, Bernot and 10 other defendants were charged with conspiring to defraud financially distressed homeowners by promising them that their homes could be saved from foreclosure and their credit repaired if the names of straw buyers were added to, or replaced on, the homes' property titles.(1)
• Bernot and others allegedly would obtain mortgage loans on each of the homes, thereby extracting substantial equity, a scheme sometimes referred to as "equity stripping."
• Often, the homeowners were left paying "rent" to the conspirators. The rent would often be nearly as much as the prior mortgage payment the homeowner had been unable to pay. When the homeowners were unable to keep up with the payments, they were often evicted from their homes.
• The cases of several co-defendants, including Charles Head, the founder of Head Financial Services Inc., are still pending. [...] Bernot will be sentenced [] on September 1, 2011.

For the U.S. Attorney press release, see U.S. Attorney Announces Results of Mortgage Fraud Prosecutions in 12 Months Since Operation Stolen Dreams.

Go here for other posts on the Head nationwide foreclosure rescue operation.

(1) For the criminal indictments, see:

• U.S. v. Head, et al. - Head #1,
• U.S. v. Head, et al. - Head #2.

Sacramento Feds Score Jury Verdict Over Brothers Who 'Headed' Up Nationwide Sale Leaseback-Peddling, Equity Stripping Foreclosure Racket; Most Co-Conspirators Copped Earlier Plea Deals; 2nd Prosecution Involving Separate Ripoff Remains Pending

From the Office of the U.S. Attorney (Sacramento, California):

• After a nearly four-week trial, a federal jury in Sacramento returned guilty verdicts against Charles Head, 36, of Pittsburg, Pa., (formerly of Los Angeles), and Jeremy Michael “Mike” Head, 33, of Huntington Beach, United States Attorney Benjamin Wagner announced. Both were convicted of conspiracy to commit mail fraud in connection with a nationwide “foreclosure rescue” scam. Charles Head was convicted of four counts of mail fraud, and Mike Head was convicted of two counts of mail fraud.(1)
  
  According to evidence presented at trial, Charles Head was the leader of a scam that, operating through an entity called Head Financial located in Orange County, between January 2004 and March 2006 netted more than $15 million in fraudulently obtained funds from scores of homeowners, many of whom were in California.
  
  On February 28, 2008, a federal grand jury indicted Charles Head, Mike Head and 14 other defendants with violations of mail fraud, conspiracy to commit mail fraud, and other charges. The grand jury narrowed the charges in a superseding indictment in 2010. The evidence at trial established that the defendants solicited homeowners facing foreclosure, promising them that they would help the homeowners avoid foreclosure and repair their credit.
  
  Instead, through misrepresentations, fraud and forgery, the defendants led the victims to complete transactions that substituted straw buyers for the victim homeowners on the titles of properties without the homeowners’ knowledge. These straw buyers were often friends and family members of the defendants. Once the straw buyers were on title to the homes, the defendants applied for mortgages to extract the maximum available equity from the homes. The defendants then shared the proceeds of the ill-gotten equity and the “rent” that the victim homeowners paid them. Ultimately, the victim homeowners were left with no home, no equity, and with damaged credit ratings.(2)

***

• A second indictment, returned March 13, 2008, charges Charles Head and six other defendants, including three not charged in the first indictment, with operating an additional “equity-stripping” scheme that netted approximately $5.9 million in stolen equity from 68 homeowners nationwide. That indictment alleges that Charles Head revised the original scheme by recruiting strangers via the Internet to act as straw buyers. Under this new scheme, the indictment alleges, he received approximately 97 percent of the stolen equity. His “sales agents” and employees, and the other defendants, allegedly received the remaining 3 percent of equity. Trial in that case is scheduled for September 9, 2013.
  
  Charles Head and Domonic McCarns were indicted in both indictments and are set for trial on the charges in the second indictment on September 9, 2013. Also charged in the second indictment and set for trial are: Keith Brotemarkle, 45, of Johnstown, Penn.; Benjamin Budoff, 44, of Colorado Springs; and Lisa Vang, 27, of Westminster. John Corcoran and Kou Yang were charged in both cases but have pleaded guilty.

For the U.S. Attorney press release, see Jury Returns Guilty Verdict For Nationwide Foreclosure Rescue Scam.

For the original indictments, see:

• Indictment - U.S. v. Head #1,
• Indictment - U.S. v. Head #2.

Go here for earlier posts on the Charles Head nationwide sale leaseback equity stripping ripoffs.

(1) According to the press release:

• Ten other defendants have pleaded guilty in this case, charges were dismissed against one, and three remaining defendants are set for trial on November 4, 2013.
  
  The following have pleaded guilty and are scheduled for hearings regarding their sentencing dates on July 24, 2013:
  
  Elham Assadi , aka Elham Assadi Jouzani, aka Ely Assadi, 33, of Irvine;
  Akemi Bottari, 31, of Los Angeles;
  Sarah Mattson, 30, of Phoenix;
  Omar Sandoval, 35, of Rancho Cucamonga;
  Xochitl Sandoval, 32, of Rancho Cucamonga;
  Andrew Vu, 42, of Santa Ana;
  Justin Wiley, 31, of Irvine;
  Kou Yang, 35, of Corona;
  John Corcoran, aka Jack Corcoran, 55, of Anaheim.
  
  Leonard Bernot, 54, of Laguna Hills, pleaded guilty and is scheduled to be sentenced on July 10, 2013.
  
  A jury trial is scheduled for the remaining defendants on November 4, 2013. Those defendants are Domonic McCarns, 36, of Brea; Joshua Coffman, 32, of North Hollywood; and Anh Nguyen, 39, of Los Angeles.

(2) For more on this type of foreclosure rescue ripoff, see:

• Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals;
• Dreams Foreclosed: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (June 2005).

Last Of 17 Defendants Gets 14 Years Prison Time For Role In Sale Leaseback, Equity Stripping Racket That Duped Over 300 Foreclosure-Facing Homeowners Into Signing Over Their Homes In Exchange For False Promises Of Foreclosure Rescue

From the Office of the U.S. Attorney (Sacramento, California):

• On Wednesday, September 14, 2016, Domonic McCarns, 41, of Irvine, was sentenced to 14 years in prison by U.S. District Judge Kimberly J. Mueller for conspiracy to commit mail fraud for his participation in a nationwide foreclosure-rescue scam, Acting U.S. Attorney Phillip A. Talbert announced.
  
  McCarns is the final defendant to be sentenced for a pair of schemes that lured homeowners with the promise to help them avoid foreclosure and repair their credit. Two indictments were brought in 2008. Four defendants were convicted after two jury trials, 13 defendants pleaded guilty, and now, all 17 defendants have been sentenced. On September 9, 2013, Charles Head was sentenced to 35 years in prison, and on October 29, 2014, his brother and fellow leader in the scheme Jeremy Michael Head was sentenced to 10 years in prison.(1)
  
  Acting U.S. Attorney Talbert said: ‘This scheme purposely targeted the financially vulnerable during their time of greatest distress with promises of help. The defendants tricked the victims into handing over their most valuable assets, their homes. Few economic crimes are more reprehensible. This final sentence in this case will bring some measure of justice for their victims.”
  
  ***
  According to court documents, the defendants solicited homeowners facing foreclosure, and through misrepresentations, fraud, and forgery, substituted straw buyers for the victim homeowners on the titles of properties without the homeowners’ knowledge. These straw buyers were often friends and family members of the defendants, or were solicited on the internet. Once the straw buyers were on title to the homes, the defendants applied for mortgages to extract the maximum available equity from the homes. The defendants then shared the proceeds of the ill-gotten equity and the “rent” that the victim homeowners paid them. Ultimately, the victim homeowners were left with no home, no equity, and with damaged credit ratings.
  
  Initially, the scam focused on distressed homeowners in California before expanding throughout the United States. In the course of the schemes, between January 2004 and June 2006, the defendants obtained over $90 million in fraudulent loans, caused estimated losses of over $50 million, and stole title to over 300 homes.
  
  On December 2, 2013, McCarns was convicted after a five-week trial along with Charles Head, 36, of Pittsburgh, Pennsylvania, (formerly of Los Angeles); and Benjamin Budoff, 46, of Colorado Springs, Colorado. Head had been previously convicted in a trial in a nearly four-week trial in May 2013 with his brother Jeremy Michael Head, 34, of Huntington Beach.

Source: Final Defendant Sentenced to 14 Years in Prison for Nationwide Foreclosure Rescue Scam (Over $90 Million in Fraudulent Loans and Hundreds of Homes Stolen from Homeowners).

---------------------------

(1) Fourteen other defendants have been sentenced:

1. Elham Assadi, 39, of Irvine, sentenced to 5 years’ probation with 6 months of home detention;
2. Leonard Bernot, 50, of Laguna Hills, sentenced to 18 months in prison;
3. Akemi Bottari, 36, of Los Angeles, sentenced to 3 years’ probation with 6 months of home detention;
4. Keith Brotemarkle, 51, of Johnstown, Penn., sentenced to 5 years, 10 months in prison;
5. Benjamin Budoff, 49, Colorado Springs, Colo. sentenced to 4 years in prison;
6. Joshua Coffman, 37, of North Hollywood, sentenced to 20 months in prison;
7. John Corcoran, 61, of Anaheim, sentenced to 4.5 years in prison;
8. Sarah Mattson, 33, of Phoenix, Ariz., sentenced to 3 years’ probation with 3 months of home detention;
9. Omar Sandoval, 36, of Rancho Cucamonga, sentenced to 4 years and 10 months in prison;
10. Xochitl Sandoval, 37, of Rancho Cucamonga, sentenced to 8 months in prison;
11. Lisa Vang, 31, of Westminster, sentenced to 3 years’ probation;
12. Andrew Vu, 38, of Santa Ana, sentenced to 6 months in prison with 6 months of home detention;
13. Justin Wiley, 37, of Irvine, sentenced to 18 months in prison, and
14. Kou Yang, 40, of Corona, sentenced to 4 years in prison.

Sacramento Feds Bag 19 Suspects In Alleged Nationwide Foreclosure Rescue, Equity Stripping Scam; Over $12+M Pocketed, 100+ Homes Involved -- So Far

(original post - 3-24-08)
In Sacramento, California, media reports from KNXV-TV Channel 15 (Phoenix) and KCRA-TV Channel 3 (Sacramento), as well as an announcement by United States Attorney McGregor Scott (Eastern District, CA) report that foreclosure rescue operator Charles Head and his brother, Jeremy Michael Head, the alleged ringleaders of what prosecutors describe as a nationwide straw buyer, equity stripping, foreclosure scam operation involving over 100 homes, have been indicted along with 17 others. The alleged scam involved targeting financially strapped homeowners and screwing them out of their home equity by offering bogus sale leaseback arrangements involving their homes that was purportedly design to save the homes from foreclosure.

According to Assistant United States Attorneys Laura Ferris, Rob Tice-Raskin, and Ellen Endrizzi, who are prosecuting the case, the charges are broken out into two separate indictments, "Head One" (2-28-08) and "Head Two" (3-13-08).

Reportedly, investigators have said that more indictments could soon be on the way, increasing the number of homes to more than 300 nationwide. The case, known as Operation Homewrecker, included an investigation by the FBI and IRS.

The following defendants were charged in the Feb. 28 "Head One" indictment:

1. Charles Head, 33, of Los Angeles
2. Jeremy Michael Head, 30, of Huntington Beach
3. Elham Assadi, aka Elham Assadi Jouzani, aka Ely Assadi, 30, of Irvine
4. Leonard Bernot, 51, of Laguna Hills
5. Akemi Bottari, 28, of Los Angeles
6. Joshua Coffman, 29, of North Hollywood
7. John Corcoran, aka Jack Corcoran, 52, of Anaheim
8. Sarah Mattson, 27, of Phoenix, Ariz
9. Domonic McCarns, 33, of Brea
10. Anh Nguyen, 36, of Los Angeles
11. Omar Sandoval, 32, of Rancho Cucamonga
12. Xochitl Sandoval, 29, of Rancho Cucamonga
13. Eduardo Vanegas, 28, of Phoenix
14. Andrew Vu, 39, of Santa Ana
15. Justin Wiley, 28, of Irvine
16. Kou Yang, 32, of Corona.

In the March 13 "Head Two" indictment, in addition to Charles Head, John Corcoran, Kou Yang and Dominic McCarns, who were all charged in "Head One" -- the following additional defendants were charged:

1. Keith Brotemarkle, 42, of Johnstown, Pennsylvania
2. Benjamin Budoff, 41, of Colorado Springs, Colorado
3. Lisa Vang, 24, of Westminster.

Friends and family members were recruited as straw buyers in "Head One," -- in "Head Two" the defendants recruited strangers via the Internet to act as the straw buyers.

For more, including the Arizona connection in this story, see KNXV-TV Channel 15: Mesa elementary school teacher indicted for federal fraud.

Go here for a U.S. map giving the location of the homeowners who were screwed over.

For the KCRA-TV Channel 3 story, see 19 Accused Of Mortgage Scheme (Struggling Homeowners Victimized, Officials Say).

For the U.S. Attorney's press release, see Indictments Announced In Major Mortgage Fraud Scheme.

For the criminal indictments, see:

• U.S. v. Head, et al. - Head #1,
• U.S. v. Head, et al. - Head #2.

Go here for earlier posts as well as available updates on the Head nationwide foreclosure rescue operation.

Thanks to Josh Bernstein and Tim McDaniel for the "Heads-Up" (so to speak) on this story.

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For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

For other criminal prosecutions involving foreclosure rescue and other deed scams, see:

• Criminal Prosecutions Of Foreclosure Rescue Operators II, and
• Foreclosure Rescue - For Criminal Prosecutors Only.