Federal prosecutors in Sacramento, California, announced today the indictment of 19 people for mortgage fraud-related offenses under what it called “Operation Homewrecker.”
The indictment alleges that the leader of this nationwide scam is Charles Head, 33, of Los Angeles, California, who targeted homeowners in dire financial straits, fraudulently obtaining title to over 100 homes and stole millions of dollars through fraudulently obtained loans and mortgages.
The charges are divided into two separate indictments.
“Head One” involved a “foreclosure rescue” scam, netting approximately $6.7 million in fraudulently obtained funds taken from 47 homeowners, nearly all located in California. The allegations in Head One are that from January 1, 2004 to March 14, 2006, the defendants contacted desperate homeowners, offering two “options” allowing them to avoid foreclosure and obtain thousands of dollars up-front to help pay mounting bills.
If the homeowner could not qualify for the “ first option,” which virtually none could, they would be offered the “second option.” An “investor” would be added to the title of the home, to whom the homeowner would make a “rental” payment of an amount allegedly less than their mortgage payment, thereby allowing the homeowner to repair their credit by having the mortgage payments made in a timely fashion.
All of this was a scam.
The defendants recruited straw buyers as the “investors” who would then replace the homeowners on the titles of the properties without the homeowners’ knowledge. Once the straw buyer had title to the home, the defendants immediately applied for a mortgage to extract the maximum available equity from the home. The defendants would then share the proceeds of the ill-gotten equity and “rent” being paid by the victim homeowner.
When the defendants ultimately would sell the home, stop making the mortgage payment, and/or pursue an eviction proceeding, the victim homeowner was left without their home, equity, or credit.
The following defendants were charged in the February 28, 2008 “Head One” indictment: Charles Head, 33, of La Habra, California; Jeremy Michael Head, 30, of Huntington Beach, California; Elham Assadi, aka Elham Assadi Jouzani, aka Ely Assadi, 30, of Irvine, California; Leonard Bernot, 51, of Laguna Hills, California; Akemi Bottari, 28, of Los Angeles; Joshua Coffman, 29, of North Hollywood; John Corcoran, aka Jack Corcoran, 52, of Anaheim; Sarah Mattson, 27, of Phoenix, Arizona; Domonic McCarns, 33, of Brea, California; Anh Nguyen, 36, of Los Angeles; Omar Sandoval, 32, of Rancho Cucamonga, California; Xochitl Sandoval, 29, of Rancho Cucamonga; Eduardo Vanegas, 28, of Phoenix; Andrew Vu, 39, of Santa Ana; Justin Wiley, 28, of Irvine; and Kou Yang, 32, of Corona, California.
“Head Two” involved an alleged “equity stripping” scheme, netting approximately $5.9 million in stolen equity from 68 homeowners in states across the nation.
While still targeting distressed homeowners and defrauding mortgage lenders through the use of straw buyers, in this version of the scheme, Charles Head would receive approximately 97 percent of the stolen equity, while his “sales agents” and employees, and the other defendants, would receive either the remaining 3 percent of equity or a salary from the fraudulently-obtained funding.
Instead of recruiting straw buyers, as in Head One, in Head Two the defendants allegedly recruited strangers via the Internet. They also used referrals from mortgage brokers to identify and solicit new victim homeowners. Beyond advertising on the Internet, the defendants also would send “blast faxes” to mortgage brokers throughout the country and generate mass emails to potential victims.
Through misrepresentations and omissions, victim homeowners would be offered what appeared to be their last best chance to save their homes. As in Head One, these victims also were left without their homes, equity, or credit.
Those charged in the Head Two indictment include Charles Head, John Corcoran, Kou Yang, each also charged in Head One, as well as Keith Brotemarkle, 42, of Johnstown, Pennsylvania; Benjamin Budoff, 41, of Colorado Springs, Colorado; Domonic McCarns, 33, of Brea, California; and Lisa Vang, 24, of Westminster, California.
The FBI has seized lavish sports cars, a fleet of high-end Italian motorcycles, thousands of documents and a condominium in Miami.
It remains to be seen how far this scam reached, or how many people and institutions were criminally involved.
Prosecutors made it clear that more charges would be filed. FBI Special Agent Drew Parenti said his agency is now “focusing on the industry professionals, the ‘insiders’ who have manipulated the mortgage loan process for their own financial gain.”
Particularly ominous is the statement by federal prosecutors that the defendants “used referrals from mortgage brokers to identify and solicit new victim homeowners”
Whatever the reach of this investigation, we know it is barely the tip of the iceberg of mortgage-related fraud.
We note too that the defendants’ scheme is alleged to have begun in January 2004 – well before the mortgage crisis grabbed national attention – and that the indictment only covers conduct up until March 2006 – well before the mortgage crisis drove many tens of thousands more people into the kind of desperation that the defendants manipulated.
This is only the beginning.
We’re going to see a lot more mortgage fraud indictments.
And as conditions worsen for more and more people who can not pay their mortgages, we’re going to see even more new mortgage fraud schemes.
We’ve discovered the website of Charles Head’s “Head Financial Services.” To see the website and read the story, click here.
We’ve also found a reverse mortgage website that lists Operation Home Wrecker scammer Keith Brotemarkle as one of its brokers. You can read our post here.