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Crackdown On Detroit Mortgage Fraud

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Tom Fryer

Sophomore Member
Jul 28, 2002
Professional Status
Certified General Appraiser
UUnnitietde dSt aStetsa Atettso rDneeypartment of Justice
Eastern District of Michigan
211 West Fort Street
Suite 2001
Detroit, Michigan 48226
June 19, 2008
CONTACT: Gina Balaya (313) 226-9758
Sandra Berchtold - FBI (313) 237-4218
Detroit, Michigan
United States Attorney Stephen J. Murphy announced today the results of a recent
crackdown on mortgage fraud in the Eastern District of Michigan. Mr. Murphy was joined in
the announcement by Acting Assistant Special Agent in Charge Toni Chrabot, Federal Bureau
of Investigation, Special Agent in Charge Brian Moskowitz, Immigration and Customs
Enforcement, Postal Inspector in Charge Joseph Parone, U.S. Postal Inspection Service, and
Special Agent James Waldron, U.S. Housing and Urban Development, Office of Inspector
Since March of this year the U.S. Attorney’s Office has filed 15 separate complaints,
indictments or informations charging 28 individuals with federal felonies relating to mortgage
fraud. The charges include wire, mail and bank fraud, money laundering, and conspiracy to
commit those offenses. The estimated total loss, as a result of the alleged conduct by these
individuals is over $50 million.
Charged are:
NICOLE MALANE, 30, of Birmingham, Michigan. The complaint and affidavit allege
that on or about May 4, 2006, Malane committed violations of the federal wire and mail
statutes in the purchase of a residential property located at 7471 Jackson Park,
Bloomfield Hills, Michigan. The fraudulent activity included artificially increasing the
sale price of a single family home from $385,000 to $630,000. Ms. Melane took title to
the property via false income documents stating that she earned $14,000 per month as
vice president of Southwest Fabricating, Inc. – a company taken over by Robert Yeo
and stripped of its assets through “busting out” business lines of credit.
KURT WARREN HEINTZ, 37, of Grand Blanc, Michigan and real estate appraiser
JAMES JEFFREY FISH, 40, of Howell, are charged in an Information with having
engaged in a systemic mortgage fraud scheme throughout Michigan, primarily in
Genesee County, Michigan. HEINTZ was involved in the purchase of numerous
properties and paid real estate appraisers including FISH to appraise the properties for
more than their true market value. Straw buyers were recruited and acquired mortgage
loans in their names based on the inflated property values. Payments on the mortgage
loans eventually ceased, thus exposing lending institutions to significant losses as the
true value of the properties was substantially less than the outstanding mortgage loan
balances. The fraudulent appraisals typically appraised the properties for more than
twice their true value. The scheme involved approximately 70 properties, and has
exposed lenders to losses of approximately $20,000,000.
AUBRY TERBRACK, 65, of Troy, Michigan and DENISE MONEY, age 52, of
Ferndale, Michigan, two former corporate officers of Marathon Financial located in
Southfield, Michigan, are charged with conspiring to defraud the United States
Government National Mortgage Association, commonly known as Ginnie Mae. Ginnie
Mae makes affordable housing a reality for millions of low- and moderate-income
households across America by channeling global capital into the nation's housing
markets via Government insured loans primarily through the Federal Housing
Administration (FHA) and Department of Veterans Affairs (VA). Specifically, the Ginnie
Mae guaranty allows mortgage lenders to obtain a better price for their mortgage loans
in the secondary market. The lenders can then use the proceeds to make new
mortgage loans available. Money and Terbrack conspired to retain the funds obtained
from terminated and/or paid off loans. Terbrack and Money failed to disclose to GNMA
that the loans were terminated, while Terbrack utilized the funds from the paid off loans
to invest in the stock market and make fraudulent monthly payments to GNMA on the
loans that were previously paid-off, to conceal the fraud. The fraud began during July
of 1998 and continued until October of 2007, resulting in a loss of approximately
JULIETA GALVEZ FLORES, 34 of Farmington Hills, Michigan and ROBERTO
CARMEN LEMOS, JR., 35 of Detroit, Michigan are alleged to have engaged in a
mortgage fraud scheme in Detroit, Michigan. FLORES operated a mortgage brokerage
under the name of JF & ASSOCIATES. FLORES acted in the capacity of a mortgage
loan officer on numerous properties and paid a title company employee, ROBERTO
CARMEN LEMOS, JR., to accept (as fact) deeds of trust which reflected an owner that
was not truly the owner. In addition, LEMOS altered title work to show that a mortgage
lien existed when, in fact, it did not. The fictitious liens resulted in fraudulent payoffs to
FLORES' shell companies. Straw buyers were recruited as borrowers. The straw
buyers did not make payments on the mortgage loans which resulted in the foreclosure
of the homes. The scheme involved approximately 13 properties, and has exposed
lenders to losses of approximately $292,000.
PHILLIP BLEVINS, 56, of Bloomfield Hills, Michigan, was the owner of “Lion Pride
Investments” also known as “Lyon Pride Investments” (LPI), which did business at
various locations in the Eastern District of Michigan and elsewhere. BLEVINS operated
as facilitator of fraudulent mortgage loan transactions and coordinated the purchase
and sale of real property by recruiting straw buyers and seeking loans on behalf of
those buyers from various lending institutions throughout the United States. JOHN
HUSAR, 39, of Sterling Heights, Michgan worked with Blevins in various positions
including acting as a loan processor and officer. CYNTHIA CRUMP, 53 of Bloomfield
Hills, Michigan and TANYA DAVIS, 49 of Southfield, Michigan were straw buyers
recruited ny BLEVINS for the fraudulent mortgage transactions. ARNOLD
JANKOWSKI, 61 of Warren, Michigan was an associate of BLEVINS who used the
stolen identity of licensed real estate appraisers to generate inflated appraisals for the
fraudulent mortgage transactions. All five defendants are charged in an indictment with
conspiracy to commit bank fraud
SHANNON FERGUSON, 36 of Canton Township,pleaded guilty on June 13, 2008, to
one count of wire fraud in connection with two fraudulent mortgage loans handled by
Select Mortgage that were secured by her residence in St. Clair Shores. The loans
totaled $732,000. Under the terms of her plea agreement, she faces up to 46 months’
imprisonment, a $1 million fine, and an order of restitution in the amount of $732,000.
Co-defendants Tariq Hamad and Kalil Khalil pleaded guilty to broader mortgage fraud
schemes encompassing loans totaling $21 million. Hamad was sentenced in
September 2007 to 110 months’ imprisonment and ordered to pay $11.5 million in
restitution. Khalil was sentenced in February 2008 to 60 months’ imprisonment and
ordered to pay $11.1 million in restitution. Both Hamad and Khalil also forfeited their
interests in several bank and securities accounts.
DENNIS TAMBURO, 39, of Washington Township, Michigan, a mortgage broker and
owner of Home Connection Mortgage (HCM), and MARIO LALIOS, 30, of Shelby
Township, Michigan, a real estate agent and owner or part-owner of Rain Maker
Investments, Inc., and ML&SL Holdings, Inc., were charged in a criminal complaint with
perpetrating mortgage fraud schemes. The schemes occurred between July 2004 and
May 2006. Tamburo and Lalios flipped properties owned by themselves or their
associates to buyers and falsified loan applications to qualify the buyers for loans with
NetBank, a federally insured financial institution. The properties were sometimes flipped
multiple times among friends, relatives, or business associates to conceal any previous
ownership by Tamburo or Lalios. Tamburo and Lalios submitted 52 loans totaling
$5,387,620 to NetBank. All 52 loans fell into default, and most are in various stages of
GREGORY PATRICK DAVIS, 30, was the owner of “GP Davis and Associates”
which also did business as “Interactive Property Services,” and “Efficient Mortgage” all
located at 18911 West 10 Mile Road, Southfield, Michigan and elsewhere. In this
capacity, DAVIS operated as a mortgage broker who facilitated the purchase and sale
of real property by seeking loans from various lending institutions throughout the
United States. MELISSA N. HARRIS, 24, was an associate of DAVIS and worked in
his various businesses as a loan officer and loan processor. Together, with others as
yet uncharged, they obtained fraudulent mortgage loans on numerous properties in the
Detroit metropolitan area and arranged to have the illegal proceeds and profits of the
fraud split between themselves and others. In committing the fraud the defendants
provided false income information for straw buyers and in order to bolster their creditworthiness
and apparent ability to qualify for mortgages, provided down payments, false
verification of bank account balances, false intent to use the property as a primary
residence and made mortgage payments after the loans closed in an effort to conceal
the fraud.
ALI AKIL, JOHN MARRAS and MARK WARD are charged in a criminal complaint with
conspiring to defraud Amtrust, a mortgage lender in Cleveland, Ohio. WARD, a
licensed real estate appraiser, agreed to create a false and inflated appraisal for a
home in Beverly Hills, Michigan. A straw buyer was recruited to purchase the property
and the defendants facilitated the submission of a loan application and the fraudulent
appraisal to Amtrust. As a result of the false and inflated appraisal and its materiality
to the loan application Amtrust approved the mortgage loan for the sale of the property
and disbursed $990,000 on May 29, 2007, by wire transferring the funds to a title
company in Dearborn, Michigan. Profits from this fraudulent transaction were divided in
various amounts between the defendants.
NISHON JOHNSON, 37, of Detroit, Michigan is charged in a criminal complaint with
wire fraud. The affidavit alleges that JOHNSON and other bought single-family homes
in the Detroit area and then - after finding buyers - resold or refinanced the homes.
After buying single-family homes, JOHNSON and others recruited buyers to purchase
the houses as investment properties which allegedly could be rented to cover the
monthly mortgage payments and costs. JOHNSON submitted false loan applications to
the mortgage companies which overstated the borrower’s income and understated their
liabilities. The borrowers eventually defaulted on the loan forcing foreclosure. The
estimated loss to the mortgage companies is $600,000.
JON AT HONE J. JOHNSON, 32, and WANDA HENLEY, 54, both of Detroit, were
charged in a criminal complaint with wire fraud in connection with a scheme to obtain
over $5 million from mortgage lenders. According to the complaint, Johnson or his
company, 3 J Solutions, purchased houses in the City of Detroit and then sold them
anywhere from a few days to a few weeks later for more than twice as much as
Johnson paid for them. The houses were purchased by straw borrowers, recruited by
associates of Johnson, in whose names loan applications were submitted. The
complaint also alleges that the loan applications contained false information about the
borrowers’ income and assets, were accompanied by counterfeit supporting
documents, and were supported by appraisals prepared by Henley, a licensed real
estate appraiser who did business under the name Michigan Appraisal. The loans soon
became delinquent, and the houses were eventually foreclosed on by the lenders.
I RVING SIMS pleaded guilty to an indictment that charged he provided false
information regarding his income to a lender, causing the lender to approve a $466,000
refinance mortgage. Sims defaulted on the mortgage shortly thereafter, causing a loss
of approximately $145,000.
fraud charges. The information presented to the court at the time of the pleas showed
that Defendant Kenneth Wilson provided false information to Quicken Loans, Inc., and
caused Kevin Bluhm, an employee of Lincoln Title Company, to provide misleading
information to Quicken Loans, Inc. in connection with “cash-out refinance mortgage
applications” for 13 residential properties which defendant Kenneth Wilson had
submitted to Quicken Loans, Inc. Wilson provided false information to Quicken Loans,
inc regarding his income and employment. Wilson also caused Kevin Bluhm to submit
misleading title commitments regarding the 13 subject properties which Wilson was
purchasing. Defendant Mark Counts, an appraisers assistant, provided false
information, including photos of more valuable properties as well as false information
regarding the size, construction, etc. of subject properties which supported loans in
excess fo the actual worth of the properties. Quicken Loans, Inc. relied on the accuracy
of the information provided by Wilson, Bluhm and Counts ,and funded the mortgages.
Wilson subsequently defaulted, causing a loss of approximately $550,000 to Quicken.
CHRYSTALIN CARTER pleaded guilty to charges of conspiracy to commit wire fraud.
The facts presented to the court at the time of the plea showed that Carter was a
participant in a scheme in which a property was sold to an associate of Carter who was
using a false identity to purchase the property and to obtain a $51,000 mortgage.
Almost immediately after the sale, the mortgage went into default status, resulting ain a
$51,000 loss to the lender.
United States Attorney Murphy said, “Honesty and integrity in the mortgage lending
business are crucial to protecting home owners, lending institutions, and borrowers. When
mortgage fraud is widespread, it undermines the stability of the housing market and the ability
of lending institutions to protect themselves from debilitating losses.”
Acting Assistant Special Agent in Charge Toni M. Chrabot of the FBI commented,
"Mortgage fraud is characterized by deceit, concealment, and is not dependent on even the
threat of violence. Mortgage fraud tears at the core of our households, our economy, and the
American dream. Individuals and groups who participate in mortgage fraud prey on the most
vulnerable in our society. The mortgage fraud problem continues to escalate, but the FBI is
committed to aggressively pursuing these cases utilizing a variety of investigative techniques."
U.S. Attorney Murphy commended federal law enforcement agencies as well as state
regulators, licensing agencies and financial institutions for their continued cooperative efforts
to stamp out mortgage fraud.
Complaints, indictments and informations are simply charges and the defendants are
presumed innocent. It is the government’s burden to prove guilt beyond a reasonable doubt.

David Molenaar

Sophomore Member
Oct 20, 2004
Professional Status
Certified Residential Appraiser

State Licensed Appraiser
Complaint No. 31521, 301644, 301791,
302497 & 302518
1. REVOKED – Minimum 3
2. Restitution: $15,000
3. Fine: $10,000
Violation of Occupational Code
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