According to a release by the US attorney’s office, the loan officer of a real estate and mortgage lending firm in Sacramento has pleaded guilty to concealing a mortgage fraud conspiracy.

Christian Parada-Renteria, 40, of Woodland, CA, made a guilty plea to one count of concealing a widespread conspiracy to commit wire fraud and one count of concealing a mail fraud transaction in connection with a mortgage fraud scheme.

According to documents presented in court, Parada-Renteria served as the loan officer of Delta Homes and Lending Inc. The company started it lending services in 2003 with one office, but has since expanded to having five offices spread across Sacramento and Woodland.

Between October 2004 and May 2007, the founder and president of Delta Homes, Moctezuma Tovar, 46, connived with other real estate agents, loan officers and loan processors to engage in a mortgage fraud conspiracy.

 

Read More

An Alton business owner has been sentenced to 37 months in prison for charges of bank fraud and submitting false loan applications to a financial institution, according to an announcement by James L. Porter, Acting United States Attorney for the Southern District of Illinois.

Christopher William Kreider, 29, of Alton, IL, was the owner of Landscape Lawn and Excavation, a landscaping company in Alton. In December 2014, he had pleaded guilty to the charges of fraud and admitted his crimes in submitting false loan applications to the Alton Bell Community Credit Union.

In order to save his failing business, Kreider engaged in a fraudulent practice known as “straw borrowing” where he asked his friends and family members to apply for loans in their names, which they submitted to the Alton Bell Community Credit Union. Proceeds of these loans were then handed over to Kreider or used for his benefit.

United States District Judge David R. Herndon discovered that Kreider’s fraudulent practice led to a total of $158, 286.59 in losses for the credit union.

 

Read More

A former Monroeville mortgage broker, who had previously been sentenced to prison for mortgage fraud, is now headed back to jail after being sentenced to 17 years in prison for defrauding more than 40 people in an elaborate loan scheme.

David C. Jackson, 54, was sentenced by a federal judge in Connecticut after being convicted at a trial in New Haven last September alongside a conspirator, Alex Hurt.

According to the U.S. Attorney’s office, Jackson and Hurt carried out a Ponzi scheme that defrauded small business owners of more than $4.5 million, most of whom were desperately seeking loans during the 2008 recession.

“His outright theft had devastating consequences to many of his victims,” said U.S. Attorney Deirde Daly.

Read More

According to a release by the U.S. District Court in the Western District of Kentucky, the former owner of a now-closed microwave popcorn business in Louisville has been ordered to pay restitution and serve three years of supervised release for a bank fraud charge.

Kermit Highfield, 43, is a Louisville resident who owned the defunct Preston Farms Popcorn LLC. He pleaded guilty to a single count of bank fraud in connection to loans he obtained from UPS Business Capital Credit which was insured by the U.S. Export-Import Bank.

The loan was obtained as an advance on payments from Preston’s international buyers. According to the loan terms, Preston Farms had to instruct its buyers to make payments into a specified BB&T Bank account, from where the funds would have been used to pay off the UPS loan. But instead, Highfield admitted to telling the buyers to deposit their payments into different bank accounts controlled by himself and Preston Farms.

This way, Highfield was able to divert the funds into settling operation expenses at Preston Farms and as the money was continually diverted from UPS, Highfield eventually defaulted on the loan payments.

Having insured the loans, the U.S. Export-Import Bank reimbursed UPS, incurring losses of $110,678 in the process.

Chief District Judge Joseph McKinley Jr. has ordered that Highfield pays restitution for the loss with monthly instalments of $2,000 over 36 months.

Already, Highfield had paid $15,000 of what he owed, according to a statement by Stephanie Collins, public information officer for the U.S. Attorney’s Office for the Western District of Kentucky. Collins said that unlike many other fraudsters, Highfield was different because he “was not using this money for anything beyond saving his company, and that was made very clear by him in court.”

SBFI offers 40+ training courses to improve commercial lending skills-get catalog here.

Subscribe to AdviceOnLoan–award-winning, weekly newsletter for commercial lenders.

What do you think? Your comments are welcome or write .

 

 

The former CEO of a Newton County bank has been indicted for engaging in a fraudulent loan scheme in which he defrauded the bank of $6 million in proceeds that were allegedly diverted for his personal expenses.

Mark Warne, 46, of Brook, IN., is charged with ten counts of bank fraud and four counts of identity theft in a scheme where he allegedly used the identities of four individuals, three of whom were related to him, to obtain loans totaling $6 million from Community State Bank, and none of these individuals received the loan proceeds.

According to the indictment, Warne, who served as the president of Community State Bank in Brook for five years, devised a way of concealing the loans from bank board members by creating two different sets of minutes for the meetings of bank directors. One of the minutes was made available to the board of directors for approval, while the other was given to examiners from the Federal Deposit Insurance Corporation (FDIC).

In the minutes given to the FDIC, it seemed as if the bank’s board of directors had approved the loans, but in the minutes given to the board members, there was no mention of such loans.

Warne used proceeds of the fraudulent loan applications to buy show cattle and vehicles, make property improvements, repay earlier fake loans, and “to support his lifestyle,” U.S. attorney David Capp stated in the indictment filed in U.S. District Court in Hammond.

From 2010 to 2015, Warne was president of the bank while sustaining the alleged scheme until it was eventually discovered by the bank, which then led to a $3 million lawsuit. This pending lawsuit filed by the bank in a Newton County court claims that loan proceeds were transferred to accounts controlled by Warne and his wife, Melissa.

SBFI offers 40+ training courses to improve commercial lending skills-get catalog here.

Subscribe to AdviceOnLoan–award-winning, weekly newsletter for commercial lenders.

What do you think? Your comments are welcome or write .

Former Minnesota Viking Stu Voigt and his business partner have been found guilty for their roles in a bank fraud scheme that defrauded investors out of several millions of dollars.

Voigt, who served as the chairman of First Commercial Bank in Bloomington, MN was found guilty on one count charge of bank fraud by a federal grand jury in U.S. District Court in Minneapolis. He was accused of defrauding the bank by failing to disclose debts of $4.5 million owed by his business partner Jeffrey Gardner, before approving his application for a line of credit.

Gardner, who owned and operated Hennessey Financial LLC, is facing multiple charges of mail fraud, conspiracy to commit mail fraud, making false statements on a loan application and bank fraud. Jurors found him not guilty on one of the false-statement charges.

Gardner was supposed to use the loan proceeds and clients investments to finance real estate projects, but instead he used it to pay off prior investors and other debts, and even used some money to cover the cost of divorce settlements with his ex-wife, according to prosecutors.

As Hennessey Financials failed, Gardner continued to deceive clients with the false impression that the business was growing strong. In the end, many lost their investments, including a 90-year-old man who now has to work part-time at a movie theater because he lost his life savings in Hennessey Financials.

In his closing arguments, Assistant U.S. Attorney Robert Lewis told jurors that all details presented before the court “boils down to simple fraud,” as Gardner continued to lie to investors regarding the failing state of Hennessey which he had completely mismanaged to the extent that it collapsed without any viable asset for creditors to use as collateral.

James Ostgard, Gardner’s attorney, said it was a complicated case, as Gardner and his investors were just casualties of the housing crash.

“Why would a guy who spent 30 years … working himself up from nothing, why would he then spend five years scheming to defraud his family, his childhood friends, his cherished benefactor, First Commercial Bank, for that matter, so he could give it all to [a hedge fund]? “That has to be the dumbest scheme to defraud I’ve ever heard,” Ostgard said.

Andrew Birrell, one of Voigt’s two attorneys, told jurors that Voigt acted in good faith and with no intent to defraud anyone. He wondered why Voigt, “the guy with the biggest share in the bank,” would defraud it. “It’s appalling that he is even here,” Birrell said. “He’s faced this matter with a great deal of courage.”

Voigt was a star of the Vikings teams during the 1970s where he played in three Super Bowls.

U.S. District Judge Patrick Schiltz will sentence the men at a later date. The bank fraud charge carries a maximum sentence of 30 years in federal prison.

SBFI offers 40+ training courses to improve commercial lending skills-get catalog here.

Subscribe to AdviceOnLoan–award-winning, weekly newsletter for commercial lenders.

 What do you think? Your comments are welcome or write .

Chaka “Chip” Fattah Jr., the son of a veteran Philadelphia congressman, has been sentenced to five years in federal prison on charges of bank and tax fraud.

Fattah Jr., misused funds while serving as a school management subcontractor, and has now been sentenced to five years in prison, another five years of supervised release, and ordered to pay $1,172,157 in restitution by U.S. District Court Judge Harvey Bartle III.

Fattah Jr., who served as his own attorney, believes that his father, Fattah Sr., was the target of his prosecution and the whole trial was a way of getting at him, as he said outside the courtroom last year, “This entire investigation has been politically motivated. If my dad wasn’t the congressman, nobody would be going after me. ”

Chaka Fattah Sr. is currently serving his 11th term in the House Appropriations Committee, having been in congress for close to two decades.

In delivering the sentence, Judge Harvey Bartle III described Fattah Jr. as someone who has enjoyed and misused so many privileges, saying he “had many opportunities and advantages that most young people could only dream about,” and made “bad choices of your own free will.”

In November 2015, a federal grand jury had found Fattah Jr. guilty on a 22-count charge of bank fraud; making false statements to banks to obtain loans; making false statements to banks and the Small Business Administration (SBA) to settle loans for less than what was owed; filing false federal income tax returns for tax years 2005, 2006 and 2008; failing to pay federal income tax; wire fraud; and theft from a program receiving federal funds.

Banks that were defrauded by his fraudulent loan applications included Citizens Bank ($26,000); PNC Bank ($30,000); Sun National Bank ($50,000); Bank of America ($10,000); Wachovia, now Wells Fargo ($25,000); United Bank ($50,000); Philadelphia Federal Credit Union ($15,000). He also provided false information to two banks and the Small Business Administration in order to settle some of those loans after he defaulted, according to evidence presented in court.

In all, prosecutors said Fattah Jr. used nearly $1 million in loan proceeds for his personal expenses and in settling gambling debts.

After the sentencing, Fattah Jr. still stood firm on his claim of innocence, “I didn’t know anything I did was a violation of the law,” he told the judge.

Fattah Sr. has also defended his son’s actions by saying “they’ve taken my only son, and I guess they suggested this was justice, I’ll leave it for others to decide.” In May, the long-serving congressman will also have his day in court where he, alongside others, are scheduled to stand trial on multiple counts of fraud before the same judge that has sentenced his son.

SBFI offers 40+ training courses to improve commercial lending skills-get catalog here.

Subscribe to AdviceOnLoan–award-winning, weekly newsletter for commercial lenders.

What do you think? Your comments are welcome or write .

According to an announcement by the U.S. Attorney’s Office, the former vice president of the Global Credit Union in Coeur d’Alene, Idaho has been sentenced to 12 months and one day in prison for bank fraud.

Randy Gard Teall, 67, of Post Falls, Idaho, pleaded guilty to charges of bank fraud on September 15, 2015. He was sentenced in the U.S. District Court to 12 months and one day in federal prison by U.S. District Judge Edward J. Lodge.

According to the plea agreement, Teall used his position as vice president of the credit union to approve more than $300,000 in loans without approval from the board. While serving as a union executive, he used false promises and statements to obtain loans from the Global Credit Union.

In one particular instance, Teall made false statements about the creditworthiness of three borrowers and a business. Teall concealed the fact that he was a business partner and landlord of one of the borrowers who obtained loan approvals in a real estate deal, according to court documents.

From 2007 to 2009, Teall approved loans to these borrowers and business that defrauded the credit union. He was also convicted on charges of making false statements on a loan application while being employed at U.S. bank in 1997.

Until his conviction, Teall served as the vice president of Idaho operations for the $394 million Global Credit Union based in Spokane, Washington.

Apart from the one year and a day prison sentence, Teall was also sentenced to serve five years of supervised release by Judge Edward J. Lodge.

SBFI offers 40+ training courses to improve commercial lending skills-get catalog here.

Subscribe to AdviceOnLoan–award-winning, weekly newsletter for commercial lenders.

What do you think? Your comments are welcome or write .

A New Jersey property manager has been sentenced to 15 months in prison for his role in a multi-million dollar mortgage fraud scheme that involved the use of straw buyers and phony documents in defrauding several financial institutions, U.S. Attorney Paul J. Fishman announced.

Paul Watterson, 55, of Mountainside, NJ pleaded guilty to a one count charge of conspiracy to commit money laundering at the Camden federal high court before being sentenced to 15 months imprisonment by Judge Jerome B. Simandle.

According to court documents and statements, Watterson and his conspirators used straw buyers to purchase over-developed condominiums in the Wildwood and Wildwood Crest areas of New Jersey. The straw buyers had good credit scores but were not earning enough to qualify for mortgage loans on those properties. Watterson prepared fraudulent loan application documents containing false information about the buyers’ income, employment, assets and the intended use of the properties. He did all this to convince the lenders to approve the loans.

Along with his conspirators, Watterson created fraudulent loan applications on behalf of the buyers, including supporting documents, which were submitted to mortgage brokers who also knew that the documents were false. Upon approval of the loans and release of the proceeds, Watterson’s conspirators took part of the money before sending the remaining part of the funds by wire transfers or check deposits into the various accounts that they controlled. This was then distributed among those who partook in the loan scheme, including Watterson, who received $273,600 from five different mortgage loan transactions.

Apart from the 15 months’ sentence, Watterson will serve three years of supervised release as ordered by Judge Simandle.

SBFI offers 40+ training courses to improve commercial lending skills-get catalog here.

Subscribe to AdviceOnLoan–award-winning, weekly newsletter for commercial lenders.

What do you think? Your comments are welcome or write .

 

A co-founder of Chicago-based venture capital company, Cardinal Growth, has agreed to pay $1.5 million to the federal government as settlement for an SBA lawsuit against the troubled firm.

Robert J. Bobb Jr., 68, was a former federal prosecutor who went on to co-found Cardinal Growth, a company in which former Mayor Richard M. Daley’s son was also involved, to secure contracts for several City Hall projects, before it was seized by the federal government four years ago for failure to repay a $21.4 million loan borrowed from taxpayers.

In agreeing to pay the $1.5 million settlement, Bobb is avoiding a legal suit by the U.S. Small Business Administration, and he has agreed to assist federal regulators in their bid to recover more of the taxpayers’ funds that he borrowed to invest in various companies.

According to an SBA report filed in federal court, regulators have been able to collect over $6.6 million from liquidating Cardinal Growth investments.

Bobb testified in court that his former partner, Joseph McInerney, 48, of River Forest, was the person in charge of  the company’s daily operation. Regulators are now hoping to collect some money from McInerney who was a close friend of the former mayor’s son, Patrick Daley. So far, McInerney has yet to respond to the SBA’s demands for the return of his “unpaid (financial) commitments” at the company.

Bobb and his ex-wife Patricia Bobb were friends of Mayor Daley, who in 1998 appointed Patricia Bobb to serve as an attorney to the police board. In 2010, Bobb and McInerney founded Cardinal Growth, a company that sourced for funds from private investors to help support struggling businesses. Investors included Bruce Rauner, who is now the governor of Illinois and loans from the Small Business Administration. The SBA had certified Cardinal Growth as a “small business investment company,” which means they could borrow $2 from taxpayers for every dollar they raised from private investors. Cardinal Growth secured loans from the SBA totalling $51 million.

They invested in several businesses, most notably being, Municipal Sewer Services, a company that handled cleaning and sewer inspection contracts at the City Hall. The former mayor’s son Patrick Daley, and the mayor’s nephew Robert G. Vanecko, invested about $65,000 in the company, but their names were not disclosed as investors in official company documents.

For over four years, the SBA has spent more than $3 million in hiring accountants and lawyers to recoup the money loaned to Cardinal Growth. More than 70 subpoenas were issued, while the government amassed more than 5 million pages of documents.

SBFI offers 40+ training courses to improve commercial lending skills-get catalog here.

Subscribe to AdviceOnLoan–award-winning, weekly newsletter for commercial lenders.

What do you think? Your comments are welcome or write .