December 19th, 2007
A Rockford Realtor was sentenced to 20 months in prison Wednesday afternoon for his role in falsifying documents to help Hispanic families qualify for loans backed by the United States Federal Housing Authority.
Cesar Arenas was the fourth person sentenced in the five-person mortgage fraud ring that operated from 2001 through 2003 and the second to receive prison time. Rhonda Torossian, the loan officer in the scheme was sentenced Monday to 20 months in federal prison.
The Arenas sentencing took place just a few hours after the U.S. District Attorney’s office announced three more people were indicted for mortgage fraud in a separate scheme that ran from 2002 through 2004.
At Arenas’ sentencing, Assistant U.S. Attorney Scott Verseman argued the native of Colombia deserved prison time rather than probation, which two people in the ring received, as a deterrant because “the number of cases we’re prosecuting shows mortgage fraud is widespread in this community.”
Arenas’ attorney, Christopher Taylor, argued that Arenas should receive probation or, at the very least, less prison time than Torossian. Whitehead Inc. Realtors, the real estate company that holds Arenas’ license, even submitted a letter saying it would give Arenas a job other than selling real estate so that he could pay restitution.
“He didn’t do this to enrich himself. If you look at the amount he received in commissions, it was something like $17,000,” Taylor said. “That was less than 10 percent of what he made in those years. He genuinely felt he was doing this to help people. It just wasn’t very well thought out.”
Arenas pleaded guilty in September to recruiting two owners of a local business to sign false employment verification forms and bogus credit letters to make it appear his clients had income to make payments and a good credit history.
Instead of helping, though, of the 19 loans Arenas helped provide false documentation for, 14 of the families already have lost the houses through foreclosure and a 15th is in default. All of the loans were to Latin American custormers. Versemann estimated the U.S. Housing and Urban Development has lost more than $330,000 on the loans, including attorneys fees.
U.S. District Court Judge Phillip G. Reinhard said instead of helping, Arenas benefitted from the commissions he received and hurt the families involved and the neighborhoods where the houses were sold. He also said he considered Arenas as culpable as Torossian because he recruited business owners to take part in the scheme and all they received “was a felony conviction.
“I do give (Arenas) some benefit of the doubt that he was trying to help Latinos,” Reinhard said in the hearing. “In fact he was placing them in a position they couldn’t win.”
December 19th, 2007
A Rockford loan officer and two others were charged today with generating thousands of dollars in commissions by faking documents to get unqualified families loans backed by the Federal Housing Authority.
Mitchel A. Fuchs, 40, also known as Mike Fox, was charged with mortgage fraud in a 14-count indictment. Also charged were 25-year-old Jessica L. Gibson of Loves Park, who was Fuchs’ mortgage loan processor, and Frank G. Anast, 58, of Rockford, who was self-employed in computer work.
The indictment alleges the fraud ring operated from at least 2002 through October 2005 at both Mortgage Solutions, where Fuchs worked from 2002 through 2004 and then at Leader Mortgage.
The announcement by the United States Attorney for the Northern District of Illinois is just the latest in a series of federal mortgage fraud cases in Rockford that shows at least a small part of the real estate boom of the 2000s was based on shady business practices. The number of homes sold locally and nationally set records from 2002 through 2006, but 2007 has been defined by the record number of foreclosures resulting from lower lending standards of the past few years.
Realtor Cesar Arenas is being sentenced today for his part in a five-person mortgage fraud ring where all involved have pleaded guilty. So far, two have received probation and Rhonda Torossian, the loan officer in the ring, was sentenced to 20 months in federal prison and fined nearly $500,000.
In May, Rockford’s Frank Mazzarese was sentenced to four years probation and ordered to pay more than restitution for mortgage fraud. Marie Caltagerone, a Rockford accountant who pleaded guilty to providing Mazzarese fraudulent employment verification forms has yet to be sentenced in this case.
In July, Roscoe’s James L. Boyle pleaded guilty to making false statements to ensure the United States Housing and Urban Development department ensured a loan. Boyle will be sentenced next March.
Also in July, Raymond S. Talan of Caledonia was charged in a 10-count indictment alleging fraudulent documents to qualify borrowers for FHA loans.
In the Fuchs case, which was announced this morning, the U.S. District Attorney alleges:
* Fuchs created fictitious cashier’s checks and bank checks to give the appearance his customers had invested their own funds in the properties they were buying.
* Fuchs paid Anast to create fictitious pay stubs and W-2s for Fuchs’ loan customers.
* Fuchs and Gibson altered pay stubs and W-2s for other customers, changed credit reports and created fake investment statements.
According to the indictment, the scheme puts several commercial lenders at risk of losing hundreds of thousands of dollars.
Fuchs faces thirteen counts of wire fraud and one count of interstate carrier fraud. Anast faces eight counts of wire fraud and one of interstate carrier fraud. Gibson is charged with four counts of wire fraud and one of interstate carrier fraud.
Each count of wire fraud and interstate carrier fraud carries a maximum penalty of up to 30 years in prison and a fine of $1 million.
