The Blotter

A federal jury has convicted two men for their roles in an extensive mortgage fraud scheme arising from the fraudulent purchases of more than 40 properties in New Haven, U.S. Attorney Paul Fishman, District of New Jersey, announced. Andrew Constantinou, of Unionville, Conn., and Jacques Kelly, of Poughkeepsie, N.Y., were convicted on April 18, of all counts charged in the indictment following a three-week trial before Chief U.S. District Judge Janet Hall. The jury found both men guilty of conspiracy to commit mail, wire and bank fraud. The jury also found Kelly guilty of one count of wire fraud and one count of making a false statement to a financial institution.

A former attorney practicing in Boston was sentenced for his involvement in a mortgage fraud scheme that resulted in more than $2.5 million in losses. Charles R. Sammon, 37, of West Pittston, Pa., was sentenced by U.S. District Court Judge Richard Stearns to 33 months in prison, 36 months of supervised release and $977,042 in restitution to defrauded lenders. In November 2013, Sammon pleaded guilty to wire fraud, mail fraud and unlawful monetary transactions.

Steve Kessedjian, 51, of Los Angeles, was sentenced by U.S. District Judge Lawrence O’Neill to 21 months in prison for defrauding clients of escrow funds, U. S. Attorney Benjamin Wagner announced.

Hundreds of distressed homeowners facing foreclosure in Hawaii were likely misled by a loan modification program operated by the Homeowner Legal Assistance Association (HLAA), a Florida corporation, for approximately 17 months in 2009 and 2010, according to an investigation conducted by the Hawaii Department of Commerce and Consumer Affairs’ (DCCA) Office of Consumer Protection (OCP). The OCP believes more than 500 Hawaii homeowners may have claims against their New York-based attorneys and urges victims to file claims for reimbursement.

Queens District Attorney Richard Brown, joined by Superintendent of the New York State Department of Financial Services Benjamin Lawsky, announced that a Queens County grand jury has charged two Long Island attorneys with defrauding Queens homeowners, financial institution and real estate buyers out of more than $1 million through a short sale mortgage fraud scheme that occurred over a nineteen-month period between October 2008 and May 2010. The district attorney identified the defendants as attorneys Kenneth Schwartz, 64, of Huntington, N.Y., and Helene Stetch, 50, of Lindenhurst, N.Y. Stetch worked with Schwartz at the law firm of Kenneth B. Schwartz, Esq., in Carle Place, N.Y., until her termination in mid-2010.

A Nevada man who was convicted by a jury in September 2013 of conspiracy to commit mail and wire fraud for his involvement in a scheme to obtain $35 million in fraudulent mortgage loans, was sentenced to 20 years in prison, announced Daniel Bogden, U.S. attorney for the District of Nevada. Jabari Marshall, 36, of Las Vegas, was sentenced by U.S. District Judge Gloria Navarro. Marshall was also ordered to pay approximately $250,000 in restitution and to forfeit up to $6.1 million in assets that were gained as a result of the crimes. Marshall has been in custody since his arrest in January 2012, and has a lengthy criminal history, including two prior federal convictions in Nevada for bank fraud/check fraud type crimes. Marshall was also on federal supervised release when he committed this crime.

The latest mortgage fraudster pled guilty for his role in KREW Settlement Services scheme. Between May 2004 and February 2009, the fraudster and his co-conspirators inflated purchase prices on loan documents for more than 100 Philadelphia properties, resulting in more than $20 million in fraudulent loan proceeds.

Fraudsters continue to stay one step ahead of the rest of us, coming up with new schemes just as old schemes are being figured out. It’s important to stay as up-to-date on the prevailing schemes of the day as possible so you — and your customers — don’t become the victims of these frauds. During the American Land Title Association’s Business Strategies Conference, Gary Bernier, vice president, underwriting counsel and agency services manager for New Hampshire and Maine, shared his insight into the latest schemes.

Kil Seok (Michael) Seo, 49, formerly of Fairfax, Va., was sentenced to 38 months in prison for engaging in bank fraud and aggravated identity theft as part of a mortgage fraud scheme. Seo also was ordered to pay restitution of $894,600 to several banks that were the victims of Seo’s criminal conduct. Dana Boente, acting U.S. attorney for the Eastern District of Virginia, and Valerie Parlave, assistant director in charge of the Federal Bureau of Investigation’s Washington Field Office, made the announcement following the sentencing by U.S. District Judge James Cacheris.

Interthinx, a subsidiary of First American Financial Corp. and a provider of comprehensive risk mitigation solutions for the financial services industry, has released its annual Mortgage Fraud Risk Report, which includes data collected in 2013 from loan applications processed by the Interthinx FraudGUARD system. According to the report, the 2013 Annual Mortgage Fraud Risk Index value was 104, a 4 percent increase from 2012. This continues the gradually rising trend in fraud risk observed over the past three years as inventories shrink, prices rise and markets stabilize.