CA Mortgage Scammers are sentenced

The United States Attorney’s Office has been working overtime putting away mortgage scammers and getting them off the streets of California. It is refreshing to see scammers in the industry are being punished for their misdeeds. The scammers have given the industry as a whole a black eye and its worth taking note when these individuals get what they just desire. The only thing that would have been sweeter would have been to catch them sooner than they were catch.

Cases that come to mind are the case against Lila Rizk and John Varner.

The case against Lila Rizk involved properties in Beverly Hills, Bel Air, Holmby Hills, Malibu, Carmel, Mill Valley, Pebble Beach and La Jolla. Ms. Rizk was a licensed appraiser who obtained thousands of dollars in fees for providing inflated appraisals in a scheme to defraud mortgage lending institutions. Ms. Rizk appraised the properties involved at values three times higher than what the property was worth. She then used those properties as comparisons on other appraisals in order to inflate the value of other properties and justify the values.

Ms. Rizk, age 43 and from Rancho Santa Margarita was involved in a scheme that included several conspirators. Her co-conspirators supplied fraudulent mortgage applications, bogus purchase agreements along with her appraisals to mortgage institutions. The case she was involved in cost Lehman Brothers alone millions of dollars and eight fraudulent mortgage loans between 2000 and 2003.

Ms. Rizk was sentenced by United States District Judge Dean D. Pregerson to three years in federal prison for conspiracy, bank fraud and wire fraud. She was ordered to pay restitution of forty six million dollars. Ten other individuals were also convicted in this case in relation to their roles in the scheme.

The case against John Richard Verner involved loans in which borrower did not qualify for the Federal Housing Administration loans they received.

Mr. Verner was the President of Mortgage One Corporation conducting business out of Hesperia. Mr. Verner and his co-conspirators attempted to defraud the Housing and Urban Development by submitting fraudulent applications for mortgage insurance and supporting documentation in order to obtain Federal Housing Administration loans. The borrowers who received loans from the Federal Housing Administration did not qualify for the loans provided and in most cases were straw buyers. The conspirators within Mortgage One and M-1 Capital sold the closed loans to the Firstar Bank N.A and Chase Manhattan Mortgage Corporation using the same fraudulent documentation.

The trail in this case lasted over four weeks and resulted in Mr. Verner’s conviction of one count of conspiracy to defraud the Housing of Urban Development, one count of bank fraud, and two counts of subscribing to false income tax returns. Mr. Verner was one of the fifteen defendants involved in the case.

Mr. Verner, age 56 and from Hesperia was sentenced to one hundred fifty six months in federal prison by United States District Judge, Virginia Phillips and ordered to pay restitution in an amount of over twenty nine million dollars.

The cost to the Housing of Urban Development was over twenty three million dollars and included over nine hundred loans.

Mr. Verner in regard to his fraudulent tax returns was convicted because he failed to report income that he used to purchase his toys. His toys included a corvette, an RV, jewelry and more than one hundred fifty dollars that he deposited into his personal investment account.