Owner and Seven Employees of Mortgage Company and Two Real Estate Developers Indicted for $50 Million Scam Involving Federally Insured Mortgages
The owner of a Florida mortgage company, seven employees of the company
and two real estate developers were indicted in the Southern District
of Florida in connection with an alleged $50 million mortgage fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department's
Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District
of Florida and David A. Montoya, Inspector General for the Department
of Housing and Urban Development (HUD) made the announcement.
Hector Hernandez, 56, of Miami, Florida, the owner and operator of Great
Country Mortgage Bankers (Great Country), a mortgage lender in Miami,
was charged with one count of conspiracy to commit wire fraud affecting
a financial institution and 25 counts of wire fraud affecting a financial
institution. Great Country loan officers Durand Deeb, 43, of Miami, Frank
Carino, 48, of Apollo Beach, Florida, and Fabian Perez, 39, of Miami;
Great Country loan processors Juliette Del Rio, 37, of Miami, and Julissa
Saavedra, 43, of Miami,; Great Country underwriters Olga Hernandez, 58,
of Lake Mary, Florida, and Olga Rodriguez, 53, of Miami; and real estate
developers Armando Bravo, 42, of Coral Gables, Florida, and Aleida Fontao,
61, of Miami, were also indicted for conspiracy to commit wire fraud affecting
a financial institution and varying counts of wire fraud affecting a financial
institution.
According to the indictment, beginning in January 2006 and continuing
through September 2008, Hernandez and others allegedly obtained mortgage
loans insured by the Federal Housing Administration (FHA), a division
of HUD, for unqualified borrowers by exaggerating the borrowers' income
and otherwise misrepresenting their financial condition.
Specifically, Hernandez and others allegedly created false documents on
behalf of borrowers who could not otherwise qualify for FHA-insured loans
due to insufficient income, high levels of debt, and outstanding collections.
These documents included bogus earnings statements that inflated the borrowers'
income and false verification of employment forms that overstated their
work histories.
In addition to creating these false documents, Hernandez and others allegedly
offered the unqualified borrowers cash back after closing as an incentive
to purchase condominiums. These secret payments were not disclosed in
the loan applications and were omitted from loan closing documents so
that HUD and the financial institutions that subsequently purchased the
loans would not know of their existence.
By later selling the fraudulent loans to financial institutions, Great
Country transferred the risk of loss to those institutions . The vast
majority of the unqualified borrowers failed to meet their monthly mortgage
obligations and defaulted on their loans. When the loans went into foreclosure,
HUD, which insured the loans, was required to pay the outstanding balances
to the financial institutions, resulting in losses in excess of $50 million
to the agency.
The charges contained in an indictment are merely accusations, and a defendant
is presumed innocent unless and until proven guilty.
This case is being investigated by HUD's Office of Inspector General
with assistance from the U.S. Marshals Service, Miami-Dade Police Department
Warrants Bureau and Miami-Dade State Attorney's Office – Public
Corruption Task Force. This is being prosecuted by Senior Litigation Counsel
David A. Bybee and Trial Attorney Michael T. O'Neill of the Criminal
Division's Fraud Section.