More on ‘Operation Malicious Mortgage’

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A few updates on ‘Operation Malicious Mortgage,’
the Department of Justice name for today’s announcement of various recent mortgage fraud prosecutions.

The DoJ’s press release, which you can read here, says the initiative involves 144 cases and 406 defendants across the country. Many of the indictments have been previously announced, including four in Southern California. More on the California cases at the bottom of this post.

From the DoJ: ‘Operation Malicious Mortgage addresses primarily three types of mortgage fraud schemes: lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes. Lending fraud frequently involves multiple loan transactions in which industry professionals construct mortgage transactions based on gross fraudulent misrepresentations about the borrower’s financial status, such as overstating the borrower’s income or assets, using false or fictitious employment records or inflating property values.’

You can read complete L.A. Times coverage here.

You can find a summary of recent Southern California mortgage fraud cases below.

Recent mortgage fraud cases in Southern California, as described today by the U.S. attorney’s office in Los Angeles:

-- In a “shotgun” scheme, a Los Angeles man was charged on Tuesday with bank fraud for submitting home equity line of credit applications to five different banks at the same time. Because they were not aware of the applications to the other banks, four of the five banks approved the applications, which allowed Roy Wankee Hong to obtain nearly $1.1 million. Hong, 43, is named in a criminal complaint that accuses him of bank fraud, a charge that carries a penalty of 30 years in federal prison if convicted. Hong is scheduled to appear in United States District Court on Friday.

-- In a second shotgun scheme, Sang Park, 35, of Koreatown, was charged with bank fraud in April for allegedly obtaining several loans simultaneously. As a result, authorities said, Park caused banks to lose more than $800,000. Park made her first court appearance Friday, at which time she was ordered held without bond. Park is scheduled to be arraigned on June 30 and faces up to 30 years in federal prison if she is convicted.

-- Seven out of 10 defendants have pleaded guilty to a scheme that sold overvalued homes from some of California’s most expensive neighborhoods to mostly straw borrowers, causing more than $40 million in losses to lenders. The three remaining defendants -– including two Beverly Hills-based Prudential Realtors who were the firm’s top brokers nationwide in 2002 -– are scheduled to go to trial in October.

-- Five defendants have pleaded guilty, and the two lead defendants are scheduled to be sentenced on June 30, in connection with a $12-million scheme that targeted homeowners in default on their mortgages and falsely promised them help. Martha Rodriguez and Edward Seung Ok orchestrated a scheme that promised refinancing to distressed homeowners, but instead sold their properties to straw borrowers who went into default. Rodriguez faces up to 40 years in prison when she is sentenced.

-- (Filed in Orange County) Three people – two from Las Vegas, Nev., and one from Los Angeles -– were indicted Friday on mail fraud charges for allegedly making bogus bank statements that were submitted to lenders as part of mortgage applications. As a result, more than $50 million in loans were funded, with half of those currently in default or foreclosure. The Nevada residents -– Gilma Ruiz and her brother, Francisco Ruiz -– and Mario Hernandez have agreed to surrender to federal authorities on June 23. The charges in this case are part of an ongoing investigation.

Photo Credit: Associated Press