Man gets 5 years for fraud

A federal judge sentenced a Newport Beach man to five years in prison Monday for “extreme greed” in defrauding several government institutions out of millions of dollars through mortgage, tax and bankruptcy fraud from 1995 to 2001.

Lorenzo Espinoza, 43, a Newport Coast resident, pleaded guilty in 2006 to defrauding the Department of Housing and Urban Development, two counts of bankruptcy fraud, one count of money laundering and one count of failing to pay 10 years’ worth of taxes to the Internal Revenue Service.

Between 1995 and 2001, Espinoza and others bought 100 residential properties with inflated market values through straw buyers. A straw buyer uses their credit to receive a loan on a property they have no intention of possessing themselves. Espinoza and others falsified tax forms on pay stubs to get higher loans and then let the straw buyers default on the loans.

HUD bought the property back from the banks, costing the agency more than $2 million when it resold the properties at a lower market value.

In 1999, Espinoza filed for bankruptcy and didn’t reveal that he owned a Rolex watch, two Ferraris and a Lamborghini. When he sold the Ferraris in 2002 for $127,500, he hid the proceeds from the government, prosecutors said.

He also pleaded guilty to failing to pay $199,053 in taxes in 1996. Prosecutors determined that he owed the government more than $5 million in taxes, interest and penalties for failing to file tax returns for 10 years.

Though he applied for leniency, U.S. Dist. Judge Stephen Wilson cited Espinoza’s “extreme greed” in handing down the 60-month sentence, officials said. He will begin serving his sentence June 4.