12 arrested in California for alleged mortgage ‘conspiracy ring’

After a multi-year investigation by the Los Angeles Police Department and Federal Housing Finance Agency’s Office of Inspector General, the California attorney general arrested a dozen individuals on 133 felony counts of alleged mortgage fraud this week.

The indictment accuses the defendants of conspiring in grand theft, identity theft, forgery, filing false documents, money laundering and aggravated white-collar crime. The scams allegedly ran from 2014 to 2020 across Los Angeles, Riverside and Ventura counties and totaled a combined $15 million.

“It’s definitely a big indictment, there was an intense investigation. It’s basically a conspiracy ring they’re alleging against all our clients,” defense attorney Diana Ivanova said in an interview. “It sounds horrible. It looks horrible. But it’s a complex case with a lot of nuances and, obviously, we’re going to fight aggressively against the charges.”

Of the 12 defendants, 11 had their arraignments and each plead not guilty. The final arraignment is scheduled for May 18. For some of the defendants, this won’t be the first mortgage fraud scheme charges brought against them. The defendant bails range from $1.45 million to $4.75 million and total $40.3 million combined.

“The allegations against these defendants charge a pattern of disregard for the law and willingness to go as far as stealing the identities of the deceased just to further their scheme,” California attorney general Rob Bonta said in a press release. “Our office will seek to hold these defendants accountable for their alleged actions.”

The alleged operation stole the identities of deceased, incarcerated or developmentally disabled people and targeted the Ygrene Energy Fund and Renew Funding, as well as conventional banks and hard money lenders, according to a document from the LAPD. Ygrene and Renew provide “green lending” for licensed contractors making energy-efficient homes, a fast growing sector of the marketplace.

Overall, COVID-19 borrower distress, the winter’s natural disasters and GSE investor caps are currently pushing fraud risk in the mortgage marketplace higher.

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