Keeping scammers on the run

The case may be over, but L.A. County’s real estate fraud investigators are still plenty busy.

Last week, a federal judge sentenced five defendants—including two who drew double-digit prison terms—in a $13 million real-estate fraud case in which the FBI and federal prosecutors received key assistance from investigators of the Real Estate Fraud and Identity Theft unit of the county Department of Consumer Affairs.

Pulling together property and loan records for dozens of fraudulent home-loan transactions, the county investigators “provided invaluable information and assistance” to federal prosecutors, said Thom Mrozek, spokesman for the U.S. Attorney’s Office in Los Angeles.

That assistance helped put Martha Rodriguez, of Downey, and Ed Seung Ok, of Huntington Beach, in prison for 10 and 15 years respectively, following guilty pleas on mail fraud and money laundering charges.

The Silvernet scam, named for Rodriguez’s real-estate firm, ran between 2003 and 2005 and it involved convincing owners of homes in default to sign over their home’s title to a “co-signer” with better credit so they could get a new, bigger mortgage on the house. But instead of giving the new loan to the family, Rodriguez and Ok pocketed most of the proceeds themselves, defrauding the banks and leaving the homeowner with no title, mortgage or right to their home.

Now that the case is over, the fraud unit is beginning to help about 30 victims of the scam pick up the pieces by, among other things, helping the victims negotiate with lenders to regain title of their homes.

“We’re telling people if you are still in this mess, we want to work with you to determine what your best options are,” Acting Consumer Affairs Director Rigo Reyes said. (Click here to learn more about the department’s homeowner services.)

Helping federal prosecutors is a small part of the work of the five-person anti-fraud team, headed by supervising investigator Dawnnesha Smith. In some cases, the investigators resolve complaints through negotiation. In cases that look criminal, investigators refer cases for prosecution to the district or city attorneys’ offices.

Since the collapse of the real-estate market, the sheer volume of complaints has spiked dramatically. “We’re seeing at least double the number of cases since 2007,” up to about 300 real-estate-related complaints each month, Smith said. In addition, the unit recently took over investigations of credit-card theft and other identity fraud.

Hoping to protect the public against scams, Smith said, “we do a lot of work explaining real-estate fraud in speaking engagements.”

The unit’s work is drawing attention from county officials. Reyes and Smith learned Wednesday that the unit won a 2009 SUPERSTARS! Award from the county for “service excellence and organizational effectiveness.” The members are scheduled to be honored at the May 11 meeting of the Board of Supervisors.

The Rodriguez-Ok prosecutions represented the first time the county investigators had teamed up with federal authorities. Since then, they’ve participated in another case, helping federal prosecutors investigate a $1 million real-estate scam in East Los Angeles that resulted in the 2009 conviction of Juan Rangel on charges that he bribed a bank manager so he could stash huge cash payments in his bank account.

Smith’s team is now busy chasing “foreclosure consultants” who prey on homeowners who have defaulted on their mortgages. The scammers charge up-front fees ranging from $1,000 to $10,000 with the promise that they will renegotiate the owner’s mortgage with the bank. Then they’d run off with the money, leaving bewildered homeowners in even deeper trouble than before.

Smith said her investigators have learned of a new scam that exploits public skepticism about banks. “We’ve noticed companies sending out notices saying ‘Your lender is under investigation. Call us to modify your loan’,” Smith said, adding of the new schemes: “It’s ever evolving, and we have to stay ahead of it.”

Posted 2/25/10