(CN) – Five Los Angeles-area residents have been sentenced to jail for defrauding struggling homeowners out of $13 million through a bogus refinancing scam, the U.S. Attorney’s Office in Los Angeles announced.
Martha Rodriguez, 38, who orchestrated the scheme through her real estate and escrow agencies, Silvernet Properties and Bellasi Escrow, pleaded guilty to mail fraud and money laundering charges and was sentenced to 10 years in prison. Rodriguez operated the scheme while she was free on bond after being charged in another real estate fraud case.
A FBI and IRS criminal investigation revealed that from May 2003 to November 2005, the five schemers used computer databases to track down more than 100 homeowners facing foreclosure and falsely promised to help them refinance.
They then submitted loan applications in the names of “straw buyers,” who were either people who were paid for use of their names or victims of identity theft. The false loan applications yielded more than $40 million in loan proceeds. They used some of the money to make loan payments, but pocketed the rest.
The loans went into default as straw buyers didn’t make the payments, causing homeowners to lose their homes. In many cases, lenders could not foreclose on the homes because the straw buyers did not know the properties were in their names.
Edward Seung Ok, 44, pleaded guilty to mail fraud and was sentenced to 15 years in prison. The court found that Ok hid proceeds of the scheme in an offshore bank account in the Caribbean. Ok had agreed to repatriate the account and transfer the funds to the government in his plea agreement, but then refused to do so, instead further hiding the funds and refusing to cooperate with investigators.
During the scheme, Ok transferred more than $1.6 million to the offshore account, and then transferred more than $1 million into a U.S. account that he used for golf club memberships, illegal drugs and a $235,000 Lamborghini Gallardo. During the court hearing, Ok admitted to spending more than $1 million over the two-year period when he was free on bond.
The other individuals convicted in the case are Cynthia Valenzuela, 27, who pleaded guilty to mail fraud and received a one-year prison sentence; Vladimir Stefanovic, 38, sentenced to 18 months in prison; and Maria Juarez, 39, sentenced to three years in prison for continuing to perpetuate loan fraud while free on bond.