REGION: Prosecutors say local gang ran $100 million mortgage fraud

Officials say 220 properties in San Diego County involved

By ZACH FOX – North County Times Staff Writer | Wednesday, April 8, 2009 9:43 AM PDT

Authorities said Tuesday that they arrested 24 people in connection with a wide-ranging real estate fraud that involved 220 properties across San Diego County and loans totaling more than $100 million.

The defendants used fictitious loan documents and a fake construction company, defrauding banks into making loans for home improvement projects that were never built, officials said. A federal prosecutor said that the 24 were charged under anti-racketeering statutes that would carrying maximum penalties of 20 years in prison.
By using the statutes originally adopted to bust organized crime, prosecutors said the government would be able to seek harsher penalties than if they pressed only bank fraud charges.

Keith Slotter, a special agent with the FBI who said he has worked white-collar crimes for 22 years, called the case “one of the most significant investigations I have seen” because of the racketeering charges for mortgage fraud activities.

According to the 83-page grand jury indictment, the defendants recruited “straw buyers,” who lent their credit profiles but put no money down to close the mortgages used to purchase the 220 homes. Authorities said that a typical mortgage application requested funds for the completion of projects that would make the home handicapped-accessible. Those projects never existed, and the funds were instead redistributed among the defendants, authorities said.

The scheme involved not only the buyer, but also real estate agents, appraisers and escrow agents, said Karen Hewitt, the U.S. attorney for San Diego.

“From top to bottom, as I described the real estate industry, it was all implicated here,” Hewitt said, adding that collusion among real estate professionals warranted the racketeering charge. “Everyone served their specific roles to make this enterprise work for the corrupt entities.”

Some of the defendants were known street gang members, including the scheme’s leader, Darnell Bell, aka “D-Bell,” 38, of Chula Vista, authorities said. Another defendant, Ray Logan, used the alias “Jack Nasty.” Bell is in federal custody serving a sentence under a conviction for selling cocaine, prosecutors said.

Authorities said Bell took home at least $9 million in profits through the purchase of the 220 homes.

Four North County residents and one Southwest Riverside County resident were among the 24 arrested: Anton Ewing, of Rancho Santa Fe; Dennis Tapia, of Oceanside; Dexter Holiday, of San Marcos; Keith Holiday, of Ramona; and Esteban Valenzuela, of Sun City, who acted as an appraiser, according to the indictment.

A North County Times investigation published in August centered on a string of transactions linked to two of the 24 defendants. Hewitt said law enforcement officials opened their investigation in November.

The newspaper’s investigation found that Michael Ivy —- who was indicted for recruiting buyers for the Bell operation, according to officials —- purchased an Escondido condominium at an unusually high price. The grant deed on that sale, as with most of the sales at that condo complex, was notarized by Billie Bishop, another name listed in the indictment released Tuesday.

However, Bishop’s arrest was only linked to work as an escrow officer, not a notary, and the Escondido condominium complex was not involved in the indictment announced Tuesday, said Todd Robinson, assistant U.S. attorney.

Also, the newspaper’s investigation focused on the condo complex’s development team, which was not mentioned in the indictment.

The newspaper reported in August that the team apparently struggled for months to sell the condos, but was later able to find buyers at dramatically higher prices than those of comparable homes in the neighborhood at a time when the local housing market was collapsing.

James Tills, one of the real estate agents who helped sell the Escondido condos, told the North County Times last summer that Michael Ivy provided buyers for some of the condos that sold at unusually high prices. Tills was not mentioned in the indictment Tuesday.

Tills said it was tough selling the Escondido condos as the region’s real estate market crumbled.

“And so I called Mike Ivy, and he said, ‘Yeah, I’ve got enough buyers to buy all of them up,'” Tills said last summer. “And I said, ‘That’s great. In this market, that’s great.'”

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