Residential Care Home Owners And Real Estate Agents Plead Guilty In $20 Million Mortgage Loan Fraud Scheme
OAKLAND, Calif. – Edith Nelson, Ronald Nelson, Nelda Asuncion and Cristeta Lagarejos pleaded guilty in federal court in Oakland on Feb. 3, 2012, to charges relating to a far-reaching mortgage loan fraud scheme involving at least 20 properties in the Northern District of California and more than $20 million in loan proceeds, United States Attorney Melinda Haag, Acting Special Agent in Charge, IRS Criminal Investigation, Clarissa Balmaseda, and Special Agent in Charge, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), Clark Settles announced. Edith Nelson and Ronald Nelson also pleaded guilty to income tax evasion and harboring an illegal alien.
In pleading guilty, Edith Nelson, 53, and Ronald Nelson, 76, a married couple, admitted to the facts set forth in their plea agreements, which include the following: The Nelsons owned and operated Placement Services, a referral service located in Pleasant Hill, Calif., that placed elderly people into residential care home facilities. On or about Aug. 21, 1998, the State of California Department of Social Services ordered the immediate exclusion of Ronald Nelson and Edith Nelson (under her former name Edith Grutas) from all facilities licensed by the Department based upon various violations of licensing requirements. Despite the exclusion order, the Nelsons continued to operate numerous residential care home facilities for the elderly and other properties in the identities of others used to purchase the properties (straw buyers). As part of this scheme, at least 63 loans, totaling approximately $20,754,700 in loan proceeds, were obtained from financial institutions based on false and fraudulent representations. Ronald and Edith Nelson maintained full control over the properties by directing the straw buyers to sign grant deeds that either transferred title of the property to Edith Nelson or added her name to the title on the property. A number of straw buyers were instructed to open bank accounts that were then controlled by Ronald and Edith Nelson.
In also pleading guilty, Nelda Asuncion, 68, a real estate agent and co-owner of Realty World Pacific West in Concord, Calif., and Cristeta Lagarejos, 49, a real estate agent and broker, and the owner of Legacy Financing in Pleasant Hill, admitted to joining the scheme to commit mortgage loan fraud with the Nelsons. In furtherance of this scheme, mortgage loan applications were prepared in the names of straw buyers that contained materially false and fraudulent statements such as employment information and grossly inflated income and assets intended to enhance the likelihood that the mortgage lenders would approve the loan applications. Nelda Asuncion and Cristeta Lagarejos determined the qualifying income that the lenders required for approval of mortgage loans, and falsely placed that amount on the loan applications, instead of the straw buyers’ actual income. Nelda Asuncion sent faxes to Placement Services with a summary of the employment information fraudulently placed on the loan applications prepared by Realty World Pacific West. Edith Nelson then falsely corroborated the employment information placed on the loan applications when the lenders called to verify employment.
As also set forth in their plea agreements, Ronald and Edith Nelson hired care givers, whom they knew were illegally present in the United States, to work at their numerous residential care home facilities for the elderly purchased through straw buyers, but which the Nelsons controlled. The care givers worked long hours at less than minimum wage and often resided in the same facilities where they worked. Many of the Nelsons’ illegal alien workforce were paid under the table in cash and did not pay taxes. The Nelsons never reported any of their illegal alien employees to immigration authorities because their intent was to conceal them from detection.
In their plea agreements, Ronald and Edith Nelson have agreed to pay restitution in the amount of $5,223,476.90, which includes restitution for lending institutions and other victims of the mortgage loan fraud, taxes owed based upon their income tax evasion, and back wages in the amount of $1,546,246.40 owed to the Nelsons’ employees and former employees as determined by the U.S. Department of Labor. Nelda Asuncion has agreed to pay restitution in the amount of $2,838,868.54. Cristeta Lagarejos has agreed to pay $318,500 in restitution.
“We have all paid the price for mortgage loan fraud, which has had a devastating effect on the United States’ economy,” U.S. Attorney Haag said. “The Department of Justice will continue to vigorously pursue and prosecute offenders of mortgage loan fraud and violators of immigration law as occurred in this significant case.”
“IRS-CI takes mortgage fraud seriously. The impact of these types of crimes cannot be overstated. Fraud in the mortgage industry has played a major role in almost crippling this nation’s economy,” said Clarissa Balmaseda, Acting Special Agent in Charge, IRS-Criminal Investigation. “IRS-CI is committed to pursuing individuals who commit this type of offense.” “Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable.”
“The defendants’ actions in this case were calculated and brazen,” said Clark Settles, Special Agent in Charge for ICE Homeland Security Investigations in San Francisco. “They exploited their foreign workers; they exploited our nation’s legal immigration system; and they exploited the mortgage-lending process. Fortunately, through our joint investigative efforts, we exposed this large-scale fraud scheme and now those involved will be held accountable for the considerable harm they caused.”
The sentencing of all four defendants is scheduled for May 11, 2012, before Judge D. Lowell Jensen in Oakland. The maximum statutory penalty for conspiracy to commit wire fraud and bank fraud, in violation of 18 U.S.C. § 1349, is 30 years in prison and a $1 million fine. The maximum statutory penalty for monetary transactions using criminally derived property, in violation of 18 U.S.C. § 1956(a), is 10 years in prison and a $250,000 fine. The maximum statutory penalty for income tax evasion under 26 U.S.C. § 7201 is five years in prison and a $100,000 fine. The maximum statutory penalty for harboring an illegal alien under 8 U.S.C. § 1324(a)(1)(A)(iii) is five years and a $250,000 fine. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Deborah Douglas is the Assistant United States Attorney who is prosecuting the case with the assistance of Paralegal Noble Hughes. The prosecution is the result of an extensive investigation by the IRS-Criminal Investigation, and U.S. Immigration and Customs Enforcement, Homeland Security Investigations.