12 CHARGED IN 6 MORTGAGE FRAUD SCHEMES
United States Attorney Mary Beth Buchanan announced today, July 14, 2009, that 12 individuals have been charged in United States District Court in Pittsburgh in connection with six separate mortgage fraud schemes.
A 15‑count Superseding Indictment charges John L. Chaffo, Jr., 49, Michael Dokmanovich, 36, and Bernardo Katz, 49, with Wire Fraud, Wire Fraud Conspiracy and Bank Fraud.
According to the Superseding Indictment, Dokmanovich, who was a licensed mortgage broker, and Chaffo, who was an attorney, participated in two different mortgage fraud conspiracies involving the submission of fraudulent loan applications and other documents, including appraisals, in connection with loan applications. The Superseding Indictment also alleges that Bernardo Katz participated in one of those conspiracies.
The law provides for a maximum total sentence of 260 years in prison, a fine of $3,250,000, or both for Chaffo; 210 years in prison, a fine of $3,250,000, or both for Dokmanovich; and 130 years in prison, a fine of $2,250,000, or both for Katz.
A four‑count Superseding Indictment charges Nicholas DeRosa, 64, with Bank Fraud, Mail Fraud, and Money Laundering Conspiracy, and Anthony J. Staph, Jr., 43, with Bank Fraud.
According to the Superseding Indictment, DeRosa participated in a bank fraud scheme, and in a similar mail fraud scheme, in which he arranged for Affordable Housing of Lawrence County (AHLC) to purchase properties at prices in excess of their fair market values. The Superseding Indictment alleges that DeRosa caused the preparation and execution of fraudulent sales agreements related to properties that AHLC intended to purchase in that the sales agreements failed to disclose that some of the sellers intended to kick back to DeRosa money after the closing. The Superseding Indictment also alleges that Staph, who was an appraiser, prepared appraisals for properties that were to serve as collateral for AHLC's loan from First Commonwealth Bank that he then knew were false and fraudulent in that they contained misrepresentations related to the value of the properties, the condition of the properties, and whether the properties were occupied.
The Superseding Indictment also alleges that DeRosa participated in a money laundering conspiracy in which a seller of one of the properties withdrew $5,000 in cash from a bank account to pay DeRosa a kickback, that some of the kickback funds were deposited into a bank account of an individual known to the grand jury, and then withdrawals were made from that account via checks made payable to an entity known to the grand jury.
The law provides for a maximum total sentence of 50 years in prison, a fine of $2,000,000, or both for DeRosa, and thirty 30 years in prison, a fine a $1,000,000, or both for Staph.
The United States Attorney filed a related, one‑count Bill of Information charging Robert Ratkovich, 40, with one count of Bank and Mail Fraud Conspiracy and one count of Money Laundering Conspiracy.
According to the Information, Affordable Housing of Lawrence County (AHLC) hired Ratkovich to provide consulting services related to the purchase of seven properties all of which were owned or associated with an individual known to the United States Attorney. The Information alleges that Ratkovich provided false information to First Commonwealth Bank in connection with a loan that was used to purchase the seven properties and caused AHLC to purchase the properties in excess of their fair market values.
The law provides for a maximum total sentence of 40 years in prison, a fine of $750,000, or both for Ratkovich. Senior United States District Judge Gustave Diamond will schedule a date for Ratkovich to enter a guilty plea.
A five‑count Superseding Indictment charges Colleen Chiavetta, 36, and John Chiavetta, 70, with Wire Fraud Conspiracy, Money Laundering Conspiracy, and Tax Evasion in connection with a mortgage fraud scheme.
According to the Superseding Indictment presented to the Court, Colleen Chiavetta and another individual operated People's Home Mortgage that assisted individuals obtain loans collateralized by real estate. Colleen Chiavetta and other individuals allegedly submitted fraudulent loan applications and supporting documents that overstated the financial condition of the borrowers, including their income and assets. The supporting documents also overstated the true sales prices of the properties and included appraisals that overstated the true value of the properties. Some of the fraudulent loan applications were submitted on behalf of John Chiavetta.
The Superseding Indictment further alleges that Colleen Chiavetta participated in a money laundering conspiracy that used the proceeds of the mortgage fraud scheme to further that fraud and to conceal the proceeds of that fraud. In addition, the Superseding Indictment charges Colleen Chiavetta with tax evasion, and alleges that, among other things, Colleen Chiavetta failed to file her income tax returns for the 2004 through 2006 calender years.
The law provides for a maximum total sentence of 55 years in prison, a fine of $1,500,000, or both for Colleen Chiavetta, and 20 years in prison, a fine of $250,000, or both for John Chiavetta.
A one‑count Indictment charges David McCloskey, 44, with Wire Fraud Conspiracyin connection with a mortgage fraud scheme.
According to the Indictment presented to the Court, McCloskey was a mortgage broker who operated a mortgage broker firm called First Atlantic Financial. He allegedly participated in a conspiracy to present fraudulent appraisals to mortgage lenders. The appraisals were fraudulent in that they overstated the true fair market values of the properties that served as collateral for the loans, and represented that they were prepared by licensed appraisers, when they were really prepared by an unlicensed appraiser.
The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000, or both for McCloskey.
In addition, the grand jury returned a one‑count Indictment charging Karen Atkison, age 50, with Wire Fraud Conspiracy in connection with a mortgage fraud scheme.
According to the Indictment presented to the Court, Atkison was employed by entities that closed real estate transactions. She allegedly participated in a conspiracy with a mortgage broker in which they submitted documents to lenders falsely representing that borrowers had made down payments in connection with the closings when, in fact, theyhad not made down payments. Rather, the Indictment alleges that Atkison, prior to the closings, forwarded funds to the mortgage broker, who converted those funds to cashier's checks or certified checks that the broker then brought to the closing. All ofthat was done to make it falsely appear to the lenders that the borrowers made down payments at the closings.
The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000, or both for Atkison.
Finally, the United States Attorney filed separate, but related, one‑count Bills of Information charging Daniel W. O'Connor, 38, and Lawrence J. Kraynak, age 40, with Wire Fraud Conspiracy in connection with a mortgage fraud scheme.
The Bills of Information allege that O'Connor and Kraynak operated a mortgage broker company called Financial Freedom Mortgage that assisted borrowers in obtaining loans collateralized by real estate. Each defendant participated in a conspiracy to defraud lenders by submitting to the lenders appraisals knowing that the appraisals vastlyoverstated the true fair market values ofreal estatethat served as collateral for the loans. The appraisals were prepared by Kenneth Cowden, who was not licensed to prepare appraisals, who has pleaded guilty to similar charges, and who is awaiting sentencing. O'Connor and Kraynak are alleged to have submitted Cowden's appraisals under the name of licensed appraisers as if they had been prepared by the licensed appraisers.
The law provides for a maximum total sentence of 20 years in prison, a fine of $250,000, or both for O'Connor and Kraynak. United States District Judge Joy Flowers Conti will schedule dates for both O'Connor and Kraynak to enter guilty pleas.
Under the Federal Sentencing Guidelines, the actual sentences imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the aforementioned defendants.
These cases are being prosecuted by Assistant United States Attorney Brendan T. Conway. The Mortgage Fraud Task Force conducted the investigations leading to the Indictments and Bills of Information in these cases. The Mortgage Fraud Task Force is comprised of investigators from federal, state and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housingand Urban Development, Officeof Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff's Office; the Pennsylvania Attorney General's Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee's Office.
Mortgage industry members with knowledge of fraudulent activity are encouraged to call the Mortgage Fraud Task Force at (412) 894‑7550. Consumers are encouraged to report suspected mortgage fraud by calling the Pennsylvania Attorney General's Consumer Protection Hotline at (800) 441‑2555.
An Indictment is only a charge and is not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
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