Ringleader sentenced in multimillion-dollar fraud operation which saddled victims with crushing debt

Editor's Note:
This matter occurred on date indicated, but not published at that time due to government shutdown. Press release posted and made available following the return to normal operations.   

HOUSTON – A 62-year-old California resident has been ordered to federal prison for leading a sweeping mortgage and loan fraud scheme that defrauded businesses, banks, mortgage lenders and government programs out of millions of dollars, announced U.S. Attorney Nicholas J. Ganjei.

Steven Tetsuya Morizono aka Jeff Lucian, Mission Viejo, California, pleaded guilty March 5 to 34 counts to include conspiracy to commit bank fraud, wire fraud, mortgage fraud and conspiracy to make false statements to the Federal Trade Commission and obstruction of an official proceeding.

U.S. District Judge Keith P. Ellison has sentenced Morizono to a total of 121 months in federal prison, followed by three years of supervised release. 

At the hearing, the court heard additional evidence that Morizono recruited his brother-in-law, Albert Lim aka Ted Chen, 56, Mission Viejo, California, and longtime friend David Best, 62, Anaheim, California, to participate in the scheme. Together, they operated through a company called Jeff Funding, which carried out a nationwide fraud involving falsified loan applications, shell companies, straw buyers and fraudulent credit repair services connected to numerous homes in Spring. 

In handing down the sentence, the court described Morizono’s conduct as “deeply troubling and absolutely corrupt.” Restitution will be determined at a later date.

“This wasn’t just paperwork fraud, this was a calculated and opportunistic nationwide scheme designed to manipulate mortgage lenders, banks and people with poor credit histories, for personal gain,” said Ganjei. “These criminals exploited every opportunity — from banks to the housing market to the pandemic – to enrich themselves at the expense of taxpayers, banks, and honest Americans.”

“The sentencings in this case send a clear message that mortgage fraud will not be tolerated,” said Special Agent in Charge Korey Brinkman of the Federal Housing Finance Agency - Office of Inspector General. “Those who defraud the government-sponsored enterprises, Fannie Mae and Freddie Mac, put our housing finance system at risk. FHFA-OIG is proud to work with the Southern District of Texas and our investigative partners to diligently pursue and bring to justice those commit these crimes.”

The group had recruited individuals with poor credit scores, falsely reported identity theft to inflate their credit histories and submitted fraudulent pay stubs to secure personal loans. Once the loans were approved, Morizono and others skimmed the proceeds, leaving clients burdened by unmanageable debt.

They also used straw buyers to acquire homes, collecting millions in rent and pandemic-era assistance while failing to pay the mortgages which resulted in foreclosures.  

During the COVID-19 pandemic, the group expanded their fraud to target federal relief programs, including the Paycheck Protection Program and Economic Injury Disaster Loans, submitting hundreds of falsified applications.

The conspiracy, which dates back to 2017, has led to the convictions of 17 individuals, including mortgage brokers Heather Campos and Kimberli Ann Tomman, Spring, and multiple straw buyers.

Campos, 46, and Best, 62, fled after indictment, but authorities arrested them in Utah.

Campos acted as a recruiter and mortgage broker for the scheme and managed the Jeff Funding office in Spring. She was sentenced to 94 months. Lim, who acted as the bookkeeper and created fake documents for the scheme, received a sentence of 84 months, while Best was ordered to serve a 60-month-term of imprisonment for setting up numerous shell companies and acting as a straw buyer on numerous properties.

Morizono, Campos, Lim and Best have been and will remain in custody pending transfer to a Federal Bureau of Prisons facility to be determined in the near future.

The FHFA-OIG conducted the investigation with the assistance of the U.S. Postal Inspection Service, IRS – Criminal Investigation, Small Business Administration - OIG, Department of Housing and Urban Development – OIG and Federal Trade Commission – OIG. U.S. Marshals Service and FBI assisted in apprehending fugitives along with police departments in South Jordan, Riverton and Herriman, Utah; Colorado City/Hilldale, Arizona; and Virginia State Police.

Assistant U.S. Attorneys Kate Suh and Jay Hileman prosecuted the case.