11 March 2005 – LAWFUEL – The Law News Network – A Pico Rivera man has been found guilty on various charges related to a loan fraud
scheme in which he and others submitted fraudulent loan applications for mortgages that were insured by the Federal Housing Administration. As a result, mortgages were issued to unqualified and “straw” purchasers, which led to numerous foreclosures and the issuance of more than $5 million in fraudulent loans.
Following a four-week trial, Frank Acosta, 38, was convicted Thursday afternoon of
a total of 25 counts. After deliberating for less than one day, the jury found
Acosta guilty of conspiracy, 13 counts of making false statements to Department of
Housing and Urban Development (FHA’s parent agency), seven counts of wire fraud and
four counts of money laundering. Yesterday’s convictions follow a trial last fall
that resulted in a mistrial when a jury was unable to reach unanimous verdicts.
Acosta’s wife, Elizabeth Madrigal, 31, also of Pico Rivera, pleaded guilty in 2003
to conspiracy, wire fraud and money laundering charges.
The evidence at trial showed that Acosta purchased residential properties that
qualified for resale using home mortgages insured by the FHA. Acosta recruited and
had others recruit non-qualified buyers and straw buyers to act as the purchasers
of the properties. Acosta and his co-conspirators prepared mortgage loan
applications that contained false employment, income, down payment and credit
information for the buyers.
To qualify for an FHA-insured home mortgage loan, the FHA requires that the
borrower have sufficient income to cover the mortgage payment, current employment,
an acceptable credit history and sufficient assets to cover the down payment for
the property. Acosta’s co-conspirators prepared fraudulent loan applications for
people who could not qualify for FHA-backed loans, knowing that the banks and HUD
would rely on the false information to determine whether to fund and insure the
loans.
Acosta enlisted mortgage brokers to fraudulently package each loan. The mortgage
brokers sometimes placed additional false statements in the applications, including
false verifications of cash-on-hand and false certifications of face-to-face
interviews with the straw buyers.
Acosta is scheduled to be sentenced by United States District Judge Dickran
Tevrizian on June 13. As a result of the guilty verdicts, Acosta faces a maximum
statutory sentence of five years in prison for the conspiracy and false statement
counts, and up to 20 years in prison for the wire fraud and money laundering
counts.
Madrigal was sentenced by Judge Tevrizian last year to 40 months in prison.
This case is a product of a joint investigation by the Office of Inspector General
of the United States Department of Housing and Urban Development, IRS-Criminal
Investigation Division and the Federal Bureau of Investigation.
