11 January – LAWFUEL – The Law News Network – The former owner of several Anaheim Hills-based real estate companies was found guilty this morning of federal charges related to an illegal property-flipping and loan fraud scheme in which he and others submitted fraudulent mortgage applications that led to the issuance of more than $6 million in fraudulent loans.
Following 14 days of trial, James Davis Bennett, 52, of Rancho Santa Fe, California, was convicted of 11 counts. After deliberating for just over one day, the jury found Bennett guilty of operating a continuing financial crimes enterprise, four counts of wire fraud and six counts of bank fraud.
The evidence presented at trial showed that Bennett purchased multiple-unit properties in distressed areas of Los Angeles and Long Beach for fair market value. Bennett purchased these properties in cash in the name of his mother, his wife and his stepson. Simultaneously, Bennett sold these properties to “straw” buyers for inflated prices, usually approximately $100,000 more than the fair market value.
Bennett and his co-schemers recruited the straw buyers with the promise that they would get the properties without having to make any down payment or deposit. Bennett and his co-schemers prepared mortgage loan applications for the straw buyers that contained false employment, income, down payment and credit information. To qualify for the mortgage loans, lenders require borrowers have a number of qualifications, including sufficient income to cover the mortgage payment, current employment, an acceptable credit history and sufficient assets to cover the down payment for the property. Bennett and his co-schemers prepared fraudulent loan applications for the straw borrowers who could not qualify for the loans, knowing that the lenders and banks would rely on the false information to determine whether to fund and insure the loans. Bennett also prepared fraudulent appraisal reports, concealing his purchases of the properties and the true value of the properties, in order for the lenders to fund loans for approximately $100,000 more than Bennett paid for the properties.
Bennett acted as the escrow officer on the transactions to provide fraudulent information to the lenders to lead the lenders to believe significant down payments were made by the borrowers, when no such down payments existed.
As a result of the scheme, lenders issued more than $6 million in mortgages to unqualified and “straw” purchasers, many of whom fell into foreclosure.
Bennett, a licensed mortgage broker and a licensed appraiser who lived in Yorba Linda during the scheme, formerly operated West Belle Mortgage, West Belle Mortgage Escrow, West Belle Realty and Independent Appraisers.
Following today’s verdicts, Bennett was remanded into custody. Bennett is scheduled to be sentenced by Chief United States District Judge AliceMarie H. Stotler on April 14. Bennett faces a mandatory minimum sentence of 10 years in prison and a maximum possible sentence of life in prison for the continuing financial crimes enterprise count. Bennett also faces up to five years in prison for each wire fraud count and up to 30 years in prison for each bank fraud count.
Previously in this case, four others – Bernardo Fernandez, Benny Ibarra, Steven Rogers and Ricardo Garcia – pleaded guilty to wire fraud and bank fraud charges. They will be sentenced by Judge Stotler in the coming months.
This case is a result of an investigation by the Federal Bureau of Investigation.