Real-Estate Fraud Scheme Raised Millions of Dollars; Defendant Was Finalist for Naming Rights to San Francisco 49ers Football Stadium
SAN FRANCISCO — LAWFUEL – US Attorney – Department of Justice News – United States Attorney Scott N. Schools announced that Tony J. Daniloo, the former President and Chief Executive Officer (CEO) of a Modesto real-estate brokerage company, was sentenced yesterday to 108 months in prison in connection with a scheme to defraud homeowners in the Bay Area and the Central Valley of millions of dollars in cash.
Mr. Daniloo, 32, of Turlock, California, was sentenced in San Francisco federal court by United States District Court Judge William H. Alsup, approximately four months after pleading guilty to all 122 counts of fraud and money laundering charged in the indictment. Because Mr. Daniloo had served 18 months in state custody in connection with the same conduct that led to federal charges, but will not receive credit from the federal Bureau of Prisons for his time, Judge Alsup reduced the sentence by 18 months.
“A prison term of nine years is a just punishment for this crime,” said U.S. Attorney Schools. “The victims here were innocent homeowners, many of whom were deprived of their life savings. This conviction and sentence confirm that real-estate fraud is something that this Office takes very, very seriously.”
Diane Carter, Acting Special Agent In Charge of Internal Revenue Service -Criminal Investigation (IRS-CI), said,”Mortgage fraud is a crime with many victims, including unsuspecting homeowners and lending institutions, who suffer significant losses while the perpetrators such as Mr. Daniloo pocket the proceeds for their personal benefit. IRS-CI is proud to be a part of the great team effort in this investigation, and we will continue to contribute our financial expertise to help unravel complex financial crimes and money laundering schemes.”
Jean Mitchell, Special Agent in Charge of the United States Secret Service’s San Francisco field office, said, “This investigation is another example of federal and
state law enforcement working in a collaborative effort to stop the defrauding of innocent victims. In this era of complex criminal trends, law enforcement needs to pool its resources and expertise to combat crime.”
In addition to imposing a 108-month prison term (with an 18-month reduction as credit for time served), Judge Alsup sentenced the defendant to three years of supervised released, a special assessment of $12,200, and restitution to the victims, with the amount to be determined on or before a hearing set for May 1, 2007.
In his guilty plea, which occurred on December 5, 2006, Mr. Daniloo admitted that he defrauded real-estate lenders and clients in the East Bay and the central California valley of millions of dollars in cash that had been intended for the lenders and clients. He pleaded guilty to all 122 counts charged in the indictment, including 41 counts of wire fraud, in violation of 18 U.S.C. § 1343; four counts of mail fraud, in violation of 18 U.S.C. § 1341; and 77 counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(A)(i).
From 2000 to 2002, Mr. Daniloo served as manager of the Dublin branch office of Residential Credit Corporation, a mortgage brokerage company based in Westminster, Calif. Mr. Daniloo admitted in his guilty plea that while employed at Residential Credit Corporation, he created a scheme to defraud lenders by falsely claiming that liens existed on borrowers’ properties, duping lenders into funding these phony liens instead of the debts that lenders required be paid. Mr. Daniloo then fraudulently paid himself “commissions” out of this extra cash.
In 2003, Mr. Daniloo co-founded DreamLife Financial, which maintained headquarters in Modesto and as many as seven branch offices. Mr. Daniloo served as President and CEO of DreamLife Financial until it closed in December 2004. Mr. Daniloo admitted in his guilty plea that he defrauded lenders and clients by using phony documentation to cause large amounts of cash intended to extinguish his clients’ former mortgages to be deposited instead into his personal bank accounts for his personal use. This fraud scheme resulted in many of DreamLife’s clients unwittingly ending up with two mortgages, not one.
Finally, Mr. Daniloo admitted to laundering his criminal proceeds by making numerous “lulling payments” to victim homeowners, as well as spending massive amounts of stolen money to garner publicity for DreamLife. For example, according to the indictment, Mr. Daniloo made a $1 million pledge to the athletic department at California State University at Stanislaus, in exchange for the university renaming its athletic arena “DreamLife Arena.” In 2004, DreamLife was a finalist for naming rights of the San Francisco 49ers’ football stadium at Candlestick Point.
In total, according to publicly-filed documents, Mr. Daniloo was responsible for more than $100 million in fraudulent loans, and embezzled from homeowners nearly $7 million in cash that the victim homeowners had intended be used for their own cash needs.
Assistant U.S. Attorney Michael Li-Ming Wang prosecuted the case, with the assistance of Helen Yee and Ana Guerra. The prosecution is a result of a four-year investigation by the Internal Revenue Service–Criminal Investigation, the United States Secret Service, and Alameda County District Attorney investigators.List your legal jobs on the LawFuel Network