United States Attorney
Eastern District of California
Tuesday, June 11, 2013
Jury Returns Guilty Verdict for Nationwide Foreclosure Rescue Scam
$15 Million in Fraudulently Obtained Funds Taken from Scores of Homeowners
After a nearly four-week trial, a federal jury in Sacramento returned guilty verdicts against Charles Head, 36, of Los Angeles, and Jeremy Michael “Mike” Head, 33, of Huntington Beach, Calif., U.S. Attorney Benjamin Wagner announced. Both were convicted of conspiracy to commit mail fraud in connection with a nationwide “foreclosure rescue” scam. Charles Head was convicted of four counts of mail fraud, and Mike Head was convicted of two counts of mail fraud.
According to evidence presented at trial, Charles Head was the leader of a scam that, operating through an entity called Head Financial located in Orange County, Calif., between January 2004 and March 2006 netted more than $15 million in fraudulently obtained funds from scores of homeowners, many of whom were in California.
On Feb. 28, 2008, a federal grand jury indicted Charles Head, Mike Head and 14 other defendants with violations of mail fraud, conspiracy to commit mail fraud and other charges. The grand jury narrowed the charges in a superseding indictment in 2010. The evidence at trial established that the defendants solicited homeowners facing foreclosure, promising them that they would help the homeowners avoid foreclosure and repair their credit. Instead, through misrepresentations, fraud and forgery, the defendants led the victims to complete transactions that substituted straw buyers for the victim homeowners on the titles of properties without the homeowners’ knowledge. These straw buyers were often friends and family members of the defendants. Once the straw buyers were on title to the homes, the defendants applied for mortgages to extract the maximum available equity from the homes. The defendants then shared the proceeds of the ill-gotten equity and the “rent” that the victim homeowners paid them. Ultimately, the victim homeowners were left with no home, no equity, and with damaged credit ratings.
U.S. Attorney Wagner said: “The Head brothers preyed on the victims’ fear of losing their homes, and then took advantage of those victims’ predicament to steal from them their last remaining equity in those homes, enriching themselves in the process. As a result of their conduct, many of the victims who looked to the Head brothers for help were evicted and left destitute. Few white collar crimes are as cruel or as devastating to victims.”
“Charles and Jeremy Michael Head knowingly exploited and victimized homeowners who feared the imminent loss of their homes to foreclosure,” said Acting Special Agent in Charge Manuel Alvarez, Jr. of the Sacramento Division of the FBI. “Our efforts demonstrate the FBI’s commitment to combating major greed-based crimes such as these, identifying and investigating these crimes to seek justice for the victims.”
“Today’s guilty verdict sends a clear message to those committing mortgage fraud, that this type of activity will have a criminal consequence, which will include a felony conviction and a prison term to serve,” said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “The defendants in this case quite literally stole the American Dream of owning a home from many people. The loss of a home represents a loss of a family’s shelter and its most precious financial resource. These types of crimes have a devastating impact on both homeowners and the community.”
Sentencing for Mike Head is scheduled for Aug. 21, 2013, before U.S. District Judge Kimberly J. Mueller. Sentencing for Charles Head will be set following a second trial set for September 2013.
This case is the product of an investigation by the FBI and the Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorneys Michael D. Anderson and Matthew Morris are prosecuting the case.
Ten other defendants have pleaded guilty in this case, charges were dismissed against one, and three remaining defendants are set for trial on Nov. 4, 2013.
The following have pleaded guilty and are scheduled for hearings regarding their sentencing dates on July 24, 2013:
Elham Assadi , aka Elham Assadi Jouzani, aka Ely Assadi, 33, of Irvine;
Akemi Bottari, 31, of Los Angeles;
Sarah Mattson, 30, of Phoenix;
Omar Sandoval, 35, of Rancho Cucamonga;
Xochitl Sandoval, 32, of Rancho Cucamonga;
Andrew Vu, 42, of Santa Ana;
Justin Wiley, 31, of Irvine;
Kou Yang, 35, of Corona;
John Corcoran, aka Jack Corcoran, 55, of Anaheim.
Leonard Bernot, 54, of Laguna Hills, Calif. pleaded guilty and is scheduled to be sentenced on July 10, 2013.
A jury trial is scheduled for the remaining defendants on Nov. 4, 2013. Those defendants are Domonic McCarns, 36, of Brea; Joshua Coffman, 32, of North Hollywood, Calif.; and Anh Nguyen, 39, of Los Angeles. The charges against those defendants are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
A second indictment, returned March 13, 2008, charges Charles Head and six other defendants, including three not charged in the first indictment, with operating an additional “equity-stripping” scheme that netted approximately $5.9 million in stolen equity from 68 homeowners nationwide. That indictment alleges that Charles Head revised the original scheme by recruiting strangers via the Internet to act as straw buyers. Under this new scheme, the indictment alleges, he received approximately 97 percent of the stolen equity. His “sales agents” and employees, and the other defendants, allegedly received the remaining 3 percent of equity. Trial in that case is scheduled for Sept. 9, 2013.
Charles Head and Domonic McCarns were indicted in both indictments and are set for trial on the charges in the second indictment on September 9, 2013. Also charged in the second indictment and set for trial are: Keith Brotemarkle, 45, of Johnstown, Penn.; Benjamin Budoff, 44, of Colorado Springs, Calif.; and Lisa Vang, 27, of Westminster, Calif.. John Corcoran and Kou Yang were charged in both cases but have pleaded guilty.
If convicted of the charges, the defendants face up to 20 years in prison on each count. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case was part of the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.