United States Attorney
Southern District of California
Friday, August 10, 2012
Operators of Several Loan Modification Scams Plead Guilty in San Diego to Defrauding Homeowners
SAN DIEGO – Three operators of San Diego-based mortgage loan modification scams that defrauded hundreds of homeowners pleaded guilty yesterday in federal court to fraud and money laundering charges, announced U.S. Attorney for the Southern District of California Laura E. Duffy. The most recent guilty plea was tendered today by Christian Hidalgo, who admitted before Magistrate Judge William V. Gallo to committing the offenses of mail fraud and money laundering. Hidalgo also agreed to forfeit certain assets seized from him at the time of his arrest in April 2012. On Aug. 2, 2012, Jose Ruiz pleaded guilty before Magistrate Judge Nita L. Stormes to one count of mail fraud and one count of money laundering, and also agreed to the forfeiture of proceeds of his offenses. The third defendant, Isidro Velasquez Jr., pleaded guilty before Magistrate Judge Gallo on Aug. 2, 2012, to one count of mail fraud for his role in Ruiz=s telemarketing fraud scheme. The guilty pleas of Ruiz and Hidalgo are subject to final acceptance by District Judge William Q. Hayes; the guilty plea of Velasquez is subject to final acceptance by District Judge Michael M. Anello.
According to court documents and admissions during their respective guilty pleas, all three defendants admitted participating in loan modification schemes in which they made false representations in order to induce victims to send mortgage payments to the defendants= businesses. Between approximately March 2009 and October 2011, the defendants defrauded homeowners facing potential foreclosure by offering to negotiate mortgage loan modifications with the victims= mortgage lenders. The defendants directed victims to stop making mortgage payments to their respective lenders, and instead to send monthly mortgage payments directly to one of the defendants' affiliated businesses, such as “Casa Nuestra,” “Expo Enterprises,” “UHUD National Reserve” and ARetro Management.” In order to bolster their credibility, the defendants misled victims into believing that their businesses were affiliated with the U.S. Department of Housing and Urban Development (HUD) or other federal agencies. Although the defendants represented that victims' mortgage payments would be segregated in a “reserve” account and eventually sent to the respective lenders, no such account was used and none of the victims' payments were forwarded to lenders. As a result of the scheme, several victims lost their homes in foreclosure. Acting through these schemes, the defendants defrauded a combined total of more than 200 victims out of over $1,600,000.
Both Ruiz and Hidalgo further admitted laundering proceeds they obtained from the fraudulent scheme. For example, Ruiz transferred $12,500 between bank accounts in order to pay for his personal expenses, and Hidalgo used victim funds to purchase a BMW. Ruiz and Hidalgo also agreed to forfeit several items that they purchased with victim funds, including vehicles, jewelry, and furniture. These assets were seized from Ruiz's and Hidalgo's residences at the time of their arrest on April 27, 2012. In addition, all three defendants agreed to pay full restitution to their victims.
Ruiz is scheduled to be sentenced by District Judge Hayes on Oct. 15, 2012. Velasquez is scheduled to be sentenced by District Judge Anello on Oct. 29, 2012. Hidalgo is scheduled to be sentenced by District Judge Hayes on Oct. 2, 2012.
U.S. Attorney Duffy praised the joint efforts of the U.S. Postal Inspection Service and HUD-OIG, who jointly investigated these offenses. U.S. Attorney Duffy stated, “Our office has dedicated, and will continue to dedicate, significant resources to investigate and prosecute offenders who prey upon those in our community who have been adversely affected by the economic downturn. I appreciate the diligent work of our federal law enforcement partners to pursue and bring to justice those who victimize our community through scams such as these.”