Clinton Woman Admits Role in Mortgage Fraud Scheme

May 19, 2010 - David B. Fein, United States Attorney for the District of Connecticut, announced that ROSA GARCIA, 34, of Clinton, waived her right to indictment and pleaded guilty today before United States District Judge Vanessa L. Bryant in Hartford to one count of conspiracy to commit mail fraud and wire fraud.

According to court documents and statements made in court, GARCIA worked for Jose Guzman, who operated a mortgage business that arranged for individuals to obtain funding from various mortgage companies to fund mortgages of houses. Operating through various mortgage brokerage, property management and home improvement companies, Guzman and his co-conspirators arranged for “borrowers” to obtain funding from various mortgage companies and mortgage originators. The borrowers usually were individuals who had good credit but were of modest means with low levels of income. Guzman and his co-conspirators located real estate properties, specifically residential housing properties located in New London County, to be purchased by the borrowers using the funds loaned from various lenders. In order to recruit and entice the individuals to act as the borrowers, Guzman and others, at times, compensated the borrowers. In order to secure the funding from lenders, Guzman and his co-conspirators, including GARCIA, falsified material information on the borrowers’ mortgage loan applications, including information regarding income, assets, employment, rent history, as well as the borrowers’ intention to make the properties their primary residence.

GARCIA was an employee of Guzman’s real estate, mortgage brokerage, and property management businesses. As an employee, she assisted Guzman and his partners in the buying and selling of properties and in the closings of the real estate deals. In pleading guilty, GARCIA admitted that she assisted in the preparation and submission of fraudulent closing documentation to lenders, including verification of rent, verification of deposits and verification of employment. GARCIA also admitted that, when called by lenders seeking to verify the information contained in the submitted documents, she would confirm the false information.

Through this conspiracy, the co-conspirators collected large commissions, fees and other money from the fraudulently conducted real estate transactions. During the time that GARCIA worked for Guzman, the co-conspirators caused more than 200 mortgages to be funded. As a result of defaults on the mortgages, the lenders suffered losses of more than $3.6 million.

Judge Bryant has scheduled sentencing for February, 7, 2011, at which time GARCIA faces a maximum term of imprisonment of five years.

On September 9, 2008, Guzman pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud. He awaits sentencing.

U.S. Attorney Fein stated the investigation is ongoing.

This case is being investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development, Office of Inspector General. The case is being prosecuted by Assistant United States Attorney Michael S. McGarry.

In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. In addition to investigating past mortgage fraud schemes, the Task Force will focus on emerging crime trends that are associated with the growing tide of foreclosures, including foreclosure rescue schemes, and short sale schemes. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 and requesting the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to ctmortgagefraud@ic.fbi.gov.

The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service - Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General, and State of Connecticut Department of Banking.