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Mortgage fraud was widespread
  08/17/10  

Jeff Greene threatening lawsuits may not clear his name.

 
  08/06/10  

The Jeff Greene - Jim McConville connection

 
  03/28/10  

Is there a  McConville-White House connection?

 
  12/03/09  

Nicole McConville files for bankruptcy. Will the courts give her a fresh start?

 
  09/23/09  

Further evidence of big bank involvement in Jim McConville's loan fraud.

 
  09/09/09   The bankers were the bank robbers.  
  07/14/09   Anatomy of a "Staggering Swindle".  
  06/25/09   Stewart Title sued for fraud.  
  05/28/09   The media are contributing to mortgage fraud.  
  05/26/09   Financial ingenuity, otherwise known as fraud.  
  04/27/09   Did condo developer Jeff Greene buy his own "credit default swaps"?  
  04/25/09   The truth about McConville and Kearny Mesa Townhomes.  
  04/22/09   Another McConville "straw buyer" scam project.  
  04/18/09   There is a connection between the Escondido loan scam and the San Diego RICO loan conspiracy - Anton Ewing.  
  04/13/09   Do journalists do deals to get stories?  
       
  08/17/10   Jeff Greene threatening lawsuits may not clear his name.
      by Pat Flannery                                                      top^
 
On August 6, 2010 I called on the Florida media to investigate the sale and financing by Jeff Greene of 300 condo units in Ridgecrest, California that I had investigated and written about back in April 2009, long before Greene announced that he was a candidate for U.S. Senator from Florida. Greene had sold 300 converted condos in a former military housing project in which he is still the landlord for a substantial number of rental units.

The St. Petersburg Times sent a reporter out to California and has since written an investigative story about Greene who is now threatening to sue the Times claiming that he knew nothing about McConville's straw buyer scam, even though the completion of Greene's 300 condo deal with McConville depended upon McConville receiving the proceeds of 300 third party mortgage loans.

Here is a package of documents Greene sent to the St. Petersburg Times. He claims they  exonerate him. A close examination shows that they do exactly the opposite. They provide the written evidence that Greene knew about and fully cooperated in McConville's scheme.

Here is the final counter offer prepared by Greene's real estate broker, Marcus & Millichap and signed by Greene. It says "Seller agrees to cooperate with Buyer in securing financing". It goes on to describe that financing: "Buyer intends to sell individual PUDs during escrow to other individual entities to be named in escrow". (PUDs are a form of condo ownership.)

The telltale words are "during escrow". Here is a letter written by Marcus & Millichap on behalf of Greene, confirming that the intention of the Greene/McConville deal was that McConville would obtain his financing through the concurrent closing of 300 individual buyers. This proves that the McConville's straw-buyer transactions were an integral part of Greene's sale to McConville. That is where McConville's purchase money was coming from.

I think the brokers at Marcus & Millichap are in serious trouble. Greene will probably throw them under the bus. Remember the old saying "if they'll do it with you they'll do it to you". Greene's mantra is that he has always hires top professionals and relies upon them. Marcus & Millichap may be about to meet the real Jeff Greene.

Following a prolonged FBI investigation, the United States Attorney filed this criminal indictment in the U.S. District Court in Oakland, California. The FBI is continuing to investigate the Greene/McConville Ridgecrest transaction. More indictments are expected. In the meantime McConville has been denied bail and is sitting in jail.

All the professionals involved in the 300 Ridgecrest condo deal will have serious questions to answer from the FBI, the IRS and the California Department of Real Estate (DRE). For example, we know that McConville's real estate agent, Jason Piette only had a salesperson's license. He held that license from October 15, 2005 to October 14, 2009 when it expired. Did he, at the time he represented McConville in the Greene deal, have an employing broker, as required by California law? If not, Marcus & Millichap has a problem with the DRE for sharing its commission with an improperly licensed individual.

The same question hangs over L.E. Escrow. There is no such escrow company listed at the CA Department of Corporations, the licensing authority for escrow companies. It could be a "controlled escrow" i.e. owned and controlled by a licensed real estate broker. California real estate brokers are allowed to handle escrows in which they provide real estate services for which they receive a commission. But who was the broker?

Here are the Buyer's Estimate and the Seller's Estimate prepared by L.E. Escrow in the Greene part of the escrow, for which it apparently received a $3,000 fee. The Seller's side shows a loan payoff to First Regional Bank in the amount of $11,689,621.99. It shows a 3% real estate commission of $628,500 split between Marcus & Millichap and Logan Piette, not his employing broker as required by law. Did he even have an employing broker?

Here is a letter from Greene to Lee Robertson the escrow holder, under the name of L.E. Escrow. Obviously Greene considered Lee Roberson to be his escrow officer. There is no Lee Robertson listed as ever having had a real estate license in California. However, a real estate broker named Erin Gardere registered "L.E. Escrow" as a DBA with the County of Alameda on January 12, 2005. Gardere did not register the name with the DRE as is required by law if he intended to provide controlled escrow services under that name.

Here is Erin Gardere's current web site. He uses the name Black Diamond Holdings Inc. It shows him as the broker of record and Lee Robertson as his Operations Manager. I called the phone number listed for Lee Robertson and she told me that she would only answer my questions under subpoena. Mr. Gardere did not return my call.

The web site also shows Laura Caton as an associate licensee. She is currently under indictment alongside McConville. Sources tell me that Gardere is a long-time associate of McConville and was the contact person listed on a web site for McConville's movie "Red Velvet.

Are these the kind of top-notch professionals Greene says he always insists upon? Or will he blame it all on Marcus & Millichap who should have carefully checked out Piette and Robertson before entrusting them with tens of millions of their client's money. Greene claims that it was Marcus & Millichap who found McConville and his team.

To sum up: Greene knew that McConville was getting the money to close the deal from multiple sales to third parties. This made the deal a multiple escrow transaction. Greene signed a document agreeing to cooperate in those third party escrows. Now he wants us to believe that he simply sold the 300 units to McConville for cash, with no involvement in McConville's mortgage shenanigans. He says he never even met McConville. Maybe not, but he didn't need to. The agreement speaks for itself. McConville's 300 individual sales were an integral part of Greene's bulk sale to McConville. And Greene agreed to the whole thing in writing.
 
  08/06/10   The Jeff Greene - Jim McConville connection
      by Pat Flannery                                                      top^
 


What is a colorful Los Angeles real estate mogul/playboy doing running for the U.S. Senate from Florida? I could hardly believe my eyes when I saw Jeff Greene's fast-talking, smiling face on national TV touting his qualifications to represent the State of Florida in the U.S.. Senate. Where did this guy get his cojones?

I first blogged about Jeff Greene back on April 27th 2009. At that time I wrote "The real life Jeff Greene puts screenwriter Robert Towne's  character Noah Cross (John Huston) in my favorite movie "Chinatown" (1974) in the shade. "Chinatown" was considered to have depicted the ultimate real estate scam. Not any more." I wrote about him again on March 28, 2010.

And now this guy is running for the U.S. Senate! Not even Robert Towne would have dared put that in a screenplay. So, Greene has gone one better. If he hadn't run for this high office, the Ridgecrest straw buyer story would never have gone farther than my blog. It would have been just another dreary real estate scam story. Thank you Jeff for being so dumb.

How did I come across Greene and the Ridgecrest condos, so far from San Diego? Greene's partner, William Ayadd is a well known San Diego condo converter and slum landlord. I did a grantor/grantee index search in several California counties for William Ayadd, Ralph Giannella and Chris Lafornora, three San Diego developers I knew had hooked up with Bay Area's Jim McConville in some shady San Diego condo deals. I wanted to find out the extent of the scam.

I had become concerned that the online publication Voice of San Diego, had over-protected these three local developers in their reporting of McConville's activities in San Diego. I had tried in vain to get the Voice to even mention Ayadd, Giannella or Lafornora. They refused. They said they were afraid of being sued. Writing about McConville without mentioning the developers involved was like writing Tony Gwinn's life story without mentioning that he played baseball.

So, does this mean that much white-collar crime goes unreported because media organizations such as the Voice of San Diego are afraid of being sued? It would so appear. Perhaps we, not-worth-suing-bloggers, have a role after all. Although I still don't understand why the Voice of San Diego or the San Diego Union-Tribune (who also ran stories about the McConville straw buyers) could not write about what was already public documents. That's all I did, which may be why Jeff Greene or any of the other developers who used McConville's straw-buyer services, have not sued me.

What will happen now? Well, I hope the media organizations in Florida and nationally will pick up on this story and pursue it more aggressively than did our local media in San Diego. Because of  his involvement with Jim McConville, that I fully documented, Jeff Greene should be thankful if he stays out of jail instead of having the hubris to run for the U.S. Senate.

To bring you up to date on McConville, here are the latest relevant court filings: a Request for Continued Detention (which was granted), he is now being held without bail as a flight risk; and his original Indictment. Together they tell much about his real estate partner Jeff Greene.
 

  03/28/10   Is there a McConville-White House connection?
      by Pat Flannery                                                      top^
 


Nicole McConville, Jim McConville's daughter, got her Bankruptcy Discharge Judgement on Friday. This means that all the debts associated with the entire McConville straw-buyer mortgage scam, up and down California, have been wiped out by one stroke of a Federal Judge's pen. Several creditors to whom I spoke on Friday are shocked. They expected proper hearings and suspect that the McConville's received special treatment.

Jim McConville had put his real estate bad debts in his daughter's name (or one of any number of companies nominally owned by her) and put the fast cars and art collection in his own name. Now he is home free and the FBI can't touch him. He no longer owes anybody anything.

It is hard to imagine that the McConvilles would have risked cross-examination under oath in a bankruptcy court without an iron-clad guarantee that their discharge would be granted by summary judgement. Was a promise made and kept? The judgment is exactly two lines long. Were the McConvilles given immunity from the top, the very top, the U.S. Attorney General, Eric Holder?

In September 9, 2009 I asked: "Can Holder take away what Geithner has given? Holder can hardly send in the FBI to arrest former Countrywide loan officers, now top executives with the Bank of America, a bank to which Geithner has given tens of billions of dollars. You see the problem."

If the FBI were to arrest McConville it would expose the whole Geithner bailout scam. McConville would incriminate dozens of top bankers and developers in California. "You see the problem".
 

But apart from that, McConville has a personal ace in the hole - his former partnership with Jeff Greene.

It was McConville's lucky break that Greene made it big on Wall Street, trading in Credit Default Swaps, "derivatives" of the very kind of bad loans he and McConville created together in California.

Greene now has the political influence that goes with being a Wall Street billionaire.

And, ironically, McConville has its "derivative" - immunity from prosecution.

The Jeff Greene/Jim McConville partnership

Jeff Greene knows that his entire fortune is vulnerable to the fact that he was partners with Jim McConville in the development and sale of a 300 unit condo project called La Mirage in the City of Ridgecrest, Kern County, California in 2006.

The La Mirage was formerly called "The Willows". Greene bought it, or acquired a partial interest in it, from San Diego developer, William Ayadd, on December 19, 2003. Ayyad signed a Grant Deed transferring ownership to 1402 Alta Vista Partners LLC. Ayadd did not pay any transfer tax on the deed, which means that he either cheated on the transfer tax or he was already part owner of the LLC, thus Ayyad and Greene became partners.

Jeff Greene had formed 1402 Alta Vista Partners LLC on June 14, 2000 and remained its registered Manager throughout.
After successfully converting the 300 units to condos, Greene personally signed all the grant deeds on 189 of the units to "straw-buyers" in 2006  e.g. this one to Agnes Kantere who works for Stewart Title and whom I have dubbed the "straw-buyer madam". Her finger prints are everywhere on these "straw-buyer" transactions.

Then Greene seems to have had a better idea, or more likely his wily partner William Ayadd had a better idea. On August 15, 2006 Greene signed a grant deed transferring the remaining 111 units to a new LLC,  La Mirage HA LLC, formed June 14, 2006, using Nicole McConville's supposedly home address in Fremont CA, but more likely managed out of William Ayadd's office in San Diego. It is interesting that Ayadd already owned an LLC named La Mirage LLC that he had formed on February 28, 2003. Ah, the games these developers play with their LLCs.

Here is the full attachment showing the legal descriptions of each condo unit as the conversion had already taken place.

All subsequent grant deeds were signed by McConville on behalf of La Mirage HA LLC e.g. this one to the "straw-buyer madam" Agnes Kantere. Was this a mere marketing scheme to cover the developer's tracks, as happened in several condo conversion projects by three San Diego developers, William Ayadd, Ralph Giannella and Chris Lafornora?

Did McConville really buy these 111 condos? Greene paid $7,840.25 transfer tax on the grant deed, indicating a sales price of $7,127,500 or $64,211 per unit. Where did McConville get the money? If the sale was genuine he must have paid cash because there is no loan for anything like that amount recorded around that date. It is very similar to the phony sale by Chris Lafornora to McConville of the Kearny Mesa Townhomes, except Lafornora used the wrong legal description. He forgot that the units had already been converted. The title companies will have to figure that one out. Are the subsequent foreclosures and re-sales legal?

In any case Greene and McConville shared a list of "straw-buyers" to whom they sold 300 individual condos and pocketed the proceeds of 300 La Mirage "owner-occupied" fraudulent loans. That in itself is enough to put both of them in jail for a long time. That is Greene's skeleton in the closet.

But that was not enough for Greene. He had come to understand what a sure thing betting on this type of bad loan really was, through credit default swaps. So he wanted in on CDSs at the Wall Street level. He now knew how three San Diego developers, William Ayadd, Ralph Giannella and Chris Lafornora, were doing several such condo conversion deals, selling all the units to "straw-buyers" at inflated prices and pocketing the proceeds.

Yet he told CNBC in his May 14, 2009 interview: "I never really was in the housing business. My background is in commercial real estate. I have been an investor-developer mostly of apartment buildings, although I've built some office buildings and shopping centers over the years". He went on to claim that he was merely "looking for a hedge for my own portfolio".

Not so. Greene was indeed the developer of the Mirage condo project. Here is the full CC&Rs document, signed by Greene personally and recorded on January 18, 2005 on behalf of 1402 Alta Vista Partners LLC c/o 1800 N. Argyle Ave., Los Angeles, the address given on Greene's (now expired) real estate broker's license.

I can understand why Jeff Greene does not want anybody to know about this little La Mirage skeleton in his closet. Did he get on the phone to somebody who could fix it?

The White House Connection.

Ari Emanuel, brother of President Obama's Chief of Staff, Rahm Emanuel, is seen in Hollywood as a very powerful and aggressive player. He got into the talent agency business shortly after leaving college in 1983. He was fired from the huge International Creative Management (ICM) in 1995 and set up Endeavor Talent Agency. He had been caught sneaking proprietary talent files out of ICM's offices in the middle of the night.

His aggressive personality saw him go on to take over the William Morris Agency (WMA) on April 27, 2009 by merging it with his Endeavor Talent Agency. He is now CEO of the world's most famous talent agency. These two Emanuel boys seem to have been raised on Rambo movies. Rahm has often been dubbed "Rahmbo".

It is inconceivable that Greene and Emanuel did not know each other. For years, they have been two of the highest profile men-about-town in Hollywood. They would have met at innumerable power parties, Emanuel as top agent to the stars and Greene as the flamboyant real estate mogul, noted for his lavish life style and aggressive business prowess.

Somehow Jim McConville became part of this free-wheeling Hollywood underworld. He even made a horror movie of his own with the ill-gotten proceeds of his "straw-buyer" scams. Who knows what friendships and partnerships were formed during the mad real estate bubble. But one thing is well known around Hollywood, Ari Emanuel is not shy about using his direct line to the White House. Did Jeff Greene ask him for a favor?

Besides, it would be like pushing in an open door because "Rahmbo's" close associate, Treasury Secretary Tim Geithner, would already be kindly disposed to avoiding any additional scandals among his financial industry friends, to whom he has given billions of taxpayer dollars. Attorney General Eric Holder got his job because of his reputation for doing what he is told.

The San Diego Connection.

For decades San Diego seems to have been the scam capital of the world. It is not surprising therefore, that three of the leading "straw-buyer" scamsters are from San Diego. Here are extracts from various McConville partnerships I have previously written about:

Ralph Giannella/Jim McConville - 04/13/09
Ralph Giannella/William Ayyad/Jim McConville - 04/18/09
Jeff Greene/Jim McConville - 04/27/09
Chris Lafornora/Jim McConville - 05/26/09
Jeff Greene/William Ayadd/Jim McConville - 05/28/09

The reader may be excused for being a little confused by all the detail, but it is sufficient to understand that McConville is the tip of a house of cards that the Obama White does not wish to bring tumbling down.
 

  12/03/09   Nicole McConville files for bankruptcy. Will the courts give her a fresh start?
      by Pat Flannery                                                      top^
 


The wife of real estate fraudster Jim McConville filed for personal bankruptcy yesterday. Here is the court filing. It is a petition to wipe out between $1 million and $10 million in "mainly business debt" to between 100 and 199 creditors. 18 pages of the document are devoted to listing her many creditors a meeting of whom is scheduled for January 6, 2010.

Maybe the creditors should sell the rights to some reality TV show or maybe Jim has already done so. It should be quite a spectacle.

The private creditors will be angry because they know that McConville put all the scam real estate in his daughter's name or a company owned by her and put all the fast cars and art collection in his own name.

The banks, developers, mortgage brokers and attorneys don't care. McConville put millions of dollars in their pockets. He was a one-man real estate bubble. Their hats are off to him. It was private investors like Andy Narraway who got burned. The bankers made a killing.
 

 
  09/23/2009   Further evidence of big bank involvement in Jim McConville's loan fraud.  
      by Pat Flannery                                                      top^  
 
Some weeks ago I received a phone call from a Bay Area investor, Andy Narraway, who had lent Jim McConville $1,875,000 in five second trust deeds, all of which together with $760,000 in accrued interest, are now in trouble. Narraway had read my blogs about McConville's scams up and down the state and wondered if I could expose the bank fraud that occurred in the refinancing of his loans which would help him recover his money.

Through a mortgage broker, Mr. Narraway had made five loans on five separate properties to McConville totaling $1,875,000 over a two-year period, December 2003 to October 2005. As I began looking into Mr. Narraway's loans it quickly became obvious that fraud was committed by the banks not on the banks. The frauds could not have been done without bank connivance. The escrow process was used for the very opposite purpose from what it is intended. The bank fraudsters struck at the very heart of real estate - the escrow.

Escrow is the process by which parties to a real estate transaction (buyer and seller, borrower and lender), deposit documents and monies with a neutral third party (a licensed escrow or title insurance company), which documents and monies are then delivered to the appropriate parties upon fulfillment of certain conditions (e.g. a grant deed for the purchase money), as set out in a written agreement called the escrow instructions.

The entire system depends upon the escrow officer faithfully carrying out these instructions. Can you imagine handing an escrow officer a signed grant deed for your house, expecting to get paid when the escrow closes, only to find that the escrow agent recorded the grant deed but did not pay you the purchase money? Well that's what happened to Andy Narraway in three separate transactions. He provided a "reconveyance" deed but did not get paid.

To understand what happens in a real estate transaction where a new loan replaces an old loan (as happens in nearly every real estate transaction) it is necessary to understand a "reconveyance" deed.

A "reconveyance" is the instrument commonly used to record the fact that an "old" loan has been paid off. In a sale or refinance transaction the "old" lender gives a signed "reconveyance" to the new lender through escrow with a "demand" to pay all outstanding monies at close of escrow.

Standard language in every deed of trust binds the beneficiary/lender contractually to provide a "reconveyance" upon payoff. But in the case of private lenders, such as Narraway, all an escrow has to do is promise to pay off the loan. See this typical request/promise from Stewart Title escrow to Mr. Narraway. 

This is because, unlike institutional lenders, private lenders, as a condition of the new lender obtaining title insurance, are required to provide the "reconveyance" before getting paid. Narraway therefore had no choice but to provide a "reconveyance" before getting paid and the banks as the new lenders took unconscionable advantage of that fact. They knew exactly what they were doing. They exploited the system.

On each refinance, Narraway was requested by the escrow officer, to provide a deed of "reconveyance" into escrow with a promise of getting paid at closing. But in each case the escrow officer gave the money to Jim McConville instead! Coincidence?

Imagine Mr. Narraway's shock when he realized escrow had recorded his "reconveyance" but he was not going to get paid. That strikes at the very heart of the system. The banks used escrow as an instrument of fraud on behalf of a favored borrower, Jim McConville.

There are built-in safeguards to prevent this from happening. Unfortunately they rely mainly on the fact that a new lender has a duty to ensure that any deed of trust recorded prior to theirs is paid off and "reconveyed". (In some rare occasions a "subordination agreement" may be recorded). Each new lender is therefore expected to protect its lien position by including in its "escrow instructions" a requirement that a "reconveyance" be obtained from any "old" lender in exchange for being paid off and to ensure that "escrow instructions" are carried out exactly.

The key to the whole system is the final "settlement statement" from escrow. It will confirm that the payoff was made. If the "settlement statement" does not show a payoff to the "old" lender, the new lender will know that its escrow instructions were not complied with.

To that end most lenders require a certified estimate "settlement statement" prior to funding and a certified final "settlement statement" within 72 hours of closing. Both the new lender and the escrow sign off on that final "settlement statement". It is usually placed at the very top of each transaction file. Everybody involved in lending knows its primary importance.

It is impossible therefore for a "reconveyance" to be recorded without the "old" lender being paid off i.e. without fraud being committed on the "old" lender, either negligently or deliberately. It is impossible for an escrow officer not to notice that it has all that money left over in its trust account. We licensees are required to keep a separate trust account for each transaction and balance each at the close of escrow. I know from personal experience that it would be impossible for me to balance my trust account if I "forgot" to pay off an "old" loan.

Was it fraud or negligence on the part of the banks in the case of Narraway's three refinancings by McConville? If it were just one case and somebody other than Jim McConville involved, it might possibly be negligence or oversight. But all three! With McConville as the borrower!

Mr. McConville appears to have had a lot of bank and escrow officials in his pocket. Something as fundamental as three "settlement statements" not complying with their "escrow instructions" simply cannot happen without collusion. Lightning doesn't strike the same place three times.


23-29 Abbey St., San Francisco. Here is Mr. Narraway's deed of trust dated May 12, 2004 securing his loan of $345,000 to Jim McConville as Sapphire Park House Corp. Here is a deed of trust to Sequoia Mortgage for $1,085,000 dated February 7, 2005.

On April 4, 2008 McConville refinanced the Sequoia loan with a new deed of trust to Wachovia Mortgage. This is when the lender-escrow fraud took place.

Here is the "request for demand" from the escrow holder. As you can see the request contains a promise that his loan will be paid off through escrow. That did not happen, despite Mr. Narraway having executed and returned the "reconveyance" provided by escrow.

It should be noted that an "old" loan holder is not a party to the escrow. Nor are they covered by any title insurance involved. They are entirely relying on the new lender who, acting through its escrow agent, is entirely responsible for their agent's actions.

The new "lender's closing instructions" clearly stated that no secondary financing was permitted. Furthermore, on page 3 of the Wachovia deed of trust the borrower, Jim McConville promised that there would be no other deeds of trust, no secondary financing, recorded or unrecorded.

Yet here is the "settlement statement" showing a payoff of the old 1st loan of $1,085,000 to Sequoia Mortgage but no payoff of the old 2nd loan of $345,000 to Mr. Narraway. Clearly Wachovia's "lender's instructions" and Wachovia's "settlement statement" did not agree. It is impossible for Wachovia's officials not to have noticed that. It is fraud by Wachovia on Narraway through its agent the escrow holder.

Wachovia is now foreclosing on McConville who owes Wachovia $36,267.24 in back payments as of July 21, 2009. Here is the NOD. Can Wachovia give clear title to a subsequent purchaser? Can it ignore the lender-escrow fraud? Mr. Narraway still has not been paid. If so we have lost our real estate escrow system. This case will ultimately be decided by a judge.

3050 Fruitvale Ave., Oakland. Here is Mr. Narraway's deed of trust dated December 30, 2004 securing his loan of $300,000 to Jim McConville as Sapphire Park House Corp. It was in second place behind a first deed of trust to Marin Capital for $1,425,000 dated October 16, 2003.

On January 12, 2006 McConville refinanced the Marin Capital loan with a new deed of trust for $1,960,000 to LaSalle Bank. Again, this is when the lender-escrow fraud took place.

As with 23-29 Abbey St. in San Francisco Mr. Narraway provided escrow with a "reconveyance" relying on a promise that his loan would be paid off in escrow. The "reconveyance" was recorded but Mr. Narraway never received his $300,000.

Again, LaSalle's "lender's instructions" and LaSalle's "settlement statement" did not agree and it would be impossible for LaSalle's officials not to have noticed it. Therefore it is fraud by LaSalle on Narraway through its agent the escrow company.


On March 17, 2006 a strange thing happened. McConville's daughter, Nicole McConville, recorded an unsolicited "deed of trust" in favor of Narraway for $300,000. But she signed on behalf of another McConville company, Diamond House Development Corporation, that did not own 3050 Fruitvale Ave. Was she trying to put right the damage done to Narraway? Did she think he would accept a new (flawed) deed of trust instead of getting paid off?

It should be noted that anybody can record a deed of trust against a property they own (or do not own for that matter) in favor of anybody in the world. The grantee does not have to be asked and may not even know about it. Narraway was not asked. Again, that is our system.

An even stranger thing happened recently.
Jack Thomas, the person who signed the LaSalle deed of trust on January 12, 2006 as CEO and Secretary of McConville's company Sapphire Park House Corp., handed Mr. Narraway an affidavit saying that he never was CEO or Secretary of any of McConville's companies or any other company for that matter. Mr. Thomas was employed as a general handyman by Jim McConville and says that McConville routinely threatened him with dismissal if he did not sign papers and that he had no idea what the papers he signed were.

Despite full knowledge of the LaSalle escrow not having paid off Narraway at the LaSalle refinance, Wells Fargo Bank, claiming to be the current owner of the LaSalle loan, is now foreclosing on McConville who, according to this NOD dated August 21, 2009, owes Wells Fargo $285,754.10 in delinquent payments, in addition to the original sum of $1,960,000. Did McConville ever even make a payment? Was the whole thing just a bank present of $1,960,000 to McConville?

Can Wells Fargo now blithely wipe out Narraway and give clear title through a foreclosure sale to a subsequent purchaser? Can it ignore the lender-escrow fraud which it has purchased? Mr. Narraway still has not been paid! If so we have lost our real estate escrow system. As with Abbey St., this case will ultimately be decided by a judge.

126 Belle Ave., Pleasant Hill. Here is Mr. Narraway's deed of trust dated August 12, 2004 securing his loan of $130,000 to Jim McConville as Sapphire Park House Corp. It was in second place behind a first deed of trust to Marin Capital for $322,000 also dated August 12, 2004.

On March 10, 2008 McConville sold the property to a person he has used extensively up and down the state as a "straw buyer". The "straw buyer" obtained new finance from the Bank of America, a 1st deed of trust for $417,000 together with a new 2nd deed of trust for $53,800 also from BofA and on the same date.

Again, Mr. Narraway provided a "reconveyance" upon a promise of being paid off in escrow. The escrow closed but he was never paid off. Here is the "settlement statement".

I noticed that there were no payoffs shown on the settlement statement, so I did a search for a "reconveyance" of the Marin Capital deed of trust for $322,000 dated August 12, 2004. I was surprised to find that it had been reconveyed, presumably paid off, on January 1, 2007. I checked to see if there was a related sale or refinance at that time. There was none. Why did Marin Capital get paid off but Narraway did not?

Following payoff of the Marin Capital loan on January 1, 2007, Narraway's August 12, 2004 loan for $130,000 was now in first position. It is clearly shown as Item 9 on the Preliminary Title Report dated February 20, 2008, a short time before close of escrow on March 10, 2008. It is impossible for the Bank of America not to have known about Mr. Narraway's loan. What did they think happened to it? It was not shown as a payoff on the "settlement statement".

There is a clear pattern here. Three institutional banks, one a direct lender, the Bank of America, cooperated with McConville in turning a blind eye to the fact that Mr. Narraway's loans were reconveyed but did not appear on the "settlement statements" as having been paid off. McConville could not have pulled off these frauds without the cooperation of the banks.

It is clear to me that McConville did not act alone - the banks were his accomplices.

 
 
  09/09/09   The bankers were the bank robbers.  
      by Pat Flannery                                                      top^  
 
Does the Federal Government have a conflict of interest with regard to  bank fraud? Fraud is defined as "an act of deliberate deception with the intent of securing something by taking unfair advantage of another." The banks practiced deliberate deception in creating and selling mortgage loans took "unfair advantage" of both borrowers and investors.

I have investigated mortgage fraud in several projects throughout California. In all cases it is clear that the fraud was top-down, not bottom-up. Fraud was committed by the banks not on the banks. It is impossible to believe that the bank officials who approved hundreds of these fraudulent loans were unaware of the fraud involved.

An honest banker does not fund multiple "owner-occupied" loans to one person in one day when that person lives in a different part of the state and is in the military. They even made loans to people who were not employed and now blame the borrower. To my knowledge none of these crooked bank officials have been arrested or charged.

Instead of prosecuting them the U.S. Government gave them hundreds of billions of taxpayer dollars. But this "bailout" money did not go to the investors who purchased the bad loans, it went to the banks who created them! Those banks had already received full value for those loans from pension funds and other investors. That is a government handout, not a bailout. It is corruption on a scale never before imagined.

Most of these crooked loan officers are now senior loan officials with the big banks that took them over. The Bank of America took over Countrywide, Chase took over WAMU, Wells Fargo took over Wachovia etc. They are still there because Obama and Geithner want them there.

Do these two Cabinet Secretaries therefore have a conflict of interest?

Tim Geithner - Treasury Eric Holder - Justice

Can Holder take away what Geithner has given? Holder can hardly send in the FBI to arrest former Countrywide loan officers, now top executives with the Bank of America, a bank to which Geithner has given tens of billions of dollars. You see the problem.

Now read this article in the New York Times. The SEC has given former Countrywide officials a license to practice their former trade in a new publicly quoted company, buying up for pennies on the dollar the fraudulent loans they created while working for Countrywide. It is like staffing a city fire department with known pyromaniacs.

By rewarding the bank fraudsters Geithner has emasculated the Federal securities laws to the point where mortgage-backed securities are now "
backed by nothing but the blue skies of Kansas" i.e. we are back to the days of "blue sky" laws before the Securities Act of 1933.

Obama is further diverting attention from the SEC by having Holder go after the CIA for its interrogation methods, instead of having Geithner go after the banks for securities and mortgage fraud. How Obama handles this financial nuclear bomb will define his presidency, not health care, not Afghanistan. If he continues to reward this internal fraud it will cause the world community to lose confidence in our currency. A collapse of the dollar would collapse America's power quicker than any terrorist act.

America's power is based, not upon arms, but upon confidence in the dollar. The world is therefore far more interested in how we deal with our internal fraud problem than how we deal with "enhanced interrogation" of alleged foreign terrorists. The threat to America is far greater from within than from without. The real threat is Wall Street.

From what I have seen, as just one individual, we need a full-blown government investigation into mortgage fraud. It has devastated our public pensions and poisoned our financial securities. These fraudulent "banksters" are worse than mere bank robbers, they have all but destroyed the American financial system. And they are still there!
 

 
  07/14/09   Anatomy of a "Staggering Swindle".  
      by Pat Flannery                                                      top^  
 


The plight of the 112 unit Sommerset Villas condo project in Escondido, raped and left for dead by a veritable gang of institutional lenders and ruthless developers, calls into question the ability of our law enforcement and media establishment to deal with the massive fraud that fueled the real estate bubble. The following is a progress report on my ongoing investigation into real estate and loan fraud up and down the state.

Bob Chemaly is CEO of Ralph Giannella's condo conversion business, Premier Coastal Development Inc, a Delaware Corporation, located at 1010 Turquoise Street Suite 200, San Diego, CA 92109. Bob lives with his wife Linda in a nice 3,305 square feet house in La Costa which they bought in July 2001 for $580,000.

Chemaly has done the heavy lifting for Giannella on several of his condo conversion and sale projects. Sommerset Villas are the units featured in a number of news stories about "straw buyers" recruited by a Bay Area scam artist named Jim McConville.

I have discovered that Giannella was using "straw buyers" in the Escondido project long before McConville came on the scene. In fact his own CEO, Bob Chemaly, was a Giannella straw buyer on one unit. Chemaly pulled a $321,090 owner-occupied loan out of it on August 31, 2006 (go to page 6 for the owner-occupied part). He has now put the property into escrow for $119,900 as a "short sale" i.e. when a lender accepts less than it is owed to pay off the loan.

 

Chemaly's real home in La Costa

 

Chemaly's "owner occupied" condo in Escondido

Chemaly took title and arranged the mortgage in his own name in order to get an owner-occupied rate. Here is the 2006 grant deed and the 2006 mortgage. He then switched ownership from himself to Chanel Partners LLC, one of the many LLCs located in Giannella's office, 1010 Turquoise Street Suite 200, San Diego, CA 92109. Giannella sold it to himself.

Chemaly signed most of the grant deeds for the 112 units in Sommerset Villas on behalf of Giannela's company, North Coastal LLC. But in the case of his own contribution to the scheme he had somebody called Eric Gregory, an "authorized signer",  sign on behalf of Broadway Coastal LLC, another Giannella corporation located at 1010 Turquoise Street. There is no record of Broadway Coastal LLC ever owning the unit. But Giannella's lenders and title companies didn't seem to worry much about which of Giannella's many LLCs owned which properties. They liked all those loan points and all those fat title fees.

Chemaly is now able to arrange a short sale instead of a foreclosure. Not every borrower is given that opportunity. Here are the short sales to date in the Sommerset Villas project. Note that $1,392,515 has already been written off on seven units ($198,930 per unit), not including Chemely's short sale not yet closed.

Here is the full original sale list of the 112 condo units, starting on January 4, 2006 and ending on July 18, 2008. The first purchase by a McConville "straw buyer" was not until March 27, 2008. Here is that first grant deed to Michael Hernandez showing McConville's Hayward address, signed by Bob Chemaly. The next 32 "purchases" are all by McConville's straw buyers. All 32 grant deeds were signed by Chemaly for North Coastal LLC.

But what about the first 80 units? Were they all sold to genuine buyers? I got copies of the recorded loans. They are all "owner-occupied". They are all at the same price as similar units sold to McConville's buyers.


I visited the condo complex last week and studied the units very carefully. I wanted to see if there was any sign that the 80 pre-McConville "owner occupied" purchases were genuine. I spoke to some of the few remaining tenants. They readily admitted that they no longer pay rent to anybody and are enjoying a free ride while they can. I could not find one owner occupier. The complex looks like a ghost town.

I was able to gain entry to several of the vacant units on lockboxes, including Chemaly's "owner occupied" unit at 1425 N. Broadway #D (now in escrow as a short sale). The water and gas was turned off and the grass was waist high in the patio area.

If the units sold to McConville's buyers were the only problem, the complex might have survived the swindle. 80 clean deals might have absorbed 32 dirty deals. But it is clear that the "Staggering Swindle" reported by the Voice of San Diego started long before McConville.

The Voice of San Diego investigated this story following a tipoff from a suspicious Escondido realtor. The tipster called TV 7/39, the San Diego NBC affiliate, who passed it on to its media partner, the Voice of San Diego, which published a story in April 2009. It reported that McConville pulled off the swindle on the unsuspecting developer, Ralph Giannella.

The Voice reported that McConville purchased 32 units at a discounted bulk price from Giannella and then sold them on to straw buyers. I researched the titles and discovered that McConville had never taken title to any of the units. Each unit was transferred directly from a Giannela LLC to each buyer. That made me suspicious.

I contacted three of McConville's buyers who eagerly told me their stories. I asked one of them, Vicki Jenkins, who appears to be the leader, about some closing documents the Voice had published on April 10, 2009 under the title "Payments Sent to McConville's Company". She sent me this explanatory email. She also sent me minutes of the McConville's meeting on January 10, 2008 at her house.

She told me that the first she and her two friends learned of the so-called "Addendum to Purchase Agreement" (that was part of the closing documents I was interested in) was when Will Carless from the Voice of San Diego contacted Frances Greenspan on March 4, 2009, who referred him to Ms. Jenkins. I asked how Carless had gotten hold of these closing documents. He got them, she said, from Giannella's attorney.

Ms. Jenkins then sent me this summary she had previously prepared for law enforcement and had also sent to Carless on March 9, 2009, a month before he published his "Staggering Swindle" story on April 10, 2009.

In it Ms. Jenkins explains that the first two mortgage payments were made by McConville, April 1st and May 1st 2008, but none after that. She tells of how for several months she was in denial. She did not want to believe that any of this was happening. She wanted to believe in the goodness of people. She clung to the belief that McConville would put the whole thing right, as his staff were assuring her he would.

Jenkins' memo for law enforcement and the lenders makes it clear that these three McConville buyers at least, were doing everything possible to alert the lenders and law enforcement that fraud had been committed. These three buyers at least, wanted no part in the fraud that was still unfolding. That is not what they signed on for, they said.

Will Carless and the Voice of San Diego should have seen right away that the real fraudsters were the developers and the lenders. Look at the original sale list. Then look at the foreclosure list. Some of the 80 units sold by Giannella were already being foreclosed before McConville came along to make quick work of the remaining 32. That's what he was hired to do. Yes, this was indeed a "staggering swindle", but it was a very different swindle from the one reported by the Voice of San Diego.

The Voice put the spotlight on McConville and his straw buyers, avoiding mention of the 80 units already sold by Giannella at similarly inflated prices to similar straw buyers.

The original sale list shows that the total sales value of the 112 units was $38,870,240 and the total value of the loans was $35,392,409. The acquisition and development loan to be paid off was only $6,256,000 originally loaned by Irvine-based
Berkshire Mortgage, a privately held commercial mortgage lender, now owned by Deutsche Bank, headquartered in Frankfurt Germany.

Mark Gleiberman was the borrower on that original (still outstanding?) acquisition and development $6,256,000 Berkshire Mortgage loan. Presumably he is still involved with Giannella as an owner of the units even though he deeded some of them from his MG Woodlands Townhomes LP to North Coastal LLC on April 4, 2005.

A separate declaration accompanying that grant deed at recordation declared it a "full value" sale for $6,325,000. That is only $69,000 more than the loan he put on it on September 19, 2000. He could not have taken back a note as no new liens were filed. Nor did the supposed purchaser, Giannella, assume the existing loan of $6,256,000. If that were the case the County transfer tax would have been $75.90, not $6,957.50 as actually paid. Also, par. 21 of the Deed of Trust has an acceleration clause which requires lender's consent for an assumption.

For the above grant deed to be genuine, i.e. not fraudulent as to its declaration and county transfer tax paid, Gleiberman would have literally given the complex away to Giannella. In my experience developers don't do that.

The fundamental question then is this: who received the $32,614,240? How was it divvied up? Did the conspiracy between developers, loan officers, title officers, escrow officers, appraisers and notaries amount to racketeering? This is far greater than a one man scam by McConville.

The 112 units sold for a total of $38,870,240 with only $6,256,000 to be paid off (
$38,870,240 - $6,256,000 = $32,614,240). Lenders contributed $35,392,409 of this cash bonanza. Only $3,477,831 was put down by 112 borrowers i.e. an average of 91% loan-to-value ratio or an average of only 9% down. And it is probable that even that was only on paper.

That is the "staggering swindle"  that needs to be investigated, not the gullibility of three women who knew nothing about real estate and "got in their own way" as Vicki Jenkins so poignantly put it.


I asked the three McConville buyers if they were aware that they had applied for several owner-occupied loans at the same time (a particularly sensitive point for me). They seemed totally unaware that the loans were in fact owner-occupied loans. They said they had never seen the closing documents, much less had them explained to them. This seemed to stir them to even greater levels of indignation at how they had been duped and were still being duped by attorneys and the media. They are now a force to be reckoned with.

In her memo to law enforcement and the Voice, Vicki Jenkins explained that McConville put in 20% of his own money (she now wonders where that money came from). But that had been the clincher for her and her friends. Why would he risk approximately $70,000 of his own money on each condo? To them, McConville was the real investor and they were merely small co-investors, putting up nothing but their own good credit.

Reading and re-reading Jenkins' summary to law enforcement and her explanatory email to me, I concentrated on the part where Carless got these documents from Giannella, presented them to the three buyers and then published them under the title
"Payments Sent to McConville's Company". I wondered why the Voice would report that McConville purchased units at a bulk price and then re-sold them to his straw buyers at a vastly inflated price, when Giannella's own letter and "Addendum to Purchase Agreement" clearly described Giannella as the seller, who  "made payments" to McConville's company? This was contradictory.

And what was this all about? Vicki Jenkins wrote: "Will had requested a dated signed statement from us on March 18, 2009 to give to Ralph Gianelli's attorney, that it was okay to release the information to him." Why would Giannella's attorney want a signed statement from the three buyers, releasing his own closing statement to him? It could only mean that he wanted proof that these buyers had finally seen the forged closing papers.

The Voice had become a messenger boy for Giannella. Will Carless had procured a receipt from a buyer for a so-called closing document that the escrow officer to whom it was addressed had never seen. Vicki Jenkins told in her explanatory email how she immediately contacted Donna, the escrow officer at Stewart Title, for an explanation:

"I called Donna back on 3/20/09 (I have our conversation documented.) and said, "Donna, you gave me just the buyer's side. She stated that legally she could only give me the buyer’s side. I then said then why do I have an addendum to escrow with a letter directed to you that states that you must disclose both the sellers and the buyer’s side and the 3-MAC addendum to me. She declared, "What are you talking about?" I have never seen such a document. Would you send me a copy of this document?" I did and then I called her back and asked her if she received it. She said, "I just don't care anymore." I said okay and then she hung up."

The Voice knew these closing documents were forged. Will Carless, who got the documents from Giannella's attorney, also spoke to Donna the escrow officer and got the same response - she knew nothing about them. Yet he went ahead and reported that "McConville agreed to pay a discount price for the condos and then sold them for higher prices to the buyers he'd rounded up", and that: "The developers of the projects were under pressure from banks to make sales and pay back their loans. The banks agreed to consider selling the units at a discount price if an investor was willing to buy in bulk, said Rob Chemaly, a Premier representative."

The Voice had become hopelessly trapped in Giannella's web by now. As for "pressure from banks", the only bank involved was Deutsche Bank, most of whose modest loan of $6,256,000 would already have been paid off from the massive $27,975,240 sales proceeds Giannella and his partners had already raked in by selling the first 80 units at vastly inflated prices to straw buyers. Look again at the original sale list.

According to San Diego County Tax records at least 6 of the 32 McConville "sales" have already been quitclaimed back to Giannella's LLC. Here are the latest Tax records on those units. Giannella and the banks are not out of the woods if Vicki Jenkins and her two friends have anything to do with it. They said they will continue to challenge the prosecutorial system and the media to do its job. I will support them by continuing my investigation into who pocketed the Sommerset Villas $32,614,240.
 

 
  06/25/09   Stewart Title sued for fraud.  
      by Pat Flannery                                                      top^  
 
Up and down the State of California lenders and title companies have been conspiring with developers to bilk people out of hundreds of millions of dollars. This lawsuit recently filed in San Luis Obispo tells a story that is happening all over California. I have investigated several situations that parallel almost exactly what happened in San Luis Obispo.

Professionals within the title and escrow community used their positions to commit unrestrained fraud. The damage to the real estate system, particularly to the concept of title insurance, will take years to reverse. Public confidence in the integrity of title insurance, escrow and loan origination may be irreversibly damaged.

Imagine being the holder of a second deed of trust on a property and being asked, as part of a refinance escrow by the property owner, to put a reconveyance (a release of your lien) into escrow in the certain knowledge of receiving a payoff check when escrow closes. Imagine your shock when you discover that the title/escrow company stole your money by clearing title for a new loan and pocketing your payoff. 

Imagine your shock when you report this crime to your local District Attorney only to receive a letter telling you that they were too busy and do not have the resources to investigate. Your life savings is gone and you have no money for private attorneys. That is just one example of some true-life tragedies I have recently documented from the Bay Area to San Diego.

The mainstream media must stop writing "shaggy dog" stories about the "straw buyers" involved in McConville's scams, while ignoring the real crooks, the developers, the lenders and the title companies who took the money and still have it, while the straw buyers and many others are left with ruined lives. The real story is how the developers, the banks and the title companies conspired together to commit massive fraud.

Most of the McConville straw buyers I talked to, and I talked to quite a few, had no real estate knowledge whatsoever and had no idea what they were getting into. They genuinely thought they were co-investors. They were reinforced in that belief by the fact that Jim McConville put 20% down on each loan and actually paid that money into escrow, or at least according to the escrow companies' settlement statements. I saw several of these buyers' settlement statements, all of which were only received a year after closing and only under subpoena.

The first time many buyers saw their Deeds of Trust, with owner occupancy clauses, was when I provided them with copies from the County Recorder. They never saw their final loan documents because they were signed "on their behalf" by a McConville employee. Yet the lenders and the title companies accepted all those legal documents without question. It is hard to believe that these professionals did not know what was going on. It is hard to believe they were not complicit.

There is an old saying in real estate: to form the ideal real estate partnership you put together somebody with money and somebody with experience. But when the deal is done and the dust settles, the partner with the experience usually has the money and the one with the money usually has the experience. Jim McConville's co-investors now have the experience while his co-conspirators, the developers, lenders and title companies have the money. This cannot stand. Society must react. Both law enforcement and the media must come to the public's rescue.
 

 
  05/28/09   The media are contributing to mortgage fraud.  
      by Pat Flannery                                                      top^  
 
"McConville's Check Clears". I was amazed to read that piece of news in the Voice of San Diego yesterday, so I made a few phone calls to see if it was true. It is not. The Voice wrongly reported that James McConville wrote a check to Najarian Loans Inc., to settle this lawsuit.

The Voice quoted Edward F. Cullen, attorney for two of the defendants, Jack Thomas and Mariam Rasuli, as follows:

"I'm pleasantly surprised" the check came through, Cullen said. "[Najarian] received money from Mr. McConville and that money was accepted as a release of Mr. McConville and the defendants who were named in the lawsuit."

I spoke to Mr. Cullen and he denied having told the Voice that anybody had received money from McConville. He told me that all he knew was that the case had been dismissed. I checked with the Superior Court of California, Contra Costa County and got confirmation that the case had indeed been dismissed without prejudice on May 14, 2009.

I then called David E. Harris attorney for the Plaintiff, Najarian Loans Inc. He denied having told anybody that Najarian had ever received a check from McConville, let alone waited for it to clear. I told Harris that a Bay Area investor, who has a judgment against McConville, told me that he intended to subpoena the check. That creditor had failed to discover any bank account controlled by McConville. Yet here was the Voice reporting the existence of a McConville check therefore a bank account.

Attorney Harris assured me that the Bay Area creditor would be wasting his money subpoenaing any alleged check. I told him that I took that to mean that a McConville check never existed let alone cleared. He did not disavow me of that belief and told me that that was the best he could do within the confines of attorney-client privilege. His frankness probably saved the investor a lot of futile attorney's fees as I passed that information on to him.

Why in the world would the Voice of San Diego report such a sensitive matter as a McConville settlement check as fact when one clearly never existed? The Voice's named sources, the above attorneys, both completely deny its story.

Here are some real facts about the
300-unit condo project in the Kern County town of Ridgecrest, where the plaintiff Najarian Loans Inc. made the loans that were the subject of the lawsuit. The condo complex is called La Mirada.

San Diego's William Ayyad (see my blog dated 4/18/09) purchased these 300 units from California Housing Corporation for $4,750,000 on February 8, 2002. That was $15,833 per unit. Here is the Grant Deed.

On December 19, 2003 Ayyad signed a Grant Deed transferring ownership of these 300 units to 1402 Alta Vista Partners LLC. He did not pay any transfer tax on the Deed, which means that he owned the LLC or at least part of it. Jeff Greene (see my blog dated 4/27/09) was also an owner and a manager of that corporation. Therefore Ayyad and Greene were partners in the La Mirage condos.

Now for NL Inc., formerly Najarian Loans Inc., the company McConville is supposed to have settled up with. It is owned by a real estate broker named Tracey Lee Hirt, formerly Tracey Lee Najarian. Here is her personal real estate license and here is her NL Inc. license. She seems to have quite a lot of agents working for her. She even has two branches here in San Diego, one at 3636 Nobel Drive, Suite 410, CA 92122 and another at 12275 El Camino Real, Suite 130, CA 92130.

NL Inc. was sued by Suntrust Mortgage Inc. for negligence and misrepresentation in selling 18 fraudulent loans to Suntrust. They were all to McConville straw buyers. NL Inc. created all 18 as owner-occupier loans, despite the fact that most of these straw buyers bought multiple units, which is fraud on its face. Here are some examples:
 
Borrower Property Date 1st Loan 2nd Loan
Angela Spangler 240 Sahara Dr 07/26/07 $116,000 $14,500
Angela Spangler 316 Sahara Dr 07/26/07 $124,000 $15,500
Angela Spangler 513 Sahara Dr 07/27/07 $124,000 $15,500
Mariam Rasili 228 Palm Dr 08/04/06 $124,000 $15,500
Mariam Rasili 509 Oasis Dr 08/04/06 $124,000 $15,500
Alfredo Ramos 417 Oasis Dr 08/04/06 $124,000 $15,500
Alfredo Ramos 236 Palm Dr 08/04/06 $124,000 $15,500

NL Inc. tried to blame its misrepresentation on the straw borrowers. It pleaded that it didn't know for example that Angela Spangler had bought more than one unit, when NL Inc. was the lender on all three. So it had to pretend to go after McConville and the straw buyers.

The American legal system has degenerated into giving color of law to illegal acts. First everybody sues everybody to put the "settlement" under a court mantle. Suncrest settled with NL Inc. and NL settled with McConville. The lawyers got paid and the Voice of San Diego got a story. The last thing lenders Suncrust and NL wanted was the whole affair aired in open court. The lawsuit was purely for show. Unfortunately the Voice, eager for a story, lent it credibility.

No wonder developers/investors like William Ayyad, Ralph Giannella, Jeff Greene and Chris Lafornara are laughing at how easy the whole thing is. They have no fear of being exposed in the media, at least not in San Diego.

Now rolling in cash, they are buying foreclosure properties that were the "security" for "securitized" loan bundles during the boom years. Here is such a property in San Diego. It was recently bought by the Ayadd family for $142,000 and put back on the market for $209,900.

The seller was a "pass-through" (securitized bundle) created by Countrywide under an exotic name starting with CWALT, which stands for Countrywide Alternative Loan Trust. There are $billions in such CWALT bundles yet to come on the market, a veritable treasure trove for the Ayyads, the Greene's, the Giannellas and the Lafornaras, loaded down with cash from all their inflated sales to straw buyers.

The listing agent, Guy Kennedy, is an old friend of the Ayadd family. He notarized William Ayadd's La Mirada Grant Deed to Jeff Greene in 2003.

They are all getting away with it because media "investigators" like the Voice of San Diego are straining to give an air of normality to some very illegal acts. Readers of the Voice are being told that not only was there a "check in the mail" but it has now cleared the bank. To cover up fraud you simply need to file a lawsuit, settle it under the jurisdiction of the court, call the media who will obligingly report whatever you tell them, while you plead attorney-client privilege.

If there is any hope of reestablishing trust in the American financial system, the media must be willing to expose fraud perpetrators, instead of tailoring the truth to make a good "news" story.
 

 
  05/26/09   Financial ingenuity, otherwise known as fraud.  
      by Pat Flannery                                                      top^  
 
China and Russia wanted a piece of the American capitalist dream - ordinary American people lending their life savings to neighbors to build their American dream home through a Jimmy Stewart-style small town American bank.

But we are not in "Bedford Falls" anymore. The Chinese and Russians can no longer invest in small town banks, so Wall Street took Jimmy Stewart's mortgages, packaged them up in large bundles and sold them to gullible Chinese and Russian investors as true American "mortgage-backed securities" (MBS).

These foreign investors trusted Wall Street and got taken to the cleaners. Now Obama is trying to bail the whole thing out. Maybe he is afraid that the Chinese and Russians will retaliate if he does not. At the very least, they will never trust Wall Street again.

Creating MBSs, known as "securitization", used to be the sole privilege of government-backed agencies like FNMA (Fannie Mae). Now anybody can do it. That is at the heart of the global financial meltdown. It is not that our American banks became deregulated, they simply chose to become unregulated brokers for foreign investors and created all kinds of unregulated investment instruments for them.

They had discovered that every time a mortgage is wrapped or bundled new money is created. The American Government thus lost control of the money supply. The printing of American money had been effectively privatized. Previously only regulated banks could create money by making regulated loans. It was called fractional-reserve banking.

Michael Strauss, former Chairman and CEO of American Home Mortgage (AHM), now in bankruptcy, typifies the rogue loan originators who took advantage of all that foreign money. Chris Lafornara of Kearny Mesa Townhomes typifies the many developers/sellers who were the main recipients of that easy money. Lafornara was able to sell his condos for three times their normal value and pocket the profits.

Here's how it worked. A straw buyer aggregator, like James McConville of Fremont in the Bay Area, agreed to provide Lafornara with all the straw buyers he would need. In the case of Kearny Mesa Townhomes there were 42 units so Lafornara would need 42 straw buyers.

Veronica Padilla is a good example. On November 29, 2006 Lafornara signed her up, a married woman with an address in Fremont, for the purchase of four of his units. He sold her three 2 bedroom, 900 square feet units (numbers 13, 25 and 26) for $355,000 each and one 1 bedroom, 644 square feet unit (number 35) for $305,000.

All the deals were signed and notarized on the same day. All her loans were owner-occupier i.e. all four units were to be her "primary residence", even though she lived with her husband in northern California. AHM funded her four purchase loans of $319,500 each, a first of $248,500 and a second of $71,000 on each unit. They didn't even bother to read the paperwork - they made a loan of $319,500 on the 644 square feet unit that sold for $305,000.

Meanwhile Lafornara had "corporate" cover.

He appointed McConville's daughter Nicole, as a "manager" of his corporation, Kearny Mesa Townhomes. Here are the two documents he filed at the California Secretary of State: the original 2005 filing and the 2006 change adding Nicole McConville as a manager. She was added in addition to the two original managers, Chris Lafornara and David Hurwitz. There was no change of ownership of the corporation.

To underline that fact, Lafornara signed a "double-flip" of the units, from the corporation to himself and back again, on November 30, 2006, the day after the Secretary of State filing adding Nicole. Nicole started signing grant deeds on behalf of the corporation on the very day of the Secretary of State filing, November 29, 2006. Here is her grant deed for unit number 25 to Veronica Padilla.

The double-flip of the units was to create false comparables for subsequent appraisals. The units were worth nowhere near $355,000 each. Unit number 16, a studio with 388 square feet was sold to Adrianus Schabbing, a McConville straw buyer with an address in Hayward, for $305,000 and a loan for $244,000 from WAMU on October 10, 2007. Nicole's father, Jim, signed the grant deed himself, even though he was never a registered officer of the corporation.

WAMU now purportedly owns the unit through foreclosure. Was Schabbing's mortgage valid? Did he get proper title from Jim? The only persons authorized to sign grant deeds for Kearny Mesa Townhomes were Chris Lafornara, David Hurwitz and Nicole McConville. If otherwise the Secretary of State's records mean nothing.

To sum up, developer Lafornara's corporation raked in approximately $11 million through fraudulent loans on the 42 units he had converted to condos. He had already pulled out $3,450,000 in a refinance deal with La Jolla Bank on September 12, 2006. That probably covered all his investment to that date. The balance of $7,555,000 could then be shared with those who helped in the scheme. The losses however, will be shared, not by the banks that originated the loans, but by the foreign investors who purchased the Wall Street-bundled MBSs in good faith.

As a final demonstration of financial ingenuity, bankrupt AHM is now AHMSI, American Home Loan Servicing Inc. It is making millions acting as trustee in the foreclosure of its own bad loans. Two of these  foreclosed units in Kearny Mesa Townhomes are now in the San Diego MLS. You guessed it: they are two of Veronica Padilla's owner-occupied units, numbers 13 and 25. We are now entering phase two of this All-American scam.

 
 
  04/27/09   Did Condo developer Jeff Greene buy his own "credit default swaps"?  
      by Pat Flannery                                                      top^  
 
Nobody knew better than Los Angeles apartment mogul Jeff Greene when the real estate bubble would burst. He was one of the main architects of the fraudulent loans that inflated real estate prices. Then he bet that the whole edifice would come tumbling down and made a billion dollars on that bet. He had discovered "credit default swaps" (CDS). Watch him explain to a CNBC reporter how his only regret is not doing "twice as much":
 
  The star-struck reporter obviously did not know about Greene's scam of helping create bad loans and then buying financial instruments (CDSs) that insured them against default.

CDSs were grossly underpriced because the market did not know how bad some underlying loans really were. But Greene knew. He was therefore able to buy low (before the markets realized the risk) and sell high (after the markets realized the risk) the oldest trick in the book.

Greene came from a Worcester Mass working-class Jewish family. He paid his way through Harvard Business School as a Boston slum landlord. He moved to Los Angeles and continued his slum landlord business in the underbelly of Hollywood. He befriended people like Hugh Hefner, Oliver Stone and Mike Tyson, who was best man at his wedding, before which he lived with Heidi Fleiss, the colorful "Hollywood Madam".

He specialized in rundown, rat-infested apartment buildings in sought-after neighborhoods of Los Angeles and branched out from there. Somewhere in that shadowy world he teamed up with Jim McConville who had perfected the "straw-buyer condo-conversion" loan. Greene's shady contacts meant that he could identify credit default swaps (CDSs) that "insured" loans he knew to be fraudulent. Were any of McConville's loans included in Greene's CDSs? Did he know the contents of each bundle he insured? Did he pick them for that reason?

Wall Street traders had a traditional believe that bundled real estate loans were a safe investment, that bundling spread the risk. But Jeff knew that some bundles were almost 100% fraudulent, the 300 hundred loans on his La Mirage condo complex for example. He knew that CDSs were a financial time bomb. He was one of those who had set the clock ticking.

With this knowledge all he had to do to make a billion dollars was to purchase enough CDSs at their low-low 2006 price and wait for that price to skyrocket around 2008 when the market would realize the enormity of the risk these CDSs had been insuring. That is why he and others were hungry for cash in 2006. They wanted to buy these CDSs while they were still cheap.

I did an in-depth analysis of his condo conversion project in the City of Ridgecrest, Kern County.
The nearby China Lake Naval Weapons Center makes it familiar to many San Diego families. Some may have lived in the 300-unit La Mirage complex, the subject of this analysis.

It was formerly called "The Willows". Jeff Greene bought the complex and changed its name to "La Mirage" (appropriately named) on October 12, 2004. He took title using a company he had formed on June 14, 2000, named 1402 Alta Vista Partners LLC. Here is the full (restated) CC&Rs document, signed by Greene personally and recorded on January 18, 2005 by a company named Millennium Holdings Inc. at 1800 N. Argyle Ave., Los Angeles, the address given on Greene's (now expired) real estate broker's license.

Greene started selling his La Mirage condos on July 14, 2006. His first buyer was a close associate of Jim McConville, Jack Thomas. He is the registered straw owner of McConville's much-used address at 37968 Canyon Heights Drive, Fremont, Ca 94536.

Here is that first Grant Deed, signed by Greene himself. The purchase price was $165,000. Here is the Trust Deed for Thomas's mortgage with New Century Mortgage for $148,500. It was notarized by another key member of the McConville team, Agnes Kantere. The scam was on.

Greene had already sold 189 of these condos before he deeded the remaining 111 to McConville on August 15, 2006. Here is  the full attachment showing the legal descriptions of each condo unit. All subsequent sale deeds were signed by or on behalf of McConville.

I compiled a list of all 300 La Mirage condo sales from the Kern County Recorder's Office. Here is a list of those sold by Greene and here is a list of those sold by McConville. Many straw buyers are common to both lists. This means that Greene was familiar with and actually selling to McConville's buyers before McConville bought the La Mirage complex.

Did McConville really buy these 111 condo units? Greene paid $7,840.25 transfer tax on the grant deed, indicating a sales price of $7,127,500 or $64,211 per unit. Where did McConville get the money? If the sale was genuine he must have paid cash because there is no loan for anything like that amount recorded around that date.

Did he really buy the 42 units in Kearny Mesa? According to Chris Lafornara, McConville shelled out another $7.4 million 3 months later, on November 30, 2006, for the 42 units called Kearny Mesa Townhomes.

There are a few other tell-tales in the public record, Agnes Kantere for example. Not only did both Greene and McConville use her as a straw buyer, both before and after Greene sold to McConville, they both used her to notarize various straw buyer Trust Deeds!

Here is a grant deed to her signed by Jeffrey Greene dated August 3, 2006 (Greene deeded the 111 units to McConville on August 15, 2006) and here is a grant deed to her signed by James McConville dated September 9, 2006. Here is her $101,500 "owner occupier" Trust Deed to American Home Mortgage (a favorite lender of these scammers) that goes with her August 3, 2006 purchase.

She bought 6 such condo units from Greene on August 3, 2006 and 3 more on August 7, 2006, all with "owner-occupier" loans. Then she purchased another six from McConville in September. Meantime she is notarizing Trust Deeds for other McConville straw buyers like Jack Thomas and Heidi Lee. She appears to be the "Notary Madam".

To sum up: the "La Mirage" story describes the sordid details of the 2000s real estate boom and bust better than anything I have come across. Jeff Greene straddled its component parts like a Hollywood anti-hero. The real life Jeff Greene puts screenwriter Robert Towne's  character Noah Cross (John Huston) in my favorite movie "Chinatown" (1974) in the shade. "Chinatown" was considered to have depicted the ultimate real estate scam. Not any more.

 

 
  04/25/09   The truth about McConville and Kearny Mesa Townhomes.  
      by Pat Flannery                                                      top^  
 
In reporting this story today the Union-Tribune carefully avoided mentioning the name of local developer Chris Lafornara, just as the Voice of San Diego carefully avoided mentioning the name of local developer Ralph Giannella in a similar story about the Sommerset Villas condos in Escondido last week. Why is that? Aren't these developers the real culprits?

Today the U-T even made it appear that McConville did the condo conversion at 7555 Linda Vista Rd after Chris Lafornara "sold" him the 42 unit condo complex on November 30, 2006:

"Kearny Mesa Townhomes, at 7555 Linda Vista Road, was converted from apartments by Diamond House Development, a company linked to James McConville of Fremont".

Chris Lafornara was still the principal owner of Kearny Mesa Townhomes on September 12, 2006. On that date he signed for a $3,450,000 loan from La Jolla Bank as "Manager of Kearny Mesa Townhomes LLC".
The condo conversion process, which started back in 2004, was completed on October 17, 2006 with the filing of a final Condominium Map. This was over a month before McConville supposedly "purchased" the units on November 30, 2006.

I hope today's U-T article will not mislead the public into believing that the condo conversion was effected by McConville, as the U-T reported.

With regard to the "purchase" the U-T wrote:

"A McConville company bought Kearny Mesa Townhomes in November 2006 for $7.4 million, or about $176,000 per unit, according to deed records and the previous owner."

The "deed records" the U-T relied upon to make that statement were recorded on November 30, 2006 as documents number 2006-0849881 and 0849882. The first purported to transfer title to the 42 condos from Kearny Mesa Townhomes LLC to Chris Lafornara and John Watmore; the second purported to transfer title from Chris Lafornara and John Watmore back to Kearny Mesa Townhomes LLC. It was a concurrent "flip", certainly not an "arms length" sale.

Filing such an invalid grant deed makes it appear that Lafornara "sold" the 42 unit condo complex to McConville in order to establish a "bulk" price of $176,000 per unit that would support inflated individual appraisals later.

Developers know how to use the media. Lafornara was careful to ensure that CoStar picked up the November 2006 "sale" and published it as a comp for his appraisers to use later. He recently convinced Mike Freeman that the 2006 "sale" was genuine. Unfortunately the media believe these guys. They even protect them by not publishing their names.

In any case the November 30, 2006 grant deed is invalid, because it did not use the 42 individual legal descriptions that were created on October 17, 2006 by the final
Condominium Map. The grant deed used the legal description before the lot was subdivided into 42 condos.

I hope today's U-T article will not mislead the public into believing that a genuine sale took place "according to deed records", as the U-T reported.

If a change of ownership of more than 25% interest in the limited liability company (Kearny Mesa Townhomes LLC) did take place "according to the previous owner" as the U-T reported, such a transaction would be detectable by a complete reconveyance (or assumption agreement) of the Trust Deed dated September 12, 2006 securing a loan of $3,450,000 from La Jolla Bank, because it had an "acceleration" or "due on sale" clause. Read it. The first associated reconveyance recorded by La Jolla Bank for Kearny Mesa Townhomes LLC after November 30, 2006 was on January 10, 2007 as document number 2007-0018612.

If a change of ownership of Kearny Mesa Townhomes LLC did not take place and the November 30, 2006 grant deed is invalid, the 42 purchases are invalid, the 42 loans are invalid and the foreclosures are invalid. You cannot give a lender a security interest in a property you do not own. Each lender would have required title insurance, therefore the title companies are liable for the lenders' losses. Or the title policies are as phony as the loans!

Anybody want to purchase a 42 unit condo complex? Call me at (619) 392-8089, I think I know where there may be one for sale "at the right price" - after I negotiate a settlement with a few very unhappy lenders and title companies.
 

 
  04/22/09   Another McConville "straw buyer" scam project.  
      by Pat Flannery                                                      top^  
 
Here is
another San Diego county condominium project owned by a company at Jim McConville's now infamous address, 37968 Canyon Heights Drive, Fremont. This is the current owner list. They all appear to be typical McConville "straw buyers" from northern California. Those units marked with a red flag are in foreclosure i.e. almost all of them.



The company that sold the condos, Kearny Mesa Townhomes LLC, was formed on September 19, 2005. CoStar Group, a commercial real estate information company, reported the sale of this apartment complex at 7555 Linda Vista Road, built in 1968, to Kearny Mesa Townhomes LLC on December 13, 2006 for $7.4 million. The seller was Chris Lafornara. CoStar does not report the date of the sale, merely that it took place.

Lavornara was still signing on behalf of Kearny Mesa Townhomes LLC on September 12, 2006. Here is a Trust Deed securing $3,450,000 for La Jolla Bank personally signed by Chris Lafornara as "Manager of Kearny Mesa Townhomes LLC".

A condo conversion application for the property was "Deemed Complete" on October 21, 2004 by the City's Development Services Department. The applicant was North Park Venture LLC. The Planning Commission approved the Tentative Map on April 21, 2005 under the name "Kearny Mesa Townhomes". Kearny Mesa Townhomes LLC was formed by Lafornara on September 19, 2005 . The required Public Notice was on the City Council's docket for July 31, 2006. The conversion was completed on October 17, 2006. Here is the final Condominium Map.

Lafornara must have wanted the transaction made public, which is how CoStar became aware of it. He would almost certainly be a CoStar client. They are the "MLS" of commercial real estate.

The following documents on three of the units are typical of the others:

 
Unit # 11 Unit # 12 Unit # 29
Grant Deed Grant Deed Grant Deed
Trust Deed Trust Deed 1st Trust Deed
Notice of Default Notice of Default 2nd Trust Deed

All the grant deeds were signed by Paul Giffin, a Director of Kearny Mesa Townhomes LLC. All the Trust Deeds contained an affidavit of owner occupancy and all were for dollar amounts considerably more than the units were worth.

The default amount for unit # 11 as of February 27, 2009 , is $15,824.26. The last payment was made on August 1, 2008. The default amount for unit # 12 as of January 26, 2009 is $6,645.79. The last payment was made on September 1, 2008.

Is McConville a "straw seller" who recruits "straw buyers"? Is he the scammers' scammer, the "marketer", as he was described in the Escondido scam?
Does he really own thousands of condo units up and down the state? All we know for sure is that various LLCs use his Fremont address as do the various "straw buyers". Until we know the ownership of these LLCs  we cannot assume that McConville is the only scammer.
 

 
  04/18/09   There is a connection between the Escondido loan scam and the San Diego RICO loan conspiracy - Anton Ewing.  
      by Pat Flannery                                                      top^  
 
This Settlement Statement, known as a HUD-1, for one of the fraudulent condo sales in Escondido about which the Voice of San Diego and the Union-Tribune reported last week, contains a little gem of information: a commission payment to "United Equity".

"United Equity" is a DBA owned by a Rancho Santa Fe CPA and mortgagee broker named Anton Ewing. Here are his license details with the California Department of Real Estate (DRE). He filed the "United Equity" DBA with the DRE on June 16, 2008, a week before closing the fraudulent Escondido loan on June 24, 2008.

Ewing is one of the 24 people arrested by the FBI on April 7, 2009. The arrest made national news. This is a link to his company's web site.

Below is a picture of his home (and office) at 18103 Via Ascenso, Rancho Santa Fe. Not bad for a 38-year old veteran of the First Gulf War. Unfortunately he is only renting it. Here is the County Tax Assessor's record showing the owners as John D. & Dinah C. Watkins who live and work in China.

This is their loan from Washington Mutual for $1,500,000  when they purchased the property in October 2007 for $2,615,000. They certified it as their primary residence although they are living permanently in China.
They gave a power of attorney to Mr. Watkins Sr. in Columbus, Ohio to sign the loan documents on their behalf. One wonders how Washington Mutual could make an "owner occupied" loan to somebody it knew, through employment verification, to be living permanently in China. Perhaps they had a broker like Ewing who knew how to get it done.



Now that we have a connection between the Escondido scam and the San Diego RICO case, what next? How many of these people knew each other?

I decided to run a check on the two northern California addresses associated with Jim McConville. I "Google Earthed" the properties and found that they are both single family houses in rundown neighborhoods. 3218 Baumberg Avenue, Hayward is the worst, with 37968 Canyon Heights Drive, Fremont being the best house on a "so-so" street. This last address is where
Ralph Giannella's Escondido company sent various "consultant" fees of $180,454, payable to a McConville company, 3 Mac Asset Portfolio. Did McConville get to keep them all? Very unlikely.

The Hayward house was deeded to Nicolle McConville by Jim McConville as Emerald Park House Corporation. The Freemont house was deeded to a Jack Thomas
by Nicolle McConville as Diamond House Development, a company involved in condo sales in Fresno as Stonemark Homes, associated with Giannella's partner, William Ayyad, as more fully described below.

There are a number of foreclosures in the McConville/Ayyad company's Fresno condo complex that resemble foreclosures in the Giannella company's Escondido condo complex. Read my April 13, 2009 blog on the Escondido condos.

Let's look at the situation the Linn family in Fresno now find themselves. It is substantially the same as the Jenkins family in Escondido: they both participated in a loan scam for a fee and are now left holding the bag. The Linns purchased three condos in Stonemark Homes from Stonemark Asset Portfolio, a McConville company. I have obtained the documents on two of them. They are worth studying to see the pattern.

Stonemark granted title to the Linns as straw buyers with a grant deed for 4875 E. McKinley Ave., #106, and one one for #117. The "purchase price" in each case was $225,000, while similar units were selling for $125,000. The straw buyers then signed First Trust Deeds for $157,500 each, one on #106 and one on #117. Next they signed two Second Trust Deeds for $45,000 each,
one on #106 and one on #117. All this took place on the same day, May 10, 2007.

On September 1, 2008 the straw owners made their last payments. The lender filed Notices of Default (NOD) on the First Trust Deeds only, on February 23, 2009, on #106 and on #117. The NODs show $6,125.98 owing on #106 and $6,230.98 owing on #117 as of February 27, 2009. The Second Trust Deeds will be wiped out in the foreclosure sale. So will any leasing rights of the renters. Rental agreements are junior to First Trust Deeds, just like junior Trust Deeds.

There is a company in San Diego called SSBI Stonemark Homes L.P. at 9252 Chesapeake Drive, which happens to be the main address of Ralph Giannella's partner, William Ayyad. According to Manta, a business search service, they own Premier Communities together.

Giannella and Ayyad are well known as owners and sellers of condo conversions statewide. The "Agent for Service of Process" for SSBI Stonemark Homes L.P. is Randy Bailey, a vice-president of the company Ayyad founded, United Development Group Inc..

According to Manta,
Ayyad's SSBI Stonemark Homes L.P and McConville's Stonemark Asset Portfolio are different sides of the same coin. They are both involved in Stonemark Homes at 4875 E McKinley Ave, Fresno. Here is a Google Earth picture of that Fresno complex.

Ayyad's company, United Development Group Inc., has a longtime presence in Fresno. According to this article in the Fresno Business Journal dated November 25, 2005,
"United Development Group owns several apartment properties in Fresno that they have purchased during the course of 15 years". The article explains that under the name "Condos in Fresno" it converted 220 units called "Villa Borgata" and 74 units at "Ridgeview". According to United Development Group's web site it directly manages "The Lexington" apartments in Fresno.

This Reader article, dated May 1, 2003, describes how ex-City Councilmember Ralph Inzunza's wife Olga, worked for Ayyad: "Until recently, records show, Olga worked for an enterprise run by Willie Ayyad, one of the Barrio Logan area's most successful developers of multi-unit low-income housing. His company, Premier Communities, has also developed upscale condominiums in Chula Vista, Escondido, Bonsall, La Jolla, and Alpine. In a 1998 county disclosure filing, Inzunza listed his wife's position at the Ayyad owned ACDW Inc. as "Accounts Payable." She is now reported to be spending a large portion of her time managing the couple's real estate." According to Manta, ACDW Inc. operates an apartment building in Fresno, called "Villa Hermosa".

Putting all this together and it would appear that Jim MConville had a prior business relationship with William Ayyad before becoming the expensive "consultant" for Sommerset Villas, the Escondido condos sold by a company apparently owned by his partner, Ralph Giannella.

Anton Ewing provides a connection between the RICO "straw buyers" conspiracy, for which he and 23 others were arrested by the FBI on April 7, 2009, and the fraudulent loans created to sell the Escondido condos owned by a Giannella company.


It is likely that the Feds will entice Anton Ewing to "sing".  Once the "singing" begins, we may learn "the rest of the story".
 

 
  04/13/09   Do journalists do deals to get stories?  
      by Pat Flannery                                                      top^  

 

Here is what the Voice of San Diego did not tell you in its real estate scam story: Vicki Jenkins, the buyer, signed five trust deeds (mortgages) as an owner-occupier on five different properties. The Voice merely reported that she had "loaned her identity" for a fee.

This is the relevant page from one of her trust deeds showing the "owner occupancy" clause. All five trust deeds contained this clause. Ms. Jenkins promised to occupy all five properties as her principal residence all at the same time! Here are her five loans. It is fraud to obtain an owner-occupied loan under a false declaration of occupancy. When you do it on a federally insured loan it is a federal crime.

Did the Voice of San Diego fail to report the loan fraud in order to protect the seller who benefited? They spent three months investigating this and didn't find out about the owner occupancy fraud? I spent less than one hour investigating it and discovered it right away. It is all in the public record.

In reporting this story the Voice never once mentioned the seller, Ralph Giannella. Giannella is well known around San Diego as a major seller of condo conversions. Using the usual maze of Limited Liability Companies (LLCs) developers use, he had purchased Sommerset Villas from Mark Gleiberman, another well known condo converter. Here is his subsequent grant deed to Vicki Jenkins using one of his many LLCs, North Coastal.

This maze of LLCs does not excuse the Voice for failing to include the real seller in their investigations. They knew who he was. He had signed this letter, which the Voice itself published. But they never once mentioned his name in their report, even though he had signed this Addendum to the Purchase Agreement, which the Voice also published.

Giannella used this "disclosure" document in an attempt to normalize a "secret profit". He unloaded dozens of troubled condos in a fraudulent scheme and didn't know about the loan fraud? There was more to this than McConville borrowing the identities of some gullible straw buyers. It required them to make false loan statements. It was fraudulent in its very concept.

It had to be abundantly clear to the Voice that Giannella knew all about the "secret profits". Yet the Voice report is all about McConville. The local guy is given a free pass. Look at this Settlement Statement known as the HUD-1. It shows a "marketing fee" of $180,454 to McConville's company, 3 Mac Asset Portfolio! But nothing about the seller who paid it. What was supposed to happen to the "marketing fee" once it was paid to McConville? Was he meant to keep it all? "Secret profits" are usually divided up among the participants. Ms. Jenkins is still waiting for her cut.

This is not the first time the Voice gave a free pass to a developer with regard to "secret profits" in dubious real estate deals. Back in July 2007 I uncovered a land deal involving a "secret profit" to SEDC's chairman, "Chip" Owen. Will Carless, the same Voice of San Diego journalist who "broke" the Escondido story, told me at the time that he had investigated what I wrote in my blog about Owen but could find nothing wrong with him receiving a "secret profit" of $500,000. He refused to investigate it further.

Carless now believes that this knowledgeable developer, Ralph Giannella, knew nothing about the fraudulent loans that bailed him out of his troubled condos. We are expected to believe that Giannella gave McConville approximately $180,000 for each sale and didn't suspect a thing. The Voice will probably seek a prize for this piece of work.

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