Lorenzo Espinoza's New 5-Year Fraud Sentence, Same as the Old 5-Year Fraud Sentence
A Newport Coast man who appealed his five-year prison sentence for fraudulently obtaining mortgage loans that went into default and caused more than $2.7 million in losses to the federal government and commercial lenders received his new sentence Tuesday:
Five years in prison.
Actually, having already spent three years in federal lockup, 46-year-old Lorenzo Espinoza could get out in 16 months with good behavior.
He pleaded guilty in U.S. District Court in Los Angeles in 2006 to conspiracy to defraud the U.S. Department of Housing and Urban Development (HUD), bankruptcy fraud, money laundering and tax evasion.
Espinoza was sentenced in 2010 to five years in federal prison, but he appealed on grounds U.S. District Judge Stephen V. Wilson's sentencing calculations were not based on specific facts in the case but the defendant's "extreme greed." An appellate panel ordered a new sentencing hearing, where Wilson conceded his previous analysis had been "incomplete."
As Fred Shuster reports for City News Service, Wilson then came up with the new five-year sentence based on Espinoza's position as an "organizer or supervisor" of the scheme, the length of the fraud and the financial loss to the government. The judge also ordered Wilson to pay about $535,000 in restitution.
Espinoza originally admitted that from 1995 to 2001, he orchestrated the scheme to defraud HUD and several commercial lenders. He and an associate would purchase homes and then sell them to straw buyers who Espinoza had secretly loaned the down payments. Bogus applications and paycheck stubs were submitted to win approval of the loans, and the Federal Housing Administration and other lenders were left holding the bad paper as well as properties worth much less than the amount funded in the mortgages, according to the U.S. Attorney's Office.
As part of his plea, Espinoza also admitted:
- He filed for bankruptcy but failed to inform the United States Trustee that he owned a Rolex Daytona watch, 1990 and 1995 Ferraris and a 1989 Lamborghini;
- He laundered the proceeds of his bankruptcy fraud when he sold the Ferraris in late 2002 for $127,500;
- He willfully failed to pay $199,053 in income tax due for the 1996 tax year.
Shuster reports that after Espinoza told Wilson Tuesday that he had received letters from "happy homeowners," the judge responded that he found the defendant to be "totally incredible and a total fraud."
"You have earned your sentence," Wilson reportedly concluded.
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