We've done so many posts on crooked mortgage brokers ripping off unsuspecting customers you might assume Orange County is the capital of slimy lending schemes.
So, it's only fair that we draw attention to a Newport Beach mortgage broker who found himself burned by an alleged fraudster.
The unnamed local was given phony information Gabriel S. Joseph, 34, of
Fremont, used to obtain a loan of more than $5 million, according to a federal grand jury indictment handed down recently in Salt Lake City, where Joseph faces three counts of wire fraud and money laundering in connection with the alleged scam.
Joseph is a partner in the FranklinSquires Cos. with Rick Koerber, who is himself fighting charges of running a huge Ponzi scheme in Utah County. The most-recent indictment of Joseph concerns other companies he began creating in 2004 to buy, hold and sell real estate. He would allegedly sell one company's real estate to himself by lying on loan documents to hide his ownership interest, pocketing millions of dollars in loan proceeds, the indictment charges.
One such company, SCIPC, LLC bought a Park
City, Utah, property for nearly $3.4 million in 2006, with Joseph obtaining a loan to cover the purchase from a hard-money lender, court documents show. Two weeks later, another Joseph company agreed to “buy” the same property from SCIPC for around $7 million, the indictment alleges.
That's where the Newport Beach mortgage broker comes in. Joseph is accused of using false and misleading information to obtain a loan and line of credit on the property, including statements about income,
assets, the fair market value of the property, employment and employment
income, and whether he intended to occupy the property as
his primary residence.
Unbeknownst to the mortgage broker, he was using misleading
information in an application to Washington Mutual for a mortgage of
$4.9 million and a line of credit for around $700,000 on the
property. Joseph was able to obtain a more favorable interest rate
and a substantially lower loan-to-value ratio on the property as a result, the indictment charges.
Joseph is alleged to have taken other steps to hide from the broker his ownership of the property he was selling to himself, as well as concocting a fake “seller carry” loan to
create the illusion that he was receiving financing from other sources besides Washington Mutual.
He now faces up to 30 years in prison and $750,000 in fines if he is convicted, according to a statement from the U.S. Attorney in Salt Lake City.