Pittsburgh Mortgage Broker Defrauded Banks, Borrowers to Enrich Himself

With hundreds of pages of paperwork and thousands of dollars on the line, getting a mortgage can be a complex and intimidating transaction for homebuyers, who often depend on experts to get them through the process.

Unfortunately for some mortgage applicants in Western Pennsylvania, dishonest real estate professionals took advantage of that trust with fraudulent practices.

As the real estate market boomed before the 2008 crash, Pittsburgh-based Century III Home Equity was a successful brokerage, closing an estimated $100 million in loans annually. As a broker, the company acted as a middleman between the mortgage applicant and the lender, but the company’s employees manipulated both sides to enrich themselves. The owner—James Nassida, IV—and his loan officers misleadingly sold customers mortgage products that were not always appropriate for their financial situation but racked up the most fees. The brokerage also fooled lenders by lying about applicants, doing things such as inflating income, misrepresenting home values, or not disclosing that down payments were actually borrowed money.

“There was massive fraud here. They were not looking out for their borrowers; they were looking out for themselves,” said Special Agent Neal Caldwell of the FBI’s Pittsburgh Division, who investigated the case with the U.S. Secret Service as part of the Western Pennsylvania Mortgage Fraud Task Force. The task force, which came together in 2008, looked holistically at the mortgage fraud threat throughout the Pittsburgh area as part of a multi-agency team involving the U.S. Attorney’s Office, FBI, IRS Criminal Investigations, U.S. Secret Service, U.S. Postal Inspection Service, and others, including state agencies. The task force’s work over a 10-year period led to 140 convictions, ranking the Western District of Pennsylvania as one of the most successful districts in the country in prosecuting mortgage fraud.

Nassida required his employees to do whatever it took to close a loan, even if it was dishonest or illegal. In many cases, the company would sell a borrower a loan with a temporary minimum payment option, designed for those with seasonal or fluctuating income, without fully disclosing the terms. In actuality, the temporary minimum payment didn’t even cover all of the interest each month, causing the loan to “negatively amortize,” or actually increase the balance of the loan. While some customers, such as house flippers, understood these products, others found them disastrous financially when they were not fully informed of the consequences of paying the lower amount over a longer period of time. This was especially difficult for borrowers once the housing market crashed in 2008—they could no longer rely on a consistent increase in their home values to keep them from going “underwater,” or owing more than their homes were worth.

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Wiretap investigation leads to seizure of more than 30 pounds of fentanyl

State and federal law enforcement officials announced Thursday they seized some 77 pounds of various illicit drugs in the Boston area — including more than 30 pounds of fentanyl — as the result of “Operation High Hopes,” according to a press release by the Suffolk County District Attorney’s office. They say it’s “one of the longest, most far-reaching, and most successful state wiretap investigations in Massachusetts history.”

Suffolk County District Attorney Daniel Conley says the investigation led to more than a dozen arrests and dismantled two Boston-area drug trafficking organizations. About $300,000 in alleged drug money was also seized. He added that fentanyl, heroin, cocaine and opiate tablets are believed to have originated from Mexico’s Sinaloa Cartel.

Fentanyl is so powerful, Conley says, that mere milligrams can be lethal.

“The number of overdoses it could have caused is truly staggering,” Conley wrote in the press release. “Individuals who buy and sell at this level aren’t users. They’re not small time dealers, either. They’re certainly not selling to support a habit. They’re trafficking in addictive substances that claim more lives in Massachusetts than all homicides, all suicides and all car crashes, statewide, combined.”

Boston Police Commissioner William B. Evans heralded the successful sting in the written statement: “These arrests and seizures will have a tremendous impact on the quality of life in Boston and many other Massachusetts cities and towns,” Evans said. “I commend the work of my detectives and all our law enforcement partners who worked tirelessly over the past six months of Operation High Hopes.”

The DEA Special Agent in Charge Michael J. Ferguson echoed that sentiment: “Those responsible for distributing lethal drugs like fentanyl to the citizens of Massachusetts need to be held accountable for their actions. DEA’s top priority is combating the opioid epidemic by working with our local, county and state law enforcement partners to bring to justice those that distribute this poison.”

Wiretap investigation

Edward Soto-Perez, 43, of Roxbury, Nelson Catala-Otero, 37, of Brockton and Julio Cuello, 52, of Dorchester were arraigned in November on multiple drug trafficking charges after the execution of wiretap-based search warrants, according to the press release. They were held on bails ranging from $100,000 to $250,000 and will return to court Feb. 13.

Robert Contreras, 42, of Roxbury, is their alleged supplier and was one of more than a dozen people arrested Thursday. He’s being held on $1 million bail and will return to court Feb. 28.

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Stopping Human Trafficking

Jaboree Williams was a pimp and drug dealer who brutally abused and psychologically tortured his victims. And thanks to the joint efforts of the FBI and local law enforcement, he will spend the next 30 years in federal prison.

“He preyed on vulnerable women who were having difficult times in their lives,” said Special Agent Maria Miller, who investigated the case out of the FBI’s Milwaukee Division as part of the office’s Human Trafficking Task Force. “He started by being more of a ‘Romeo’ pimp—he would act like a boyfriend and make them think they were doing this for their future as a couple.”

However, shortly after the women began working for Williams, he would take all or nearly all of their earnings, beat them, and limit their access to food. Williams also took the women’s identification, cell phones, and money to make it difficult for them to escape. When one victim tried to leave, he severely beat her with a belt and threatened to kill her children. With another, he beat her beloved dog to keep her under his control.

The investigation began in 2015 when a woman contacted the Racine Police Department saying she could not find her sister, whose photo appeared on a prostitution website. The police department collaborated with the FBI’s Wisconsin Human Trafficking Task Force to begin an investigation.

Racine Police Department Investigator Neal Lofy, who works human trafficking cases for his department and also serves on the local FBI task force, explained the importance of taking a collaborative approach in human trafficking cases and using the FBI’s available resources, such as administrative subpoenas of prostitution websites.

“Trafficking is a very transient crime; there’s a lot of movement between jurisdictions,” Lofy said. “Partnering with the FBI and having access to FBI databases and records, as well as the ability to travel to other jurisdictions, has been very helpful in these cases. Also, the clarity and penalties of the federal laws, as opposed to individual state laws, ensure convicted human traffickers can receive the punishments they deserve.”

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Virginia Credit Union using new eye print security option

Virginia Credit Union is offering another layer of security for its mobile banking users.

EyeVerify is a biometric authentication based on a person’s eye print. The feature uses a phone camera and eye print to confirm the user’s identity when opening the credit union’s mobile banking app.

EyeVerify is an option for members who do not want to manually enter a password or for those do not have a phone that accepts fingerprint identification. Unlike other biometric technologies, it doesn’t depend on a particular model of smartphone.

 
“Since not all phones are enabled for fingerprint authentication but most offer a camera, we wanted to provide an additional layer of security for their mobile banking information,” said Frank Macrina, senior vice president of products and channels for Virginia Credit Union.

The optional technology can provide users with a fast and secure way to use the mobile banking app, Macrina said. Also, if a phone is lost, EyeVerify locks down access to the member’s accounts.

It can be used as well for people who have joint accounts, with eye prints recorded for both users and verified upon opening the app.

The eye biometric offers a stronger option than a thumbprint, Macrina said. However, it is a new technology, and the thumbprint is still the most popular method of biometric security.

The credit union began offering the technology in the spring ahead of many of its banking competitors.

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TSA experienced one of the busiest Thanksgiving weeks ever

WASHINGTON – The Transportation Security Administration (TSA) experienced one of the busiest Thanksgiving travel weeks in its 16-year history. Sunday was the busiest day of the holiday week with more than 2.6 million passengers and crew members passing through TSA screening. It was the fifth busiest day since the agency was established immediately following the 9/11 attacks.

Half of the busiest days on record in the past 16 years occurred in the past few months.

Even though the volume of individuals screened was remarkably high, nationwide 98.1 percent of all passengers waited less than 20 minutes in a checkpoint line and 99.2 percent of passengers who were in a TSA Pre✓® lane waited less than 10 minutes in a security checkpoint line.

“Enhanced security screening measures and the use of TSA canine teams were in place during the busy Thanksgiving travel period to ensure security of air travel,” said TSA Administrator David Pekoske. “I am very proud of our Transportation Security Officers for their work and attention to detail during a very hectic time, ensuring safe travel for all passengers,” he added.

From Friday, Nov. 17 through Sunday, Nov. 26, TSA screened 21,613,767 passengers and crew at airport checkpoints nationwide. More than 13.6 million checked bags were screened during the same time period. Typically, an average travel day would see TSA screen in the neighborhood of 2.1 million passengers and crew, but in the busiest days of the Thanksgiving travel week, TSA screened as many as a half million more passengers per day than usual.

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Bridgeport school security union gives back to help district

“School security officers in the city aren’t exactly giving students the shirt off their backs — just the cost of them.

James V. Meszoros, a security guard and president of NAGE Local R1-200, told the city school board Monday they are giving back $200 of a $424 uniform allowance to help the financially strapped school district.

The gesture will amount to $16,600 that Meszoros said he hopes the district will put toward the athletics program.

His announcement brought a round of applause in the room when the announcement was made.

“I know it goes back into the general fund but I was a coach at Bassick High School for 13 years,” Meszoros said.

Meszoros said he is hopeful Marlene Siegel, the district’s chief financial officer, can work the numbers so they can benefit athletics.

Last year, Meszoros said, the idea was raised by Police Lt. Paul Grech. After Meszoros became union president, he presented the idea to his members who liked it because it was something different.

Security guards make an average of just shy of $38,000 annually. The union contract calls for guards to get an allowance to cover four shirts and four pairs of pants every October. This year only, he said guards will get two and two.

Schools Superintendent Aresta Johnson said she was ecstatic to hear of NAGE’s give back when the union president told her of it.
“It truly exemplifies all of us pulling together and rowing in the same direction for the betterment of our students,” Johnson said. “I️ sincerely thank each member of NAGE.”

The district is working to close a multi-million dollar gap between what officials say they need to run the system of 21,000 and the near flat operating funding it got from the state and city in the current fiscal year.”

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Father/Son Tutoring Company Executives Sentenced for Fraud

“The father-and-son executives of two suburban Chicago tutoring companies have been sentenced to federal prison for orchestrating an $11 million fraud scheme that bilked more than 100 school districts around the country, including Illinois.

From 2008 to 2012, JOWHAR SOULTANALI and his son, KABIR KASSAM, fraudulently obtained funds from the school districts by misrepresenting the nature of their companies’ tutoring services and falsely inflating invoices for tutoring work that was never performed. Soultanali and Kassam also paid bribes to school officials and teachers to make sure the fraud was not detected. The bribes included a Caribbean cruise for an assistant principal in Texas and an outing to a gentleman’s club for a state education official in New Mexico.

Soultanali, 62, of Morton Grove, Ill., and Kassam, 38, of Wheeling, Ill., each pleaded guilty last year to one count of mail fraud. U.S. District Judge Amy J. St. Eve on Friday sentenced Soultanali to six years in prison, and Kassam to five years and ten months in prison.

The sentences were announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; John P. Selleck, Acting Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and Thomas D. Utz Jr., Special Agent-in-Charge of the North Central Region of the U.S. Department of Education Office of Inspector General. The Chicago Public Schools Office of Inspector General assisted in the investigation.

“Defendants abused the trust that the Department of Education placed in them to carry out a massive fraud that was not merely extensive, but also egregious,” Assistant U.S. Attorneys Kruti Trivedi and Barry Jonas argued in the government’s sentencing memorandum. “The fraud in this case had a significant impact on both the failing school districts that allocated their federal funds to defendants and on the students at those school districts.”

Soultanali served as director of operations for BRILLIANCE ACADEMY INC. and its wholly owned subsidiary, BABBAGE NET SCHOOL INC., both based on Niles, Ill. Kassam was the president of both companies. The firms contracted with school districts to provide tutoring services to students on-site at schools and via laptop computers.

According to the charges, Soultanali and Kassam furnished the school districts with false applications and marketing materials that fraudulently inflated the companies’ services. The companies falsely stated that they provided pre-testing of enrolled students, created customized tutoring programs, provided ongoing progress reports to schools and parents, and compiled accurate student improvement results after the tutoring was completed. In total, Brilliance and Babbage received $33 million from more than 100 school districts and small schools throughout the country.

The fraud scheme also involved numerous bribes paid to some school officials, with the expectation that the officials would assist in procuring federal funds for the tutoring services.

In addition to Soultanali and Kassam, the investigation resulted in criminal charges against Brilliance and Babbage, as well as three school officials in Texas and one state education official in New Mexico
who pocketed the bribes.”

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Connecticut Group Staged Car Accidents for Insurance Money

“After a autumn evening of drinking and using drugs in 2013, a group of friends got into an Audi A6 and drove to the remote Wilderness Road in Norwich, Connecticut. The car slid off the road, hitting a tree.

Everyone in the car survived, but this seemingly typical crash was no accident.

Despite their impairment, the driver and passengers had purposely planned the crash to collect the insurance money. It was one of many crashes that a group of Connecticut residents were connected to over several years—contributing to higher car insurance premiums for all drivers and wasting public resources like ambulance responses.

In the October crash, driver Mackenzy Noze got out of the Audi and drove away in a getaway car, while his friend, Jacques Fleurijeune, climbed into the driver’s seat of the damaged Audi and called 911. Fleurijeune told police he had hit the tree while swerving to avoid a deer—though no witnesses or police ever saw the alleged deer.

The four passengers were all taken to the hospital and eventually received insurance settlements for their injuries, which were fake. Fleurijeune also received payment for the value of the car, and others in the car gave some or all of their injury payouts to Noze and Fleurijeune.

This scenario played out numerous times with various combinations of co-conspirators from 2011 through 2014, with insurance companies paying out $10,000 to $30,000 per crash in about 50 crashes. Many of them happened under similar circumstances—late-night, single-car crashes on remote roads without witnesses. In the fall, the drivers would claim to have swerved hitting a deer. In the winter, they said they lost control on a snowy street. To up their payout, they used older, European cars, which tend to hold their value over time.

For the insurance companies, these repeat crashes raised red flags. So the National Insurance Crime Bureau (NICB), a non-profit organization that serves as a liaison between law enforcement and insurance companies, shared crash data with the FBI and the U.S. Attorney’s Office for the District of Connecticut. The NICB’s suspicious accident data helped investigators hone in on the worst offenders.

“It was just a good, old-fashioned case, conducting interviews and reviewing documents—such as police reports and insurance company records—looking for patterns,” said Special Agent Daniel Curtin, who investigated the case out of the FBI’s New Haven Division. “With a lot of these staged crashes, the fraudsters made interstate telephone calls to file the insurance claims, and the calls were recorded, forming the foundation for many of the wire fraud counts.”

Noze, 33, the group’s ringleader, was convicted of conspiracy to commit mail and wire fraud and sentenced last month to four years in prison. Six others, including Fleurijeune, have been charged and convicted.

While insurance fraud may seem to be a victimless crime, that’s far from the case.

Estimates show car insurance fraud costs the average policyholder about $300 per year in higher premiums, according to NICB Supervisory Special Agent John Gasiorek, who assisted the FBI with the investigation.

Additionally, staged accidents are a safety hazard, both to those involved and other drivers. While in this ring, the conspirators generally did not involve other motorists, criminals sometimes do stage accidents involving unsuspecting drivers.

“You never know who’s going to come around the corner. You could hit an innocent person. It’s really a public safety issue,” Gasiorek said, noting that even willing participants in the staged accidents are unexpectedly injured.

“When insurance companies pay fraudulent claims, everyone’s premiums go up,” Curtin said. “More importantly, the staged crashes pose risks to first responders. You had police officers and EMTs rushing to crash scenes. The wasted time of medical professionals was also a concern with ER doctors and nurses treating these fraudsters for non-existent injuries. It took time away from other patients who really needed medical attention.”

At least in the local region, Curtin said word has gotten out that law enforcement is working these cases and bringing perpetrators to justice.

“The insurance companies have said that suspicious claims, especially those involving single-car accidents on remote roads, are down in southeastern Connecticut,” Curtin said. “They’re not seeing these types of suspicious accidents because this case has sent a message.”

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Commodities Fraud Sentencing

Self-professed investment professional Pedro Jaramillo was a pro at promoting himself and his financial prowess. Through a slickly produced online video, phony office space on Wall Street, and promises of unrealistic financial returns, this Peruvian national living in New York managed to convince more than two dozen investors to trust him with more than $1.2 million of their hard-earned money.

Jaramillo, however, never invested a dime of their money—instead, he used it to line his own pockets and keep his Ponzi scheme going. Even his claim to be an investment professional was false—he wasn’t licensed to do anything remotely connected to financial advising and/or investing.

But, as with most Ponzi scheme operators, Jaramillo eventually ran out of funds to keep his fraud scheme afloat, and two unhappy investors reported their concerns to the FBI. After an intensive investigation by the FBI’s New York Field Office—in close coordination with the U.S. Attorney’s Office for the Southern District of New York—Jaramillo was arrested and charged with commodities fraud in December 2016, pleaded guilty in April 2017, and was sentenced last month to 12 years in federal prison.

Investigators determined that, beginning at least in January 2014 until his arrest, Jaramillo—using his Latin American heritage as a common bond—had been soliciting potential victims mostly from Latin American immigrant communities in the U.S. to invest in commodity futures contracts. He told would-be investors that their money would be invested in short-term commodities contracts with a guaranteed (and unrealistically high) rate of return.

And he established his financial bona fides with potential clients using various methods.

His online video, done in Spanish, opened with flashy depictions of Wall Street and the New York Stock Exchange. Then, Jaramillo himself made his pitch to potential investors, telling them, “Money is being earned on every transaction. All you have to do is work with a proven winner.” He delivered all sorts of promises about how client investments would be handled—including being set up in individually managed and federally protected accounts. Unfortunately for his investors, none of what Jaramillo said in the video was true.

To further impress potential investors, Jaramillo met with many of them in rented office space on Wall Street, where he touted his prior financial successes and his relationship with a well-known global investment bank. Again, this “relationship” with the bank proved to be non-existent, and he had no prior Wall Street investment successes.

Jaramillo also created and handed out documents with simple charts and graphs that purported to illustrate past successes and his high rates of return. This were yet more false facts he fed to his victims.

The FBI investigation included numerous interviews with the victims of Jaramillo’s scheme. Many of these people—including retirees, working professionals, and manual laborers—lost their life savings, retirement money, or homes.

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Clarion Security company founder named “Women Business Owner of the Year’

“The founder of a Memphis security guard firm has been named the “Women Business Owner of the Year” by the National Association of Women Business Owners.

Kim Heathcott was honored at the association’s four-day meeting in Minneapolis this week for growing her 8-year-old company, Clarion Security, into a $10 million business.

She founded the firm with one employee and no clients in 2009, and now it’s the largest woman-owned business in Memphis with 450 employees.

The national association was founded 42 years ago and has 26 chapters across the nation.

Before founding Clarion, Heathcott worked in financial services, with an emphasis in fraud auditing and control investigations. She served as president in 2013 of the Memphis Chapter of the National Association of Woman Owned Businesses.

She holds an undergraduate degree in economics from Vanderbilt University, with a minor in business administration, and received an MBA from Southern Methodist University.

Clarion has made a mark in part for the way it treats its employees. For example, concerned that Clarion’s security officers were eating most of their work-time meals out of vending machines, she and her husband, Larry, started providing a free meal to each employee every shift, the Heathcotts told The Commercial Appeal in 2011.

The couple even started attending the earlier Sunday morning church service so employees would not have to wait as long for the lunches, often delivered by the Heathcotts themselves.

Clarion contracted with a nursing company to provide monthly wellness clinics for employees.

For the security guard industry, Clarion has experienced a much lower-than-average turnover rate among employees.”

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