The United States Department of Justice (USDOJ) announced on Monday that three California men were sentenced for operating a mortgage elimination and foreclosure rescue scam in the Bakersfield area.
The defendants all received lengthy sentences from Chief U.S. District Judge Lawrence J. O’Neill for their crimes. The USDOJ said that Martin Calzada, 30, of Norwalk, was sentenced to nine years in prison; Juan Curiel, 38, of Visalia, to three years and five months in prison; and Santiago Palacios-Hernandez, 48, of Salinas, to two years and seven months in prison.
The three men ran a mortgage brokerage called Star Reliable Mortgage from approximately August 2010 and October 2011, which had offices in Bakersfield, Visalia, and Salinas, and targeted distressed homeowners with a fraudulent “loan elimination” scheme. As part of the scam, they charged clients illegal upfront fees ranging from $2,500 up to $4,500 and also monthly fees. The victims were duped out of hundreds of thousands of dollars to Star Reliable and at least $300,000 was transferred from Star Reliable into Calzada’s bank accounts.
The defendants further perpetuated the scam by filing fraudulent documents at the court house in order to allegedly replace the legitimate property trustees with fictitious trusts. According to the USDOJ, this was done as a stall tactic so they could “cloud title” and delay the foreclosure process. The defendants and other employees working at their direction told the victims to stop paying their mortgages. They also falsely represented that Star Reliable clients had $1 million in a U.S. government account that could be used to pay off a homeowner’s mortgage.
In addition to their prison sentences, the defendants were ordered to pay more than $1.1 million dollars in restitution to the victims and mortgage loan owners Fannie Mae and Freddie Mac, which suffered financial losses upon the foreclosure of several clients’ homes.
The announcement was made by U.S. Attorney Phillip A. Talbert and these cases were the product of an investigation by the FBI and the Tulare County District Attorney’s Office. Assistant U.S. Attorneys Christopher D. Baker and Patrick J. Suter prosecuted the cases.