Last week the FBI started a mortgage fraud task force to deal with the high number of foreclosures in Southern Nevada. The task force is comprised of local and federal authorities, including the IRS, FBI, Metro, HUD and the Nevada AG's office. The same day they announced their first case against the owners of Distinctive Real Estate & Investments, Eve Mazzarrella and her husband Steven Grimm. The company website, lasvegascondomania.com is still up and running, although no one answers the phone and all of the photos of Eve and the company name have been removed. According to authorities, the couple was allegedly involved in a scheme of inflated housing values, straw buyers and limited liability companies. Investigators have seized hundreds of boxes of documents and some computers from two offices and two homes connected to the couple (prosecutors received help from a former employee of the couple, Cathy Rojas).
A release from the US Attorney for Nevada, stated the plan involved 227 properties with a purchase price totaling 100 million dollars. Of those 227 properties, at least 118 of the properties have been sold in foreclosure. The banks that owned the properties lost an estimated 15 million dollars. The quote below came from Eve's bio on the company website.
Both individuals have been arrested and charged with six counts of bank fraud and one count of money laundering, plus aiding and abetting. If convicted, they could face up to decades years in prison. The couple is being represented by attorney John Spilotro. The trial date is set for May 19th.
Follow the Money
In an interesting twist, government prosecutors say the couple funneled $8.7 million dollars through a series of different bank accounts but only $5,000 of it has been found. The alleged scheme involved a $100 million in loans.
The Human Cost
The couple (allegedly) conned unsuspecting buyers into using their good credit to perpetuate the scam. The homebuyers are now facing foreclosure, their credit ruined and some have lost everything. One man claims to have lost $125,000 to the couple. Now as taxpayers, we will end up footing the bill eventually.
A typical scam to defraud the bank usually involves an over inflated sales price with a large kickback through the title company going to an LLC, unbeknownst to the lender. While prosecutors haven't released the specifics of the fraud involved, it's a pretty safe bet that's what happened. No word yet on more arrests, although with a scam of this size and depth there had to be several others involved like appraisers or home inspectors.
This wasn't the first scam uncovered this year. Often criminals target the desperate. In January of this year, Metro investigators arrested Sheila Williams, a local escrow officer after she pocketed over $500,000 from a local valley lender. Earlier in the same month, Matt Marlon was arrested for scamming homeowners facing foreclosure. Marlon would approach homeowners, offer to buy the homes and make the payments. He of course didn't buy the home or make any payments. Instead, Marlon would then rent out the homes to unsuspecting renters. Marlon has "helped" at least 60 home owners in the valley under a variety of aliases. Marlon created approximately 45 corporations to "buy" homes. In a strange twist, Marlon was also CEO of the SEO firm Traffic Power.
If you have had any business dealings with the above individuals, you can contact the Southern Nevada Mortgage Fraud Task Force at (702) 584-5555. There is also a Nevada site to help homeowners facing foreclosure at foreclosurehelp.nv.gov.
Sources: FBI News Release 3/13, KLAS Channel 8 I-Team Reports
Las Vegas Foreclosures