Fifth individual pleads guilty in California mortgage fraud scheme

Fifth individual pleads guilty in California mortgage fraud scheme

July 6, 2010

United States Attorney Benjamin B. Wagner has announced that Christopher Stovall of Bakersfield, Calif. has pleaded guilty before United States District Judge Oliver W. Wanger, in Fresno, Calif. to four counts of mail fraud in connection with a mortgage fraud scheme involving Crisp & Cole Real Estate. Four other persons, including Megan Balod, Leslie Sluga, Kevin Sluga, and Jerald Teixeira, have previously pleaded guilty in related cases.
In pleading guilty Stovall admitted from July 2005-August 2006, he and certain individuals at Crisp & Cole and Tower Lending, and other individuals, executed a scheme to defraud mortgage lenders, including Long Beach Mortgage Company, Kirkwood Financial Corporation, Wells Fargo Home Mortgage, SunTrust Mortgage Inc., and Fremont Investment & Loan, by submitting materially false and fraudulent statements in mortgage loan applications and related documents to obtain loans for straw buyers and others purchasing real property. At that time, Stovall was employed as a loan officer with Tower Lending, a mortgage brokerage affiliated with Crisp & Cole.
According to the plea agreement, Stovall admitted that he knowingly caused materially false and fraudulent statements to be made in loan applications and related transaction documents, including false and fraudulent statements by the borrowers and by Crisp & Cole and Tower Lending employees. He also admitted that he obtained and processed loans to finance the purchases of real properties by straw buyers for the benefit of Crisp & Cole. The false and fraudulent statements in the loan applications frequently included material misstatements and omissions concerning the borrowers’ income, assets, and employment, and false statements concerning the borrowers’ intent to reside in the properties as owner-occupiers. Based on his experience in the industry, Stovall admitted that he knew and expected that the lenders would rely on such misstatements and omissions in approving the funding of the mortgage loans. Many of the properties purchased with the loan proceeds were subsequently foreclosed upon after loan payments were not made when due. Stovall admitted that he caused lenders to be defrauded of approximately $2,479,290.
This case is the product of an extensive investigation by the FBI’s Bakersfield Resident Agency, Sacramento Division. To further the prosecution of mortgage fraud cases arising out of the southern half of the Central Valley, in 2009 the U.S. Attorney’s Office and the FBI created the San Joaquin Valley Mortgage Fraud Task Force in Fresno, composed of both federal and local law enforcement agents and prosecutors. Assistant U.S. Attorneys Kirk E. Sherriff and Stanley A. Boone are prosecuting the case.
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