Rhode Island Man Found Guilty in $3.5 Million Straw-Borrowing Scheme
Miguel Valerio of Providence, R.I., a mortgage loan processor with National City Mortgage Company has pled guilty in U.S. District Court in Providence, R.I., to his participation in a “straw-borrowing” scheme that netted more than $3.5 million in fraudulently obtained mortgages on 13 properties in five Rhode Island communities, all of which were eventually foreclosed upon. U.S. Attorney Peter F. Neronha announced the guilty plea of Valerio to two counts of conspiracy to commit bank and wire fraud. Valerio and two others, Juan Carlos Hernandez of West Warwick, R.I., a loan officer with National City Mortgage Company; and James D. Levitt of Pawtucket, R.I., a former real estate attorney, were named in a 13-count federal indictment returned on May 25, 2011. Valerio admitted his participation in schemes in which he, Hernandez and Levitt conspired to recruit and pay “straw-purchasers” to purchase properties in Cranston, Central Falls, Coventry, Pawtucket, and Providence that the buyers would not normally qualify to purchase. Valerio admitted that he and Hernandez formed a company called Latin American Investments. The purported purpose of the company was to oversee rental properties. However, the rental properties were primarily properties for which the co-conspirators secured straw buyers to apply for mortgages or which were bought in Valerio’s name or in the name of his ex-wife, based upon false and fraudulent loan applications. Valerio admitted that the intent of the scheme was to take control of the properties, collect rent, and then sell or “flip” them within a short period of time, dividing the profits. Valerio faces up to five years’ imprisonment and a $250,000 fine on each count of conspiracy to commit bank and wire fraud when he is sentenced by U.S. District Court Judge William E. Smith on March 6, 2012. Hernandez pleaded guilty in October 2011 to seven counts of bank fraud, four counts of wire fraud and two counts of conspiracy. He is scheduled to be sentenced on January 20, 2012. Levitt is awaiting trial on the 13-count indictment and a separate eight-count indictment alleging three counts of bank fraud, three counts of wire fraud and two counts of tax fraud in connection with mortgage transactions in Providence separate from the conspiracies outlined in the indictment charging Levitt, Hernandez and Valerio.