U.S. Attorney Benjamin B. Wagner announced that seven people were charged with mail fraud, wire fraud, and making false statements in connection with a mortgage fraud scheme involving the purchase of at least 23 homes. On March 28, 2013, a federal grand jury returned an indictment charging Aleksandr Kovalev of Rocklin, Calif.; Arthur Chang Menefee of Stockton, Calif.; Adil Qayyum of Rosele, Ill.; Jannice Riddick, aka Jannice Frazier of Sacramento, Calif.; Florence Francisco of Houston, Texas; Elsie Pamela Fuller of Richmond, Calif.; and Leona Yeargin of San Pablo, Calif. Fuller and Yeargin were also charged with aggravated identity theft for using stolen identification to purchase a home as part of the mortgage fraud scheme.
According to the indictment, Kovalev developed, built, and sold property in Sacramento. In a declining real estate market, Kovalev; Menefee, a licensed real estate salesperson; Riddick, a licensed real estate salesperson; and Francisco, a licensed mortgage broker, recruited others with sufficient credit scores to act as straw buyers for residential properties. Kovalev, through Menefee, Riddick, Francisco, and Qayyum, made cash incentive payments to the straw buyers. These payments were concealed from the lenders. In order to qualify for the mortgage loans, Menefee, Riddick, Francisco, and Fuller also allegedly prepared fraudulent loan applications to lenders, falsely stating the straw buyers’ incomes, assets, and intents to occupy the homes as their primary residences. Further, Yeargin and Fuller used the identification of another individual without that individual’s knowledge or authorization to purchase a property from Kovalev as part of the mortgage fraud scheme. Additionally, Menefee and Qayyum participated in a similar mortgage fraud scheme with respect to properties sold by individuals other than Kovalev.
This case is the product of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the Sacramento County District Attorney’s Office. Assistant United States Attorney Todd A. Pickles is prosecuting the case.
If convicted of wire or mail fraud or of making false statements on a loan application, the defendants Kovalev, Menefee, Qayyum, Riddick, and Francisco face a maximum penalty of 30 years in prison and a $1 million fine. Fuller and Yeargin face a maximum penalty of 20 years in prison and a $250,000 fine for the charges of wire and mail fraud and a consecutive two-year sentence for the aggravated identity theft counts. Any sentences, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants.