Loomis is further charged in a second mortgage fraud scheme related to acquiring approximately 200 properties in California, Arizona, Florida, and elsewhere, for members of Loomis Wealth Solutions to buy. The indictment charges Loomis and five others with falsifying the sales prices on homes from late 2007 through August 2008, causing approximately $10 million in losses.
According to the indictment, Loomis used Michael Llamas, 27, of Tracy, and Peter Woodard, 54, Ventura, to approach builders of new homes and developers of condominiums to purchase investment homes in bulk at substantial price discounts ranging from 30 to 50 percent off under the terms of an “option contract.” Llamas and Woodard had no financial ability and no intention of purchasing the homes; rather, the homes were to be sold to Loomis’s nominee members at full price. Loomis then arranged for his mortgage company, Nationwide Lending Group (NLG), to sell mortgage loans for the nominees with banks and other lenders at the full price of the homes without disclosing the large price discount. Lenders were thereby misled into advancing loans that far exceeded their lending guidelines. Also, the large option contract price discount was used to conceal the lack of required down payments by nominee buyers. Loomis, Llamas, and Woodard split what remained of the price discount after subtraction of the fake down payments and certain fees.
Joseph A. Gekko, 43, of Yorba Linda, controlled an escrow company called Lender Services Direct (LSD), in Mission Viejo, Calif., and Tulsa, Okla. He is accused of preparing Form HUD-1 Final Settlement Statements to reflect the false sales price and to indicate down payments had been made by the nominee buyers when there were no down payments. According to the indictment, Gekko concealed the lack of down payments in a series of sham financial transactions whereby, before he closed escrow, he wired large amounts of lender money to entities associated with Loomis, Llamas, and Woodard. According to court documents Llamas and Woodard induced at least one home builder to record false liens in favor of their entity, Cobalt One LLC, for millions of dollars in bogus loans to cover up large payments from LSD to Cobalt One.
In furtherance of this second mortgage fraud scheme, Loomis and others also charged with causing NLG to provide fraudulent loan applications to lenders on behalf of nominees by means of inflating incomes and falsifying Naras Fund balances on the asset portion of the loan forms. Dawn C. Powers, 42, of Lincoln, an employee of LWS who reported directly to Loomis, is charged with providing false verifications of Naras Fund deposits to lenders in connection with the loans for nominees. Former LWS and NLG employee Christopher Jared Warren, 30, formerly of Sacramento and currently in federal custody at the Sacramento County Jail, operated NLG on a daily basis from late 2007 through part of 2008. Warren pleaded guilty to the loan fraud aspect of the scheme on January 10, 2012. Warren was sentenced to more than 14 years in prison by U.S. District Court Judge John A. Mendez on September 11, 2012 for his role in the fraud.
“This large fraud scheme is the type of case that the President’s Financial Fraud Enforcement Task Force was designed to combat,” said U.S. Attorney Wagner. “In this indictment, the grand jury charged the people responsible for running a mortgage lending company and an escrow company in a fraud scheme that spanned many states and cost lenders and investors tens of millions in losses. With the sentencing of Mr. Warren on Tuesday and these charges unsealed today, we are bringing to justice some of those who are responsible for the mortgage crisis in this district and elsewhere.”
9/06/2012......................... Full docket text for document 1: INDICTMENT as to Lee Loomis (1) counts 1-50, John Hagener (2) counts 1-23, Darren Fehst (3) counts 24-26, Michael Llamas (4) counts 27-50, Peter Woodard (5) counts 27-50, Joseph A. Gekko (6) counts 27-50, Dawn C. Powers (7) counts 27-50. (Becknal, R).
Full docket text for document 49: MINUTES (Text Only) for proceedings held before Magistrate Judge Gregory G. Hollows: Further Proceeding re Terms of Bail as to Michael Llamas held on 10/23/2012. The defendant bail is clarified in court. The defendant is released on $300,000.00 bail of which 20,000.00 is secured by the equity in the parent's home. $100,000.00 will be placed with the Clerk of Court in the form of a Certified Check. The defendant's brother will sign an unsecured bond for the remainder ($180,000.00). Government Counsel Paul Hemesath and Todd Leras present. Defense Counsel Tom Johnson present. Custody Status: Non Custody. Court Reporter/CD Number: 1 of 1. (Callen, V)
Full docket text: RECEIPT #CAED200048532 for $100,000.00, Unsecured Bond by Phytosphere Systems, LLC., as to Michael Llamas. (Reader, L) Modified on 11/9/2012 (Reader, L).
Full docket text for document 61: STIPULATION and ORDER [60] as to defendants Lee Loomis, John Hagener, Michael Llamas, and Dawn C. Powers, signed by Judge John A. Mendez on 11/13/12: The Status Conference is CONTINUED to 1/8/2013 at 09:45 AM in Courtroom 6 (JAM) before Judge John A. Mendez. Excludable started as to Lee Loomis, John Hagener, Michael Llamas, and Dawn C. Powers: XT2, XT4 Start: 11/13/12, Stop: 1/8/13. (Kastilahn, A)
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