SAN DIEGO –The Sacramento office of the Federal Bureau of Investigation announced Monday the indictment of 10 people in Southern California for allegedly defrauding lenders of more that $20 million in a wide-ranging real estate scam.

U.S. Attorney Benjamin B. Wagner of the Sacramento office of the Department of Justice, announced the arrest of 10 people and who have been charged with a 56-count indictment with conspiracy to commit bank, mail and wire fraud, and with individual counts of mail fraud. Certain of the defendants were also charged with wire fraud, bank fraud, and conspiracy to launder money.

The indictment was returned Jan. 13 by a federal grand jury in Fresno and unsealed today. The 10 were arrested Sunday and Monday in San Diego, Ventura County, Bakersfield, and Monterey.

Wagner said David Marshall Crisp and Carlyle Lee Cole, two of the arrested people, were owners of Crisp, Cole & Associates, also known as Crisp & Cole Real Estate. They also controlled Tower Lending as an “in-house mortgage broker business.” The others arrested this week worked for one or both of those companies.

“The indictment alleges that, from approximately January 2004 to September 2007, the defendants perpetrated a scheme to defraud mortgage lenders by submitting fraudulent loan applications with material misrepresentations,” including the “borrower’s income, assets, employment status, and intent to use the home as” a primary residence.

The indictment alleges the defendants perpetrated the scheme by “flipping” the homes, that is, by “selling a single home on multiple occasions” to the co-defendants, straw buyers, or others “in order to artificially inflate the prices of the residences.” Wagner said the “defendants typically increased the loan amounts, and used close to 100 percent financing in order to extract the inflated equity amounts from the properties ,on each financing transaction.”

The real estate and lending firm generally brokered the sales and mortgage financing, “generating substantial commissions and fees for the defendants,” Wagner said. “The scheme involved more than $20 million in losses to lenders.”

Wagner said the extensive investigation by the FBI was assisted by the Department of Housing & Urban Development, and the Bakersfield Police Department. The law enforcement action was part of the federal Financial Fraud Enforcement Task Force established by President Barack Obama.

The task force is “working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes.”

Story by Jim Reece This email address is being protected from spambots. You need JavaScript enabled to view it.