24 indicted in mortgage fraud scheme led by gang member

By Greg Moran (Contact) Union-Tribune Staff Writer
12:54 p.m. April 7, 2009

Related documents
•Indictment in mortgage fraud case case (PDF)

SAN DIEGO – Federal prosecutors unsealed a massive indictment Tuesday morning charging 24 people with a mortgage fraud scheme that netted millions of dollars between 2005 and 2008.

In a new low in the implosion of the real estate market, caused in part from bad lending practices, the leader of the group was identified in court papers as a member of a San Diego street gang.

The indictment says ring members recruited straw buyers to overpay for homes that had been languishing on the market. The ring pocketed the overpayment amount and then walked away from the homes several months later, sending them into foreclosure.

The scheme was run out of La Mesa and relied on a network of at least one real estate appraiser who made appraisals that supported the inflated price to secure mortgage loans, an escrow officer and real estate broker. The homes were purchased with 100 percent borrowed money, according to the indictment.

They also “owned, established and utilized real estate businesses and escrow companiesâ€