Sacramento, California - Wednesday, a federal jury found two men guilty in a bank fraud scheme that sought to fraudulently eliminate home mortgages and then profit on the subsequent home sales, U.S. Attorney Phillip A. Talbert announced.
George B. Larsen, 56, formerly of San Rafael, was found guilty of conspiracy and four counts of bank fraud. Larry Todt, 65, formerly of Malibu, was found guilty of conspiracy and one count of bank fraud.
According to court documents, between April 22, 2010, and November 18, 2011, Larsen and Todt were members of a conspiracy that ran a “mortgage elimination program” purporting to help distressed homeowners avoid foreclosure. The conspirators fraudulently altered the chain of title on residential properties, sold the properties, and received the sales proceeds.
As a requirement for participation in the “mortgage elimination program,” the conspirators enrolled homeowners as members in a Nevada City-based church named Shon-te-East-a, Walks With Spirit, or its successor entity Pillow Foundation. The conspirators indicated to the homeowners these entities would offer protection against the banks.
Larsen and Todt each ran branches of the mortgage elimination program, recruiting homeowners into the scheme, marshalling the necessary recorded documents, and guiding the homes through sale. Once the homeowner enrolled with Shon-te-East-a or Pillow Foundation, Larsen and Todt would have a sham deed of trust created and recorded, giving the impression that the homeowner had refinanced the mortgage loan with a new lender. In reality, the new lender was a fake entity controlled by the conspirators, and the homeowner owed no money to the purported new lender.
The next step in the process was also a recorded document. The conspirators caused a fake deed of reconveyance to be recorded, giving the appearance that the true mortgage loan had been discharged and that the true lienholder no longer had a security interest in the home.
With title appearing to be clear, the conspirators caused the sale of the home, with the proceeds split between the co-conspirators and the homeowners.
In total, 37 properties were sold through the Shon-te-East-a conspiracy. The conspirators recorded fraudulent documents on an additional approximately 100 homes, but were unable to sell these before the scheme unraveled.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Audrey B. Hemesath and Todd A. Pickles are prosecuting the case.
Three other co-defendants have previously entered guilty pleas. On April 21, 2017, Remus A. Kirkpatrick, formerly of Oceanside, pleaded guilty to one count of falsely making writings of lending associations. On May 26, 2017, Michael Romano, of Benicia, pleaded guilty to conspiracy, and on July 14, 2017, Laura Pezzi, of Roseville, pleaded guilty to falsely making writings of lending associations. They are scheduled to be sentenced on February 23, 2018. Co-defendants John Michael DiChiara, of Penn Valley, and James Castle, of Santa Rosa, are still awaiting trial. The charges against DiChiara and Castle are only allegations: both defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.
In related cases, on September 4, 2015, Tisha Trites and Todd Smith, both of San Diego, pleaded guilty to related charges before U.S. District Judge Garland E. Burrell, Jr. They are scheduled to be sentenced on February 9, 2018.
Larsen and Todt are scheduled to be sentenced by U.S. District Judge Garland E. Burrell, Jr. on March 16, 2018, at which time they each face a maximum penalty of five years in prison and a $250,000 fine. The maximum penalty for bank fraud is 30 years and a $1 million fine. The actual sentences, however, will 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.