California Criminal Defense Blog

The Los Angeles District Attorney’s Office charged eight people with over 76 counts of California real estate fraud. The scam, which generated $13 million in profit, involved more than 20 properties. Charges for these crimes include grand theft, forgery, perjury and failure to file income tax returns. Many of these charges arise from involvement with California “straw buyer” schemes.

California “straw buyer” schemes involve individuals…known as straw buyers…who knowingly agree to purchase or acquire property for someone who is personally unable to complete the transaction. And while this may not seem like a serious offense, it constitutes fraud.

In fact, with respect to this case, the network of straw buyers obtained fraudulent financing for 23 properties, each ranging from $500,000 to $700,000. Eight financial institutions were defrauded as a result of these straw buyer schemes.

If convicted of these offenses, the “orchestrator” of the scam faces 72 years in the California state prison. Other people involved in processing these fraudulent straw buyer transactions face similar sentences…one faces 65 years in prison and another faces 70 years.

Kathy Chen, an Orange County real estate broker, was sentenced last week to 68 years in California state prison for committing $17.5 million worth of real estate and mortgage fraud between 2005 and 2007. Chen’s charges of California real estate and mortgage fraud included 136 felony counts involving allegations of conspiracy, grand theft and forgery.

Chen, her boyfriend and his brother…who are believed to be hiding in Puerto Vallarta, Mexico…conspired to commit this fraud by using stolen identities to purchase 35 properties where they would intentionally default on the loans and ultimately collect more than $17 million in proceeds.

California’s laws regarding mortgage and real estate fraud are far reaching. Penalties include substantial fines (that often include paying back victim restitution), lengthy prison sentences, and…if you are a state licensed real estate agent or broker…the potential (and probable) loss of your professional license.