Pair Plead Not Guilty in Home Loan Scam

Prosecutors said the scam worked like this:

The suspects located homeowners whose loans were in default and persuaded them that they could avoid foreclosure with a short-term loan to cover their debts. The victims were told that their homes would be refinanced by “co-signers” with good credit.

With access to the deed, the suspects took out loans against the property and eventually pocketed the majority of the proceeds, robbing homeowners of their equity by increasing their debt and saddling lenders with bad loans.

This type of sham transaction, which was uncovered last month, has become increasingly common and is indicative of a boom in real estate fraud throughout California and the nation, authorities said.

On Monday, Martha Rodriguez, 33, and Edward Seung Ok, 39, pleaded not guilty in U.S. District Court to 10 counts of mail fraud in connection with the scheme that bilked dozens of Los Angeles and Orange County homeowners and lenders out of $8 million.

Ok’s lawyer, Roger J. Rosen, said his client did not commit criminal acts.

“We certainly take a different view of the allegations presented in the indictment; in fact, our view is 180 degrees different,” Rosen said.

He said federal prosecutors “have laid out their theory, but we have our theory. We deny he made any false representation to these folks.”

Rodriguez’s attorney could not be reached for comment.

According to the 23-page indictment filed with the court in Los Angeles, Rodriguez started the real estate company in Downey in 2003 and later moved to Seal Beach.

Ok was her partner, and the two employed varying company names, including Silvernet Properties and Bellasi Escrow Corp.

Prosecutors said the scam often worked as follows: Rodriguez and Ok perused public records and an electronic database of foreclosure sales to find the names of potential victims -- people defaulting on their home loans.

Ok visited these debtors and told them that Rodriguez’s company could help them avoid foreclosure.

Interested homeowners met with Rodriguez, who posed as the firm’s financial manager, and heard her sales pitch.

She told them she could solve their difficulties by floating them a short-term loan to cover their debts until they could refinance their home loan.

This could be done, she told them, provided an investor or co-signer with good credit signed on.

After that came the signing of documents -- loan applications, trust deeds and grant deeds.

There was no danger of losing title to one’s home, Rodriguez assured her victims: The deed would be held in escrow or returned after six months.

“They were very easy to talk to and friendly,” said FBI Special Agent Christopher Thomas, an investigator on the case. “They were people who you wouldn’t otherwise assume would defraud you.”

But once the documents were signed, prosecutors say, the pair started draining cash from the victims’ properties.

They allegedly employed straw buyers, paying them up to $5,000, then filed phony loan applications. The victims got a small share of the proceeds -- from a few thousand dollars to $70,000 -- but Rodriguez and Ok pocketed most of the money, stripping the homeowners of their equity while also cheating lenders, prosecutors said.

Dozens of homeowners caught up in the scheme soon found themselves saddled with payments far greater than those upon which they had defaulted, and “their homes are now in someone’s else’s name,” Assistant U.S. Atty. Rebecca Lonergan said.

Some of the victims were immigrants, some were elderly, but “the one thread in common between them is that they were desperate,” Lonergan said.

Rodriguez was arrested at her Downey residence Wednesday -- the same day that Ok was taken into custody at a probation office in Arcadia after an FBI investigation. A trial is scheduled for Jan. 24.

Neither Rodriguez nor Ok was licensed in the fields they professed to practice.

Both were in trouble with the law:

Ok was on probation for a felony grand theft conviction from 2003, Lonergan said, and Rodriguez had pleaded guilty in federal court last year to filing more than two dozen phony loan applications for nearly $3 million from the U.S. Department of Housing and Urban Development.

State officials said the case underscores the need for consumers to check that real estate agents and mortgage brokers are properly licensed by checking their status with the California Department of Real Estate.

But, “the bottom line,” said Laura Eimiller, spokeswoman for the FBI, “is never allow, under any circumstances, your property to be transferred to another person’s name unless you intend to sell it to them outright.”