Prison Time for Mortgage Scam

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Good morning. On the fraud front, interesting story in today’s L.A. Times by Christine Hanley about one of the more brazen real estate scams you’ll see:

The scam, run by former Cal State Fullertion baseball star Salvatore ‘Sam’ Favata, at Orange-based National Consumer Mortgage, worked like this: The company persuaded clients to refinance their homes and then use the cash, and other assets, to invest back into another arm of the company, promising investment returns of 30% to 60% a year. Surprise: little of the money was invested.

An SEC investigation revealed that Favata was paying earlier investors with funds from new investors in what is known as a Ponzi scheme; Favata stole an estimated $32 million from more than 200 investors.

Favata, who pleaded guilty to fraud, was sentenced Monday to five years in prison. Maybe his good buddy Steve Garvey -- who was in the courtroom Monday offering moral support -- will visit him.

Photo Credit: www.collegegear.com