Gang member accused of leading mortgage fraud scheme
Two dozen people have been charged with racketeering in connection with an allegedly fraudulent mortgage scheme run by a street gang member, according to an indictment unsealed Tuesday in federal court in San Diego.
The group allegedly profited from loans arranged for amounts in excess of the price of the homes, among other tactics. The homes went into foreclosure soon after they were sold, according to the indictment.
The alleged mastermind was Darnell Bell, 38, a member of a street gang long known to law enforcement for violence and drug sales. Bell, in prison since April 2008 on a cocaine-distribution conviction, was arraigned in federal court Tuesday on the racketeering charge.
From 2005 to 2008, the scheme involved the sale of 220 homes and mortgages worth more than $100 million issued by 70 lenders, U.S. Atty. Karen Hewitt said at a news conference.
Keith Slotter, FBI special agent in charge of the San Diego office, said the case showed that gang members had gone “from dealing dope on the street . . . to delving into this much more sophisticated crime.”
More than $9 million from “illegal activities” was deposited into a bank account controlled by Bell, the indictment said. Bell used his status as a gang member to recruit phony buyers and to “maintain discipline” among the co-conspirators, it said. FBI and IRS agents arrested the 23 alleged co-conspirators Tuesday, Hewitt said.
The 24 defendants face charges including conspiracy, bank and wire fraud, money laundering and racketeering.
The racketeering charge could lead to much tougher sentences than might be expected in other real estate fraud cases. “That’s never been done before in a real estate fraud case,” Slotter said.
The homes were mostly in the cities of Spring Valley and La Mesa and the San Diego neighborhood of Encanto. According to the indictment, Bell and others would look for properties that had been on the market for several months.
Among Bell’s alleged co-conspirators were people in the real estate, title insurance, appraisal and notary public businesses.
FBI agents became concerned when scanning so-called suspicious activity reports filed by lenders.
One tipoff, Hewitt said, was that all the loan documents showed that additional funds were necessary to make the homes accessible to the disabled. The work, she said, was to be done by Bell Construction, which proved to be a dummy company created by Bell.