This is the second of an occasional series of stories on the Real Estate Fraud Advisory Board and the Orange County District Attorney's fraud unit.
When Kathy Chen purchased 35 properties around Orange County using stolen identities and then intentionally defaulted on loans in order to steal the loan money, it must have seemed like a bright idea.
It must have also seen like an opportune time, seeing as it was only a few years ago, during the heart of the real estate downturn. Banks were overloaded with foreclosures and toiling to fix their own financial troubles, and defaulting was anything but uncommon.
But Chen, a 49-year-old real estate broker, was caught and convicted of conspiring with her boyfriend and his brother to commit $17.5 million in real estate fraud and found guilty by a jury of 136 felony counts, including one count of conspiracy, 47 counts of grand theft, one count of attempted grand theft, 37 counts of forgery, 27 counts of recording false documents, 15 counts of identity theft, one count of elder financial exploitation, four counts of forging an official seal, and three counts of filing false tax returns, according to the O.C. district attorney's office.
Actually, her scam was not so original, and little did she know that Orange County has a team of real estate experts that advise the Orange County district attorney on such potential scams.
Elizabeth Henderson, an assistant district attorney and head of the major fraud unit in the Orange County district attorney's office, has behind her the Real Estate Fraud Advisory Board.
Henderson and the board meet roughly every three months at the D.A.'s office to talk about new scams, and how to better catch perpetrators of real estate-related fraud. There are roughly 20 people on the board, which is organized by the D.A.'s office.
The D.A.'s real estate fraud unit, which has two attorneys and three investigators who work full time in the area of real estate fraud, has 37 active cases in which charges have been filed. Since it was launched in 2009, the unit has amassed 49 felony convictions, many of which have received assistance or real estate expertise from the advisory board.
"What we're doing in Orange County is not unique," said Wally Malesh, a member of the task force. "Many other counties have put together other task forces."
But Malesh, with Keller Williams Realty in Mission Viejo, and his fellow task force members say the task force is important to protect the reputation of Orange County area Realtors by ferreting out bad seeds, which tend to emerge when times are tough.
"Any time the economy gets tough is when the bad guys come out," he added.
For Henderson, it's pretty much all about putting the bad guys behind bars.
"People are getting some significant jail time," she said, noting the work with the task force and her unit has led to convictions that resulted in sentences in excess of 60 years.
"We've received more than 400 referrals in two years," she said of the tips her offices have gotten from the real estate community.
Mark Alan Helsing, 53, a broker for "hard money lenders" was sentenced last December to 15 years in state prison and three years of formal probation for stealing $6.9 million from investors in a Ponzi and real estate fraud scheme.
A "hard money lender" is a private investor who provides money to borrowers looking for funds from non-bank lenders.
Helsing, of Tustin, pleaded guilty on Oct. 3, 2011, to 55 felony counts of grand theft, seven felony counts of filing false recorded documents, six felony counts of elder financial exploitation, and sentencing enhancements for white collar crime more than $500,000 and excessive taking more than $1 million and $1.3 million, according to the O.C. district attorney's office.
Between May 2004 and June 2007, Helsing defrauded about a dozen people in a Ponzi and real estate fraud scheme, operating as a broker for "hard money lenders" through his four Orange County-based businesses, including Sea View Investments, HLHS Financial Services Inc., Foothill Realty and Sea View Mortgage.
He stole from his private investors, keeping the money they lent for borrowers and not funding the loans as promised.
Helsing supplied investors with bogus interest payments by taking small sums from their initial investment and providing them with falsified and forged documents to prevent them from discovering that the loans had not been repaid. Helsing embezzled the money and failed to return it the investors' initial principal.
Malesh said the main function of the task force is to give the D.A "street information."
"Having a close working relationship with law enforcement is a critical part of battling fraud," he said.
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