Crime - Sacto 911

Ninth defendant sentenced in Elk Grove-based mortgage fraud scheme

An Oakland woman on Tuesday became the ninth person sentenced in a large-scale mortgage fraud scheme operated out of Elk Grove.

U.S. District Judge John A. Mendez sentenced Dana Faulkner, 48, to one year in prison for conspiring to commit mail fraud and make false statements in loan applications, according to a U.S. attorney’s office news release. She was ordered to pay more than $3 million in restitution to defrauded financial institutions.

Faulkner was involved in a mortgage fraud scheme operated out of the Elk Grove headquarters of Liberty Real Estate and Investment Co. and Liberty Mortgage Co., federal officials said. Hoda Samuel, the owner and principal operator of both companies, was convicted after a jury trial in January 2013 and is serving a 10-year prison sentence.

According to Faulkner’s plea agreement and evidence presented at Samuel’s trial, in 2006 and 2007 the defendants made misrepresentations to various financial institutions to persuade them to finance the purchase of residential properties. Loan applications prepared by Liberty Mortgage Co. misrepresented borrowers’ abilities to pay back loans by overstating or falsifying employment, income and assets.

In addition, the defendants drafted purchase contracts making offers significantly above what the sellers were asking for their properties. The excess amounts were paid back to the purchasers at escrow, disguised as payments for fictional remodeling and repairs to the properties, authorities said. In many cases, the kickbacks were falsely described as payments to make the properties compliant with the Americans with Disabilities Act.

Although she was unlicensed, Faulkner acted as both a real estate agent and loan officer during her employment with Liberty, authorities said. She recruited people to serve as buyers, sometimes of more than one property. She convinced the buyers that they could qualify for home loans and told them they would receive payments at the close of the transactions to help cover mortgage payments and pay off other bills. Faulkner filled out fraudulent loan applications and helped arrange for the disguised kickback payments to be made to her clients, authorities said.

Almost all of the 30 properties listed in the indictment went into foreclosure, resulting in a loss of more than $5 million to financial institutions, authorities said.

Call The Bee’s Cathy Locke, (916) 321-5287.

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