Eastern District of California Blog

Guilty Verdict In Foreclosure Rescue Fraud Case

After a 4-day jury trial, a Fresno jury returned a guilty verdict Friday on all counts in a foreclosure rescue fraud case before Judge O'Neill in United States v. Calzada, No. 1:15-CR-0355-LJO.  The defendant was remanded into custody after the verdict.

Phil Angelides and Ben Wagner Spar over Feds' Goldman Sachs Settlement

In the Sacramento Bee's Forum, Former California State Treasurer Phil Angelides, "No consequences, no justice in Goldman Sachs settlement," and then-EDCA US Attorney Ben Wagner, "Goldman Sachs settlement a significant step," spar over the federal government's Goldman Sachs settlement.

 

Sacramento Prosecutors Involved In $5 Billion Goldman Sachs Settlement

The numbers alone are staggering: $13 billion paid out by JPMorgan Chase to atone for its role in the economic meltdown of 2008, and more than $5 billion to be doled out by Goldman Sachs.

Hundreds of millions of dollars from those banking giants will flow back to the pension funds of California’s state workers and teachers, with millions more directed to help distressed homeowners in Sacramento and 24 other Central Valley counties ravaged by the housing collapse.

Both agreements stem, in large part, from the work of two assistant U.S. attorneys who have spent long hours and weekends poring over tens of millions of financial documents in their offices on the 10th floor of Sacramento’s federal courthouse. 

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The Goldman Sachs settlement includes a $2.385 billion civil penalty, the largest ever levied by federal prosecutors in the Sacramento-based Eastern District of California. Wagner lavished praise on investigators who made it happen.

“I am very pleased that this office, which serves the district that was ravaged by the financial crisis, played a major role in delivering a measure of justice in this matter,” Wagner said. “This was not a case involving a lot of attorneys from Washington that were working on it.

“It really pretty much exclusively was a product of the hard work done by this team and this office.”

At the news conference, Wagner defended the fact that no criminal prosecutions were announced, addressing the issue before being asked about it. He noted that the deal announced Monday allows prosecutors and agents to investigate Goldman Sachs and requires the company to cooperate in any such probe.

“There’s a lot of blame to go around,” Wagner said. “That does not necessarily equate to a scheme by high-level employees of the company. If there is a criminal case to be made, we will make it.”

Wagner said his office is not conducting a criminal probe of Goldman Sachs or any of its employees.

Sac Bee, 4/11/16

14-Year Sentence In Mortgage Fraud Case

A Placer County woman convicted in a multimillion-dollar mortgage fraud scheme has been sentenced to 14 years in prison.

Vera Kuzmenko, 46, of Loomis was sentenced Tuesday by U.S. District Judge John A. Mendez for multiple counts of mail and wire fraud, witness tampering and money laundering associated with her involvement in the scheme that cost financial institutions more than $16 million, according to a U.S. attorney’s office news release.

On Dec. 4, after a 16-day trial in federal court in Sacramento, a jury returned guilty verdicts for Kuzmenko and Rachel Siders, 40, of Roseville. Siders is to be sentenced June 21.

Sac Bee, 3/15/16

Another Mortgage Fraud Jury Trial Starts Up Tomorrow

Jury selection starts up Thursday, 9:00 a.m., in Judge Shubb's courtroom in another mortgage fraud criminal case, United States v. Woods, No. 2:12-CR-0330-WBS.  [Update 4/12/16:  The court declared a mistrial on March 17, with the jury trial to be rescheduled.]

Recent ABA Journal Article Covers EDCA Mortgage Fraud Case

The February 1, 2016 Issue of the ABA Journal has an article entitled, "Will those who led the financial system into crisis ever face charges?"  The piece highlights Prof. Bill Black's testimony during the 2014 EDCA mortgage fraud trial where all four defendants were acquitted.  (I represented one defendant). 

Guilty Verdicts in Sacramento and Fresno

On Tuesday, a jury found four defendants guilty in a Fresno tax refund fraud scheme after a 3 1/2 week trial before Judge Ishii, No. 1:13-CR-362-AWI.  The jury was unable to reach a verdict on a fifth defendant. In Sacramento, another jury found two defendants guilty in a mortgage fraud case before Judge Shubb.  No. 2:12-CR-328-WBS. 

EDCA Court Sentences Straw Buyer Defendants To Probation After Jury Trial

Five defendants convicted in a multimillion-dollar mortgage fraud scheme last May walked into a federal courtroom in Sacramento on Tuesday morning expecting to be sentenced and packed off to years in prison.

With their families in tow, they gathered in the 14th-floor courtroom of U.S. District Judge John A. Mendez facing anywhere from three to 20 years in prison for their part in a scam that prosecutors say allowed them to obtain more than $5 million in home loans during the height of the housing boom that precipitated the economic collapse of 2008. 

Instead, as their attorneys stood in shock, the judge declared that none would go to prison and sentenced them to probation and months of wearing electronic ankle monitors as they return to their daily lives.

“The judge walked out and said, ‘You know, the government’s going to disagree with me, I know that, but this is wrong and none of these people should be going to prison,’ ” defense attorney Mark Reichel said afterward in an interview. “Our jaws just dropped. I was convinced they were all going to prison.”

The U.S. attorney’s office declined to comment Tuesday on the unusual turn of events, which came four years after a federal grand jury indicted nine members of a Russian immigrant family in Sacramento on charges of acting as straw buyers for homes they purchased by using phony income documents to qualify for loans. The five were convicted in May on wire fraud charges after a 12-day trial in a case that generated more than 400 docket entries since the indictment.

The Sacramento region has been called “ground zero” for mortgage fraud crime, and prosecutors in the federal Eastern District of California based in Sacramento have made such cases a priority.

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One veteran Sacramento defense attorney – and former prosecutor in the U.S. attorney’s office – said the judge’s move was unusual, but not unheard of.

“That’s Mendez being Mendez; he’s an independent thinker,” said William Portanova, who said he witnessed a similar incident years ago in the judge’s courtroom when the government was pushing hard for a prison sentence to which the judge objected.

Portanova said federal sentencing guidelines have placed great power in the hands of prosecutors, who can convince judges to hand down sentences that would result in much less time in state prosecutions.

“The federal system has gotten out of control in terms of the sentences being handed down,” he said. “It attempts to result in a standardized system of justice as if justice itself were a McDonald’s cheeseburger.”

Portanova added that Tuesday’s decision by Mendez should not suggest the judge prefers light sentences. Two weeks ago, Mendez sentenced three defendants in a related $16 million mortgage fraud case to sentences of eight, 11 and 19 years, respectively.

Sac Bee, 11/10/15.  

 

Two More Mortgage Fraud Trials Underway

The third United States v. Kuzmenko, No. 2:11-CR-210-JAM, mortgage fraud jury trial started up this week before Judge Mendez on the fourteenth floor of the Sacramento federal courthouse.  For various reasons, the defendants had been severed into three trial groups.  This trial involves the last two defendants, Vera Kuzmenko and Rachel Siders.  It is expected to last a few weeks. 

And in the courtroom right next door, there is another two defendant mortgage fraud trial in its 6th trial day before Judge Shubb.  U.S. v. Dubinsky, No. 2:12-CR-0328-WBS.  The two lead defendants, Volodymyr Dubinsky and Leonid Dubinski, are believed to be fugitives and have not entered appearances in court.

More Mortgage Fraud Prison Sentences

Four people from Sacramento were sentenced to prison Thursday in a Sacramento federal court for their part in a mortgage fraud scam. 9

One of the defendants, Peter Kuzmenko, 37, of West Sacramento, was sentenced to nearly six years in prison, of which two years will be served consecutively to a 19-year sentence he received earlier this week for another mortgage fraud scheme case.

Olga Palamarchuk, 45, of Rancho Cordova, was sentenced to nearly six years; Pyotr Bondaruk, 44, of Sacramento, was sentenced to nearly six years; Vera Zhiry, 35, of Sacramento, was sentenced to three years and one month.

Sac Biz Journal, 10/23/15.