Owners indicted in $20M mortgage fraud case

July 28, 2008 11:57:52 AM PDT
Four owners of residential care homes were arrested today after being indicted on charges stemming from an alleged far-reaching mortgage loan fraud scheme, the U.S. Attorney's office announced.

Two of the owners also have been charged with income tax evasion and harboring illegal aliens, according to prosecutors.

The indictment by a federal grand jury in Oakland alleges that between December 2002 and January 2007, Edith Nelson, Ronald Nelson, Nelda Ascuncion and Cristeta Lagarejos secured through straw buyers more than 60 loans totaling more than $20 million in loan proceeds based on false and fraudulent representations.

The U.S. Attorney's office alleges that the owners fraudulently obtained mortgage proceeds from financial institutions through straw buyers to buy residential care home facilities for the elderly and other properties controlled by Edith and Ronald Nelson.

Prosecutors say that as part of this scheme, the straw buyers were told that the properties would be purchased under their names and that the properties would be sold after about a year.

According to the U.S. Attorney's office, the mortgage loan applications for the straw buyers were prepared by Nelda Asuncion of Realty World Pacific West and Cristeta Lagarejos of Legacy Financing, based on fraudulent representations, including overstated gross monthly income.

Prosecutors say the straw buyers were told that all of the expenses associated with the property, including the mortgage payments, property taxes, and capital gains taxes would be paid by Edith Nelson.

The U.S. Attorney's office alleges that in exchange for their actions, Edith Nelson generally paid the straw buyers $5,000 or $10,000 for each purchase and, at times, $5,000 or $10,000 when the properties were sold.

Prosecutors say the defendants caused the loan proceeds obtained by straw buyers to be wired or deposited into escrow accounts at the title companies under false and fraudulent pretenses for the purchase of the properties.

They say that the defendants received the proceeds of the property sales directly from the title companies or from the straw sellers whose bank accounts received the proceeds from the title companies.

The U.S. Attorney's office says Edith and Ronald Nelson are also charged with harboring illegal aliens.

According to search warrant affidavits, the Nelsons hired the caregivers, mostly Filipinos who were illegally present in the U.S., for the numerous residential care home facilities for the elderly purchased through straw buyers, but which the Nelsons controlled.

Prosecutors allege that the caregivers worked long hours at less than minimum wage and often lived in the same facilities where they worked.

The four defendants made their initial appearances in federal court in Oakland today.

Edith Nelson was released on $1 million bond and Ronald Nelson, Nelda Asuncion and Cristeta Lagarejos were released on $750,000 bond each.

The defendants are scheduled to return to federal court in Oakland on Aug. 5.


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