FLORIDA MORTGAGE COMPANY OWNER RECEIVES 11 YEAR PRISON SENTENCE FOR ROLE IN $64 MILLION FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, September 24, 2015

Owner of Florida Mortgage Company Sentenced to Over 11 Years in Prison for Orchestrating $64 Million Fraud Scheme

Two Associates Also Sentenced for their Roles in the Conspiracy

The owner of a Florida mortgage company was sentenced today to serve 135 months in prison for orchestrating a $64 million mortgage fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Special Agent in Charge Nadine Gurley of the U.S. Department of Housing and Urban Development Office of Inspector General (HUD-OIG) Atlanta Region made the announcement.

Hector Hernandez, 57, of Miami, Florida, the owner and operator of Great Country Mortgage Bankers (Great Country), a mortgage lender in Miami, was sentenced for conspiracy to commit wire fraud affecting a financial institution.  He was also ordered to pay $64,508,141 in restitution and to forfeit $8,000,000 in illicit profits.

In the same case, a real estate developer for Great Country, Aleida Fontao, 62, of Miami, was sentenced today to serve 41 months in prison, and ordered to pay $7,131,952 in restitution and $400,000 in forfeiture.  An underwriter for Great Country, Olga Hernandez, 59, of Lake Mary, Florida, was sentenced yesterday to serve 51 months in prison and ordered to pay $24,512,755 in restitution.  Hector and Olga Hernandez both pleaded guilty on July 13, 2015, while Fontao pleaded guilty on July 7, 2015.  Hector Hernandez was the last defendant to be sentenced in the case.  All 24 defendants charged in this case, which included loan officers, loan processors and underwriters, were convicted of participating in the scheme.

According to admissions made in connection with the guilty pleas, from at least 2006 and continuing through at least September 2008, Hector Hernandez was the owner and operator of Great Country which specialized in approving Federal Housing Administration (FHA) loans.  The loans were primarily for buyers of condominiums at complexes where Hector Hernandez was a part owner – however, the buyers were unqualified borrowers, due to insufficient income, high levels of debts, and outstanding collections.  Hector Hernandez admitted that his company employed loan officers, loan processors and underwriters, including Olga Hernandez and Fontao, whom he knew approved and submitted false and fraudulent FHA mortgage loan applications and accompanying documents to HUD on behalf of the unqualified borrowers.  These documents included false pay stubs, false verification of employment forms, and fictitious letters from the borrowers.

According to admissions made in connection with the guilty pleas, closing costs were paid on behalf of the unqualified borrowers through an interstate wire transfer of funds.  The borrowers were also paid to purchase the condominium units as an unreported inducement to purchase.  After the loans closed, the loans were sold to financial institutions.  When the unqualified borrowers failed to meet their monthly mortgage obligations, they defaulted on the loans causing losses both to the financial institutions and to HUD which insured the loans.  Hector Hernandez admitted that the loss from the fraudulent conduct was at least $64 million.

This case was investigated by HUD-OIG as participants in the Miami Mortgage Fraud Strike Force.  The case was prosecuted by Senior Litigation Counsel David A. Bybee and Trial Attorneys Mike O’Neill and William Johnston of the Criminal Division’s Fraud Section.

7 INDICTED FOR ROLES IN ALLEGED FLORIDA MORTGAGE FRAUD SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 
Monday, March 31, 2014
Seven Indicted in Florida in Mortgage Scheme

Seven individuals have been indicted in the Southern District of Florida for their alleged participation in a mortgage fraud scheme in the Miami area.

The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Inspector General David A. Montoya of the Department of Housing and Urban Development and Acting Inspector General Michael P. Stephens of the Federal Housing Finance Agency’s Office of the Inspector General.

A 19-count indictment, returned on March 13, 2014, by a federal grand jury and unsealed today, charges Miami-Dade County residents Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez, Marie Mendez, Wilkie Perez and Enrique Angulo with one count of conspiracy to commit wire and bank fraud.   Some of those defendants have also been charged with bank fraud and wire fraud.   Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez and Marie Mendez were taken into custody today and made their initial appearances before United States Magistrate Judge Jonathan Goodman in Miami, while the other three defendants remain at large.

As alleged in the indictment, Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez and Marie Mendez owned or controlled various real estate properties in the Miami area.   They enlisted mortgage brokers and other individuals, including Perez and Angulo, to recruit straw buyers to act as qualifying mortgage applicants to fraudulently purchase condominiums in the properties.   The defendants prepared and caused to be prepared loan documents containing false statements and representations relating to the buyers’ income, assets and other information necessary to enable lenders to assess the buyers’ qualifications to borrow money, which induced the lenders to make loans to finance the condominiums.   Luis Michael Mendez and Marie Mendez are alleged to have submitted their own fraudulent loan applications for two condominiums, and they, as well as Luis Mendez and Stavroula Mendez, advanced the buyers cash to close the transactions.

After the loans were funded, the defendants allegedly caused fraudulent payments to be made from the loan proceeds to pay kickbacks through shell companies to the brokers, recruiters and straw buyers, as well as to pay the mortgages to conceal the conspiracy.   Eventually, the conspirators were unable to make mortgage payments, causing many of the condominium units to go into foreclosure and leading to losses by the lenders.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case is being investigated by HUD-OIG and FHFA-OIG.  The case is being prosecuted by Trial Attorneys Gary A. Winters and Brian Young of the Criminal Division’s Fraud Section.

MEDICAL DIRECTOR AND 6 THERAPISTS ARRESTED FOR ALLEGED ROLES IN $63 MILLION HEALTH CARE FRAUD SCHEME

FROM:  U.S. DEPARTMENT OF JUSTICE
Tuesday, July 16, 2013

Florida Health Care Medical Director and Six Therapists Arrested for Alleged Roles in $63 Million Fraud Scheme

The former medical director at defunct health provider Health Care Solutions Network (HCSN) and six therapists were arrested today, accused of conspiring to fraudulently bill Medicare and Florida Medicaid more than $63 million.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer; Special Agent in Charge Michael B. Steinbach of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office, made the announcement after the indictment was unsealed following the arrests.

The former HCSN medical director, Roger Rousseau, 71, of Miami, was indicted on July 11, 2013, and charged with conspiracy to commit health care fraud and two counts of health care fraud. In addition, six therapists from Miami – Doris Crabtree, 61; Angela Salafia, 65; Liliana Marks, 46; Ruben Busquets, 49; Alina Fonts, 47; and Blanca Ruiz, 59 – were also charged in the same indictment with conspiracy to commit health care fraud. Fonts was also charged with two counts of health care fraud, and Crabtree, Salafia, Marks and Busquets were each charged with two counts of making false statements related to health care matters. The indictment also seeks forfeiture of proceeds from the alleged healthcare fraud offenses.

According to the indictment, HCSN purported to provide intensive mental health treatment to Medicare and Medicaid beneficiaries in Miami and Hendersonville, N.C., from approximately 2004 through 2011 for purported mental health services that were not medically necessary and often never provided.  The indictment also alleges that in Miami, HCSN paid kickbacks to assisted living facility owners and operators who, in exchange, referred beneficiaries to HCSN.  In total, HCSN is alleged to have fraudulently billed Medicare and Medicaid approximately $63.7 million, from which HCSN allegedly received payments totaling approximately $28 million.

Rousseau served as the medical director for HCSN in Florida, and the indictment alleges that he routinely signed what he knew to be fabricated and altered medical records without ever reviewing the materials, and, in most instances, without ever meeting with the patient.  The indictment also alleges that Crabtree, Salafia, Marks, Busquets, Fonts and Ruiz fabricated HCSN medical records to support false and fraudulent claims for partial hospitalization program services that were not medically necessary and were not provided.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Southern District of Florida. The case is being prosecuted by Fraud Section Trial Attorney Allan J. Medina.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.