Monday, June 20, 2011

A Case Of Actual Mortgage Fraud

For the benefit of the special prosecutor in Charlie White's case who seems to have a creative imagination of what constitutes mortgage fraud, I point to a case of a condo-flipping transaction involving federally-financed affordable housing dollars and a congressman's daughter in Chicago as Exhibit A. From the Sun-Times:

In 2008, a 25-year-old man named Volodymyr Kuchmiyov — a Ukrainian living in Chicago on a student visa — took out two mortgages totaling $675,000 and bought a couple of brand-new condos in a building on the city’s Northwest Side.
Now, Kuchmiyov is enmeshed in a mortgage-fraud case that federal authorities brought after a Chicago Sun-Times investigation last year revealed that a Chicago congressman’s daughter bought an “affordable housing” unit in the same development — even though she and her husband were making more than $90,000 a year. She then flipped the condo at a profit of 55 percent — after owning it for 14 months.
According to the FBI, Kuchmiyov was able to qualify for his bank loans by lying about his income, falsely claiming he was a U.S. citizen and failing to disclose his ownership in both properties.
Kuchmiyov, now 28, was arrested last Nov. 18. He is expected to be indicted this summer as part of a broader federal investigation of mortgage fraud, according to court records and interviews.
Kuchmiyov bought the two condos in a four-unit development built in Humboldt Park by a man named Roman Popovych, who got the zoning change he needed to build the project by agreeing to set aside one of the condos in the complex as an “affordable” unit that would be sold at a deep discount. That was a requirement set by then-Ald. Billy Ocasio (26th), who, as the local alderman, wielded great authority over the zoning change Popovych needed.
Popovych got the zoning change and eventually sold the discount-priced condo to Omaira Figueroa, the daughter of Ocasio’s political mentor, U.S. Rep. Luis V. Gutierrez (D-Ill.).
Figueroa bought the two-bedroom, two-bath condo for $155,000. She took out a $140,000 loan, at 4.75 percent interest, from her parents — the congressman and his wife — in June 2008 to pay for it.
Little over a year later, Figueroa sold the condo for $239,900 — $84,900 more than she’d paid to buy it.
The 55 percent profit that Gutierrez’s daughter turned by flipping the condo was one of a handful of affordable-housing deals uncovered by the Sun-Times that city officials said appeared to be not in line with the aim of the program. The city’s housing department asked city Inspector General Joseph Ferguson to investigate the deals, asserting that affordable housing should be reserved for “moderate-income” buyers. When Figueroa bought the condo, she and her husband were making more than $93,000 a year from their government jobs — she with the state, he at the city Aviation Department.
Figueroa, Gutierrez and Ocasio haven’t been charged with any wrongdoing. The only person involved in the condo development at 1834 N. Kedzie who’s accused of any crime is Kuchmiyov.
The FBI and U.S. attorney’s office in Chicago declined to comment on the case, as did Ferguson’s office . . .

Kuchmiyov appears to have had ties to Roman Popovych beyond buying the two condos from him, according to government and court records and Kuchmiyov’s lawyer, DiNatale, who says it’s his understanding that his client once worked for Roman Popovych’s development company, which is called V.P. Interlink.

“I believe he worked there some time back,” DiNatale says, adding that, at the time, “He was going to some business college, trying to learn real estate and investment.”

Also, Kuchmiyov, who is a licensed notary public, notarized documents regarding a property transfer in June 2010 between V.P. Interlink and Bogdan Popovych, who’s listed in state records as an employee of V.P. Interlink.

Gutierrez and Ocasio have both said that the sale of the discount-priced condo to Figueroa was properly handled.

Six months before Gutierrez’s daughter bought the condo, his congressional campaign fund received a $1,000 contribution from Roman Popovych, records show.

Ocasio’s aldermanic campaign fund got $13,500 in contributions between 2004 and 2009 from Roman Popovych and V.P. Interlink.

Ocasio left the Chicago City Council in 2009 to take a $125,000-a-year state job as a senior adviser to Gov. Pat Quinn on social justice issues. He left that job last month for another post in state government, as the $110,000-a-year director of community affairs for the Illinois Housing Development Authority, which finances affordable-housing projects.
Ocasio says he has never met Kuchmiyov or spoken with Popovych since last year’s Sun-Times reports. And he says federal authorities haven’t contacted him about the condo development.

Gutierrez’s press secretary, Douglas Rivlin, says “neither the congressman nor anyone in his family has been contacted regarding” 1834 N. Kedzie.
Yep, the Chicago media is heads and shoulders above the Indianapolis news media when it comes to uncovering fraud being carried out daily by elected officials to line their own pockets. It actually requires investigative journalism work, something that is foreign to the many of the media in this town, particularly those who work for the Indianapolis Star. According to the Star's executive editor, Dennis Ryerson, there is no such thing as Pay To Play much to the delight of the political insiders who are becoming multi-millionaires from insider deals financed with your tax dollars.


Paul K. Ogden said...

This is one thing about the White persecution that burns my but. For years I have been screaming at someone to prosecute mortgage fraud and virtually no prosecutor will touch it. I've been talking about the failure of the AG to civilly go after the players in mortgage fraud they regulate, especially the appraisers.

So then finally they target mortgage fraud with Charlie White and all it is is a political prosecution with no foundation for the mortgage fraud case. The mortgage lender, the so-called victim, hasn't even complained. The occupancy provision, the basis of the fraud charge, is based solely on intent to occupy at the time he signed the documents. That's all he has to show. The charge is disgusting, prosecutorial overreach at its worst.

Citizen Kane said...

The prosecutors always argue that it is hard to uncover mortgage and real estate fraud. People including myself co-workers and my wife easily spotted mortgage / real estate fraud being conducted by using something unique - common sense! Once a sprinkling of common sense is applied, it is just a matter of doing a little work; but, of course, what reporter wants to do any work when they know that work will be buried and ignored.

Paul K. Ogden said...

CK, it can be difficult to decipher the real estate transaction to spot voter fraud if you have little experience in real estate transactions. But there is nothing stopping the prosecutors office from deputizing someone to handle a mortgage fraud case that knows real estate. I've long argued we need to consolidate real estate regulation at the state level and provide people who can be deputized to go after mortgage fraud. The AG though is too busy working on unclaimed property. Real tough issue that is.