Illinois Department of Financial and Professional Regulation

 

NEWS
For Immediate Release:
February 6, 2009  
   

State shuts down property flipping scheme

Illinois Department of Financial and Professional Regulation
stops nearly two-million dollar mortgage fraud scam

CHICAGO – The Illinois Department of Financial and Professional Regulation (IDFPR) recently shut down a property flipping scheme that involved nearly two million dollars in fraudulently obtained loans.  IDFPR charged that Pablo E. Pablon of Chicago, in his capacity as a loan originator, was a key participant in at least two mortgage fraud schemes and was paid a percentage of the value of each loan.
 
IDFPR, along with the cooperation and assistance of the Chicago Police Department (CPD), found that Pablon worked with a team of accomplices who acted as “homeowners” facing imminent foreclosure, and “investors” willing to purchase properties prior to foreclosure.  Pablon originated these loans with forged appraisals, fraudulent income and assets, and fake verification of deposits.  State regulators found that Pablon processed 14 of these loans totaling $1,856,880 million.  IDFPR revoked Pablon’s license on Jan 27.

“Today’s action should serve as a sharp reminder to dishonest lenders that violations of our consumer protection laws will not be tolerated in Illinois,” said Michael T. McRaith, Acting Secretary, Illinois Department of Financial and Professional Regulation.  “In addition to defrauding vulnerable homeowners, these fraudulent schemes result in more boarded-up homes and decreased property values in respective areas.  We will continue our aggressive efforts to stop people from engaging in mortgage practices that shun the requirements of our laws.”

In the first scheme, IDFPR found that Pablon had diverted funds to a real estate management company called “Eyes Have Not Seen,” owned by Mr. Charles White.  White was identified as a key conspirator in a “mortgage rescue” scheme that IDFPR shut down in 2006.  At that time, White was charged with exploiting unwary homeowners who were at risk of foreclosure by conning them into signing over the title and any earned equity from their properties, allowing so-called “investors” to then purchase the homes at a fraction of their market value. 

White misled homeowners to believe that the new investors would lease the homes back to the owners while they were attempting to regain their financial footing.  In addition, White falsely assured homeowners that the new investors would repay the delinquent mortgage accounts.  As a result, IDFPR revoked White’s license and continued to follow up on tips it received on White’s fraudulent real estate business activities.  White has continued to target vulnerable homeowners and was recently indicted by the Federal Bureau of Investigations (FBI) for several activities involving defrauding homeowners.

In the second scheme, Pablon worked with Derrick Stephens, a CEO of DAS Development Co., who is believed to have found borrowers for Pablon and create false verification of deposits. Stephens also suggested that Pablon use fake assets for all clients and “advertised” the business of “providing proof of funds” to Pablon. 

“The state of the economy is one opportunity for criminals to take advantage of individuals with deceptive schemes,” said Chief of Detectives Thomas Byrne. “The Chicago Police Department needs cooperation from people and organizations to help protect the public from these fraudulent acts,” he added.

IDFPR recommends that homeowners in financial difficulty should first talk to their mortgage lender to explain the situation and to see if the loan can be restructured or refinanced.  A homeowner should also consider enlist the help of a HUD-approved housing counselor.  A list of HUD-approved housing counselors is on HUD’s website.  Consumers who want to learn more can contact the IDFPR homeowner hotline at 877-793-3470. 

IDFPR is emphasizing that regardless of the circumstances for selling or refinancing a home, it is extremely important that homeowners:

    1. Read everything before signing and get all “promises” in writing.  If there are things you don’t understand, consider visiting a housing counselor or hiring an attorney before signing any documents. Verify all the figures at the closing for accuracy and completeness.  Some schemers will offer to complete paperwork for the homeowner or ask that he or she sign a stack of documents, supposedly to secure a new mortgage.  Victims later learn they signed over the deed to their home;
    2. Be wary if a foreclosure “rescuer” or mortgage “broker” discourages the homeowner from contacting the mortgage company or an attorney; 
    3. Never sign a contract under pressure and never sign away ownership of property.  Remember, signing over the property deed to someone else does not necessarily relieve the original owner of his or her obligation to repay the loan; 
    4. Ask a trusted family member, attorney or a financial professional to review paperwork before signing.  

A copy of IDFPR’s order is available here