A Washington State couple and a Nokomis man were sentenced this week to federal prison for participating in a Sarasota mortgage fraud scheme. They were convicted earlier this year following a three-month jury trial in Tampa’s federal court.
George Cavallo and his wife, Paula Hornberger, along with Joel Streinz, had been accused of being part of a large-scale conspiracy to commit wire fraud and lie on loan applications to FDIC-insured financial institutions and mortgage lenders.
The three were part of a 44-count, 14-individual indictment handed down over 18 months ago after a years-long mortgage fraud investigation by the FBI, the U.S. Attorney, the Federal Deposit Insurance Corp. (FDIC) and the Sarasota County Sheriff. The indictment purportedly related to 200 mortgages, 65 loans, 50 bank accounts and 22 properties in Sarasota County.
According to the FBI, real estate agent Craig Adams and others lied on financing documents to obtain loans totaling more than $47 million, beginning in late 1997 and early 1998. Federal prosecutors claim that Adams and his associates flipped properties for overstated prices and tricked lenders into making inflated loans.
Prosecutors accused Streinz of taking out more than $6.2 million in fraudulent loans. He was sentenced to five years in federal prison and ordered to pay $1.07 million in restitution.
Cavallo and Hornberger were accused of taking out more than $8.3 million in fraudulent loans and were sentenced to 10 years in federal prison, and 12 months and one day, respectively. They were ordered to pay $13.2 million in restitution.
Mortgage fraud prosecutions have exploded in the Tampa Bay area in recent years. In 2009, the local U.S. Attorney’s office announced an aggressive initiative against mortgage fraud. This was followed up by the passing of a federal mortgage fraud bill through Congress. In the last few years, U.S. Attorney General Eric Holder announced the the U.S. Department of Justice was recommitting to mortgage fraud investigation and prosecution.
Florida is seen as a hotbed of mortgage fraud on the heels of the housing bubble in the early part of this decade. Anyone who believes they are a possible target of investigation is best advised to contact an experienced Tampa Bay area criminal defense attorney – one with substantial federal court experience – prior to interview, indictment or arrest.