McHenry County Blog

A press release from the U.S. Attorney’s Office:

McHENRY COUNTY BUSINESSMAN PLEADS GUILTY TO $7 MILLION FRAUD

ROCKFORD — A Woodstock, Ill., man pleaded guilty today in federal court in Rockford to conducting a $7 million mail fraud scheme. Francis X. Sanchez (“Sanchez”), 51, co-owned and operated a business in McHenry County, known as InvestForClosures, with his business partner James D. Bourassa. In his guilty plea today, Sanchez admitted that he fraudulently obtained more than $7 million from InvestForClosures’ investors.

Sanchez’s and Bourassa’s business was initially known as InvestForClosures.Com, but later changed its name to InvestForClosures Financial, LLC. According to Sanchez’s plea agreement, he represented to potential investors that this business bought distressed houses, rehabilitated those houses, and sold the houses for a profit.

Sanchez admitted in his plea agreement that he, Bourassa, and their employees solicited people to invest in InvestForClosures.Com and InvestForClosures Financial. Sanchez acknowledged that he and his employees made various representations to their potential investors, including:

1. their investments would be safe because they would be backed by real estate;
2. InvestForClosures used the majority of their investors’ funds to purchase real estate; and
3. because of the business’ efficient cash flow from buying and selling houses, InvestForClosures Financial had never failed to make an interest payment on time or return an investor’s principal when requested.

As Sanchez admitted today, each of these representations was false.

First, the business did not own sufficient real estate to secure all of the investments.

Secondly, the business did not use the majority of investor funds to purchase real estate, but instead used most of the investors’ funds to pay other expenses, including the salaries of the defendants, and to pay Ponzi type interest to prior investors.

In addition, InvestForClosures was not making enough money from property sales to pay the interest owed to the investors, but was instead using cash received from new investors to pay the prior investors with Ponzi type payments.

Sanchez further admitted that, in order to conceal from the investors his false promises and misrepresentations, and to prevent the investors from demanding the return of their principal, he told the investors that he was developing an exclusive, luxury, residential community in Mexico known as the “Sands of Gold.”

Sanchez and Bourassa formed a new business, known as InvestForClosures Ventures, LLC, doing business as Realty Opportunities International, to operate the Sands of Gold project. Sanchez acknowledged that he and Bourassa solicited their investors to purchase lots at Sands of Gold and to invest additional monies with InvestForclosures Ventures.

Sanchez admitted that he made several misrepresentations to his investors regarding Sands of Gold, including:

1. the government of Mexico had promised to invest millions of dollars in infrastructure necessary for the development of the Sands of Gold;
2. efforts to obtain financing for the project were going well and a financing deal was imminent; and
3. they were finishing negotiations with a major hotel chain for the construction of a hotel at Sands of Gold.

Sanchez further admitted that, during the course of the scheme, he and co-defendant Bourassa fraudulently obtained approximately $7,238,506.40 from the investors.

Of this amount, approximately $1,711,711.18 was paid back to the investors through Ponzi type payments.

The indictment, which was filed on November 16, 2010, charged both Sanchez and Bourassa with mail fraud and wire fraud. Bourassa pled guilty to mail fraud on February 27, 2012.

The sentencing hearing for Sanchez will be conducted on August 13, 2012, at 9:00 a.m.

Bourassa will be sentenced on June 11, 2012, at 9:30 a.m.

Mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater, as well as restitution to the victims. The actual sentences will be determined by the United States District Court, guided by the advisory United States Sentencing Guidelines.
The case was investigated by the Rockford Office of the Federal Bureau of Investigation, the Chicago Office of the United States Postal Inspection Service, and the Illinois Secretary of State’s Securities Department. The investigation was conducted under the auspices of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit:
www.StopFraud.gov

The guilty plea was announced by Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois; Robert D. Grant, Special Agent-in-Charge of the Chicago Office of Federal Bureau of Investigation; Thomas P. Brady, Postal Inspector-In-Charge of the Chicago Division of the U.S. Postal Inspection Service, and Illinois Secretary of State Jesse White.

The government is being represented by Assistant U.S. Attorney Scott A. Verseman.

"You've got to be consistent...Government screwed this up."

A press release from Congressman Joe Walsh has arrived. It is Walsh’s side of a video snippet from an interchange between Walsh and a constituent. I first saw the story on Illinois Review yesterday and have received two or three emails containing the same video. If memory serves me correctly, most came from sources on the left side of the political spectrum.

Rep. Joe Walsh Releases Statement on Exchange at ‘Cup of Joe’

FOX LAKE – Congressman Joe Walsh (IL-8) released the following statement regarding the recent exchange with a constituent at a local ‘Cup of Joe with Joe.’

Walsh stated: “As my constituents know, I am a very passionate person.

“I am passionate about our freedom, fighting for taxpayers, and standing up against big government.

“Constituents with opposing views have every right to argue with me, and I have every right to argue passionately for my conservative values.

“That¹s what freedom is all about.

“This debate is important and the fact that two people can discuss their differing opinions is what makes this country special.

“I have hosted a ‘Cup of Joe with Joe’ event every single weekend since I have been in office.

“I show up at coffee houses in the district and anyone can meet with me to discuss any issue.

“These are fun, engaging sessions, and I often meet with people who disagree with me and the conversation can become spirited.

“The woman I most recently had a heated discussion with was great and she appreciated how open these events are.

“I apologized to her for getting a bit too passionate to which she smiled and did not mind at all.

“Regarding the substance of which I was referring – I have never been a ‘pal of big banks’ and I would have voted against the bank bailout in 2009.

“If banks abuse their charters, they should be prosecuted.

“But banks are not all to blame for this mess – government policy that advocated for every American to become a homeowner is at fault for this disaster.

“To allow and encourage Freddie and Fannie to approve loans to people with no credit history and no money down was a disaster waiting to happen.

“Despite some Republicans attempts to enact reform, Democrats, like Barney Frank, killed any attempt at reform.

“The banks followed the rules set forth by the government, and further meddling by the government will only exasperate the problem.

“I have held over 80 town hall meetings and ‘Cup of Joe with Joe’ events since taking office.

“I hold these because I welcome this open discussion and will continue to keep this direct line of contact with those who I proudly represent.”

The box of foreclosure notices at Crystal Lake City Hall.

If you want to understand how the mortgage mess kept on going.

Here’s a paragraph written by a liberal that appeared in a Slate article.

“These documents, from Clayton Holdings, a due diligence company retained by the banks, reveal that Clayton, after analyzing more than 900,000 mortgages, told the banks that about 30 percent of the loans being packaged into securitized products did not satisfy the banks’ own underwriting standards. This meant that the securitized products were almost bound to blow up.”

Democrats controlled the U.S. House in 2008 and did nothing to stop this from happening.

And McHenry County’s own Congresswoman Melissa Bean serves on the Financial Services Committee chaired by endangered Barney Franks.

Nor have they called for criminal prosecutions of big banks from whom they got fat political contributions.

Democrat oversight was a failure of the banks as it was of BP’s oil rig operations.

More Democrat bureaucrats simply deliver more paid Democrat voters and little productive output as a practical matter.

This is why Democrats are obsessive about taking over health care and one sixth of the economy.

Democrat Melissa Bean sat on the House Financial Services Committee and did nothing to stop the big banks from almost blowing up our entire economy.

I guess this is what “merited” her an endorsement from both the Northwest Herald and Daily Herald. How can their editors have such blinders?

It not hard to surmise someone thinking

“Throw the facts out the window, Bean’s a real liberal, so let’s figure out some way to endorse her.”

Democrats have held majority control of the U.S. House of Representatives for four years.

There was a huge red flag that financial hanky-panky was going on in the mortgage market.

It was in 2004, the same year Melissa Bean was elected. Here it is:

Securities and Exchange Commission found that Fannie May had used improper accounting. Fannie Mae was ordered to restate its earnings for the previous four years. This wiped out some $6.3 billion in profits that Fannie had reported but weren’t real.

Liberal Democrats like Bean did nothing to put a stop to reckless mortgage lending. She has sat on the House Financial Services Committee for four years.

People didn’t call it reckless but instead coined the phrase sub-prime.

They were happy to give out mortgages to people who couldn’t afford to pay back the loans as long as they collected their fees and we the taxpayers got stuck with the bill.

I pointed out how Bean got more than the $465,000 of “independent” campaign expenditures from the National Association of Realtors. She also got direct political monies to her campaign from the Realtors.

Bean took plenty of political money so the mortgage bad-loan money would keep on flowing.

Bean had plenty of green incentives to look the other way and forget to stop abusive practices that left us with a mountain of debt and foreclosures.

The Federal Election Commission shows Bean directly taking:

Melissa Bean

• $27,500 from the American Bankers Association PAC
• $8,000 from Equifax PAC, which does credit reports
• $24,500 from Experian North America Inc PAC (Experian is in the credit report business)
• $25,999 from the Financial Services Roundtable PAC
• $5,000 from the First American Financial Association PAC (First American is in the title insurance business)
• $31,500 from the National Association of Realtors Political Action Committee
• $23,000 from the Mortgage Bankers Association Political Action Committee
• $7,000 from the National Association of Mortgage Brokers
• $24,175 from the National Association of Real Estate Investment Trusts PAC
• $7,775 from the National Multi Housing Council PAC
• $6,500 from the PMI Mortgage Insurance Company PAC
• $1,000 from the Title Industry PAC
• $25,000 from the Trans Union LLC PAC (Trans Union is in the credit report business)

The above totals $236,949 without listing individual banks heavily in the mortgage business.
Bean politically profited from looking the other way.

It might help explain why she put no reforms of any kind about Freddie Mac and Fannie May into the financial reform law she now grandstands as a wonderful Democrat achievement.

Had Bean stood up for the taxpayers instead of her reaching out with palm facing up for political money, we might not have a glut of foreclosures that has depressed everyone’s home prices.

Bean also took another $34,387 from Fannie Mae ($20,000) and from Freddie Mac ($14,387).

Bean grabbed another $106,322 from Chase, Citigroup, Bank of America, Countrywide, CNA Financial (into subprime mortgages) and Washington Mutual. Washington Mutual gave Bean thousands in the months before it was seized by the FDIC and became the largest ever bank failure.

How much did this add up to?

To recap

• $465,000 National Association of Realtors “independent” campaign spending for Bean
• $236,949 directly from list detailed above
• $34,387 from Fannie Mae and Freddie Mac
• $10,500 from Sallie Mae
• $106,322 from Countrywide, Washington Mutual, Chase, etc, list detailed out above
• $ 853,858 for the above and
• this doesn’t include securities associations, foreign banks, G.E (G.E. Capital) credit card companies, life insurance companies and mutual funds, for example.

That easily runs more than couple of hundred thousand dollars more.

It is easy to say that Bean allowed the bad mortgage mess.

It got worse while she was adding over a million dollars to her campaign fund.

A coincidence?

Perhaps, but there should have been no surprise when she voted for billions of dollars of bailout monies to the big banks, including big foreign banks.

They got the money, Bean took the campaign contributions and we ended up with

• lower home prices and
• a national huge debt.

Dear Friend,

Home foreclosures are on the rise – reaching more than 14,000 last month.

I have heard numerous stories of families in McHenry County being forced right out of their homes.

It is for this reason that I am partnering with the Governor’s Office to bring the Mortgage Relief Project to McHenry County. Please save the date and tell your neighbors that on September 10 from 4 to 7 p.m., the Mortgage Relief Project will be offered at McHenry County College, Building B, 8900 U.S. Route 14 in Crystal Lake.

The Mortgage Relief Project, administered through the Illinois Department of Financial and Professional Regulation (IDFPR) and the Illinois Housing Development Authority (IHDA), offers homeowners assistance to rework their mortgage. According to the Homeowner Protection Act which was enacted this spring, homeowners who are late on their mortgage payments can obtain a 90-day grace period by entering housing counseling.

The Mortgage Relief Project offers free workshops with useful information about mortgage refinancing, foreclosure prevention, legal rights, credit counseling and avoiding scam artists.

Homeowners will have the opportunity to take advantage of one-on-one housing counseling with HUD-certified counselors and are encouraged to bring their most recent mortgage documents including bills, statements and notices, as well as their state ID or drivers’ licenses.

I have been extremely committed to helping protect the rights and bank accounts of homeowners. I successfully passed legislation to create the Manufactured Housing Buyer Protection Act. And, I am committed to initiatives that reduce property taxes and create a fair process for determining home assessments.

I look forward to meeting you at the Mortgage Relief Project on September 10 from 4 to 7 p.m. at McHenry County College.

For more information, please contact the IDFPR toll-free hotline at (800) 532-8785 or call my office at (815) 459-6453.

Sincerely,

Michael W. Tryon
Illinois State Representative
64th District

My CPA sent me an article from September 30, 1999. It was written by Steven A. Holmes and entitled,

“Fannie Mae Eases Credit to Aid Mortgage Lending”

I have copied two parts which seem to tell the story:

. . . . .

Click to enlarge the reprinted part of the article.

My CPA sent me an article from September 30, 1999. It was written by Steven A. Holmes and entitled,

“Fannie Mae Eases Credit to Aid Mortgage Lending”

I have copied two parts which seem to tell the story:

. . . . .

Click to enlarge the reprinted part of the article.

The United States Attorney’s Office has taken on the prosecution of Charles H. Landwer, Jr., for (to quote Daily Herald reporters Rob Olmstead and Chuck Keeshan) “scamming the elderly and the unsuspecting out of their homes and property.”

$2.4 million from 17 people, many senior citizens.

Landwer has a long history of run-ins with the law, which you can read in the Daily Herald story. He now operates out of Bloomingdale as Accurate Financial Group.

Two federal criminal complaints were filed by Vick Lombardo, Federal Bureau of Investigation Special Agent. He is a ten-year agent who “investigate(s) criminal violations of federal bank and wire fraud statute.”

The short one says,

“…for the purpose of executing a scheme to defraud and attempting to do so, (Landwer) knowingly caused to be transmitted in interstate commerce by wire communication from American Mortgage Network in San Diego, California, to the Private Bank and Trust Company in Chicago, Illinois, certain signs, signals and sounds, namely: approximately $230,522.38 from the fraudulent refinance of Victim KD and ED’s house in Yorkville, Illinois.”

Here’s one charge from the 10-pager:

“as early as September 2002, CHARLES H. LANDWER, JR., defrauded at least 17 individuals of more than $2,400,000 in personal funds and home sale proceeds.”

Landwer is charged with not only basically, stealing the financially troubled couple’s Yorkvill home, but then having the nerve to hound them for $50,000 more, plus $12,812 in rent. (You really have to read it to believe the boldness of this flim-flam man.)

Locally, according to the Northwest Herald reporter Jillian Duchnowski, he “bilked an elderly Huntley woman out of more than $350,000 have been rolled into a federal fraud case” and was set to go to trial three days from now.

The NW Herald says the guy is from Bartlett, but the FBI says the search warrant was for a Barrington Shores unit.

The United States Attorney’s Office has taken on the prosecution of Charles H. Landwer, Jr., for (to quote Daily Herald reporters Rob Olmstead and Chuck Keeshan) “scamming the elderly and the unsuspecting out of their homes and property.”

$2.4 million from 17 people, many senior citizens.

Landwer has a long history of run-ins with the law, which you can read in the Daily Herald story. He now operates out of Bloomingdale as Accurate Financial Group.

Two federal criminal complaints were filed by Vick Lombardo, Federal Bureau of Investigation Special Agent. He is a ten-year agent who “investigate(s) criminal violations of federal bank and wire fraud statute.”

The short one says,

“…for the purpose of executing a scheme to defraud and attempting to do so, (Landwer) knowingly caused to be transmitted in interstate commerce by wire communication from American Mortgage Network in San Diego, California, to the Private Bank and Trust Company in Chicago, Illinois, certain signs, signals and sounds, namely: approximately $230,522.38 from the fraudulent refinance of Victim KD and ED’s house in Yorkville, Illinois.”

Here’s one charge from the 10-pager:

“as early as September 2002, CHARLES H. LANDWER, JR., defrauded at least 17 individuals of more than $2,400,000 in personal funds and home sale proceeds.”

Landwer is charged with not only basically, stealing the financially troubled couple’s Yorkvill home, but then having the nerve to hound them for $50,000 more, plus $12,812 in rent. (You really have to read it to believe the boldness of this flim-flam man.)

Locally, according to the Northwest Herald reporter Jillian Duchnowski, he “bilked an elderly Huntley woman out of more than $350,000 have been rolled into a federal fraud case” and was set to go to trial three days from now.

The NW Herald says the guy is from Bartlett, but the FBI says the search warrant was for a Barrington Shores unit.

Chief McHenry County Circuit Court Judge Sullivan J. Sullivan has so many mortgage foreclosure cases on the docket that he is setting up special calls each week.

Starting September 2nd, the 22nd Judicial Circuit will hear mortgage foreclosures three days a week.

The cases will be heard Tuesdays, Wednesdays and Thursdays, starting at 10:30.

Sullivan himself will hear the cases.

Fifty cases will be on each day’s docket.

The dockets for September 2nd, 4th, 9th and 11th are already filed.

As the Chicago Sun-Time pointed out this week, lots of folks who bought homes in the last five years have properties with mortgages larger than their homes’ current values.

And the number of foreclosures has about doubled from last year.

While not all of the chancery court call cases are foreclosures, most are.

In 2007, there were 892 cases.

Through July of this year, 1,362 have been filed.

Tuesday, the Chicago Sun-Times ran a front page headline about the problem.

Inside was a map showing a map with percentages of homes bought in the last five years where current values of homes is less than the mortgage.

Most of southeastern McHenry County seems to have over 20% of recent home purchasers in that predicament. Large swatches of Algonquin, Lake in the Hills, Huntley and McHenry seem to have over 31% of new homeowners without enough equity to pay off their mortgages.

= = = = =
Click to enlarge especially the Sun-Times map on top and the March Chicago Tribune map on the bottom. An April, 2008, story about the Tribune map can be found here in which it is noted that Huntley and western Lake in the Hills appear to have the worst problems in McHenry County.