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CEO of Mortgage Brokerage Engaged in Equity-Skimming Scheme Sentenced to Nearly Eight Years in Federal Prison

Posted by Fay Arfa | Jun 03, 2016 | 0 Comments

LOS ANGELES– The chief executive officer and owner of a Westwood-based mortgage brokerage company that falsely promised to help distressed homeowners avoid foreclosure – but instead stole the equity in the homes and served as the homeowners' impostor landlord – was sentenced this afternoon to 94 months in federal prison.

David Singui, 52, of Inglewood, the former CEO of Direct Money Source (DMS), was sentenced after pleading guilty to conspiracy, loan fraud, aggravated identity theft and tax evasion charges.

United States District Judge Christina A. Snyder sentenced Singui and ordered him to pay just over $4 million in restitution.

The scheme related to DMS caused distressed homeowners to lose more than $4 million and lending institutions to suffer losses of more than $11 million. Homeowners suffered losses when they were induced to sell their homes to straw borrowers sponsored by DMS, which was supposedly going to hold these properties for one year while the distressed homeowners repaired their credit and would then be in a position to repurchase these properties from the straw borrowers. In fact, DMS and Singui took permanent title to these properties and misappropriated the distressed homeowners' equity, while DMS and Singui ended up serving as the landlord of these distressed properties and collected rent from the homeowners for over five years.

Previously in this case, Aziz Meghji, 37, of Los Angeles, who was the second-in-charge at DMS, was sentenced to four years in federal prison.

“Mortgage rescue schemes cause significant harm to distressed homeowners, as well as to financial institutions that are often defrauded in the scams,” said United States Attorney Eileen M. Decker. “These schemes target vulnerable victims who are already in financial jeopardy and make their plights even worse. Some of the victims in this case were left homeless by the financial predators who targeted them, including Singui.”

DMS offered a “Fresh Start Program” that purportedly could assist distressed homeowners avoid foreclosure by arranging to have their homes purchased by so called “credit investors,” who would hold the properties for a year and then sell them back to the original homeowners after they restored their credit ratings. In reality, DMS was an equity-skimming operation that took possession of distressed homeowner's equity under fraudulent pretenses.

As part of the scheme, DMS told distressed homeowners that it would provide “credit investors” who would provisionally purchase the properties for one year, thereby allowing the homeowners to avoid foreclosure. During the one-year period, the distressed homeowners could remain in their homes and repair their credit. At the end of the 12-month period, the homeowners were promised that they could repurchase their homes at a lower interest rate.

The distressed homeowners were told that DMS would draw down on the equity in their homes and use the revenues to make monthly mortgage payments during the one-year period.

DMS took title to about 50 distressed properties and misappropriated the existing equity in the homes. The “credit investors” were nothing more than “straw borrowers” whose names were used to access the equity in the homes. DMS and its principals falsified the employment, bank account and income information of the straw borrowers on the loan applications.

At the conclusion of these transactions, DMS usually ended up with approximately $100,000 equity per transaction, plus around $35,000 in fees and commissions associated with each loan. In the meantime, each of the straw borrowers ended up owing approximately $300,000 or more on loans that went into default because DMS did not make the mortgage payments as promised. This led to banks suffering more than $11 million in losses and the homeowners suffering losses of over $4 million as a result of the theft of the equity in their homes.

“The defendant preyed on struggling and trusting homeowners, literally stealing the American Dream out from under them, with no remorse,” said IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “Today's sentencing exemplifies the continued effort by federal law enforcement to investigate and prosecute those who commit mortgage fraud. IRS-CI is committed to pursuing those who line their pockets with profits from these schemes.”

This case was the result of a joint investigation by the Federal Bureau of Investigation, the United States Postal Service and IRS Criminal Investigation.

USAO – California, Central Updated June 2, 2016

Central District of California DOJ / 16-123 / June 01, 2016

About the Author

Fay Arfa

Fay Arfa has the distinction of being Certified as a Specialist in two separate areas of law – Criminal Law as well as Appellate Law – by the California State Bar, Board of Specialization. The National Board of Trial Advocacy has also awarded her a board Certification in Criminal Trial Advocacy. ...


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