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by Brian Mahany
It’s the Fourth of July as I write this post. As we celebrate Independence Day and this great democracy, I am reminded that one of the fundamental values of this nation is that no man is above the law. Alejandro Cubelo of Miami was sentenced last week to 54 months in federal prison for failing to remember this important lesson. His crime? Mortgage fraud and arranging secret cash back deals on mortgages.
According to Cubelo’s indictment, he sold condos at a development in Coral Gables. When Cubelo couldn’t find qualified buyers for the condos, he resorted to helping unqualified buyers “qualify” for a mortgage. That may not sound like a bad thing but when the borrowers couldn’t make their payments, they lost their homes, their credit was further ruined and the federal government was left holding the bag.
Why the government? Because HUD backed the mortgages used to purchase the properties.
Cubelo was one of the few people who profited from the scheme; sales agents typically earn lucrative commissions on each unit sold.
How Cubelo pulled off his scheme is quite interesting. In addition to the usual fraud - false loan applications and phony income verifications - he also persuaded nonprofits Nehemiah Corporation and Home Downpayment Gift Foundation to pay the buyer’s cash-to-close obligations. Often these companies will make the payments in return for a charitable donation. Who makes the donation? Often the seller.
Cash back schemes and providing buyers with down payment assistance frequently result in big losses for lenders and the federal government which backs many loans today. The legality of these schemes is at best questionable and certainly crosses the line when not adequately disclosed.
Cubelo was indicted on 13 counts of felony wire fraud and conspiracy. On June 28th he was sentenced to 54 months in prison and ordered to pay $9.2 million in restitution when released.
We are currently seeking present and former mortgage brokers, real estate professionals and title company employees with knowledge of these practices. We are especially interested in speaking to folks who have an interest in becoming a whistleblower in a federal false claims action.
Whenever a mortgage defaults because of illegal lending practices, there is a good chance that taxpayers wind up footing the bill. The false claims act, also known as the Lincoln Law or qui tam, allows everyday Americans with inside information to come forward and bring an action on behalf of the United States government.
Typically, whistleblowers receive a cash award of 20% of whatever the government collects as a result of their information. There is no better way to celebrate the 4th of July than by doing one’s patriotic duty and shutting down fraudulent lending schemes. And get paid too.
The fraud lawyers at Mahany & Ertl represent whistleblowers in a wide variety of false claims act cases. Most cases are handled on a contingent fee basis meaning you don’t have to pay unless we collect. Currently we are handling the largest false claims act case in the country against a lender - HUD’s $2.4 billion case against Allied Home Mortgage.
Large or small, we want to hear from you and are here to help.
For more information contact attorney Anthony Dietz at adietz@mahanyertl.com. Have an urgent need? Contact the author at brian@mahanyertl.com or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney client privilege and kept in strict confidence.
Mahany & Ertl - America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. Services available in many jurisdictions.
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