Man accused of stealing $10M from 122 elderly West Side victims in reverse mortgage scheme
By Katherine Rosenberg-Douglas of the Chicago Tribune
The Federal Trade Commission filed a civil suit against him in 2003. The Illinois Department of Financial and Professional Regulation suspended his loan originator registration in 2010.
But it took until Mark Steven Diamond – who also went by the name Mark Stevens – was accused of stealing a total of $10 million of equity in the homes of at least 122 elderly victims before he was arrested on Monday and, on Tuesday, upon appearing in federal court, was charged in connection with wire fraud and engaging in a financial scheme, according to FBI Special Agent Garrett Croon, a media coordinator for Chicago.
“Diamond caused certain elderly homeowners to execute reverse mortgage loan documents, despite the fact that they were disabled or otherwise unable to understand the reverse mortgage loan documents,” said Kelly Popovits, a special agent with the United States Department of Housing and Urban Development, Office of Inspector General.
Diamond, 60 and of Chicago, is suspected of working with at least five co-conspirators, officials said, defrauding seniors by fraudulently obtaining home loans in their names and keeping the profits.
A judge determined Tuesday that he is to be held until his next hearing, investigators said.
“Diamond knowingly participated in a mortgage fraud scheme by using a name and registration number belonging to another loan originator for compensation or gain due to the fact that Diamond’s registration was expired,” Popovits wrote in an affidavit meant to establish probable cause to arrest Diamond.
The main focus of the investigation was into reverse mortgages, Popovits wrote, as she explained what they are and who is eligible.
“A reverse mortgage loan is available to homeowners age 62 or older and allows the homeowner to borrow the equity in their home minus fees and costs. It may only be secured by a primary residence for which all title holders are borrowers and are age 62 or over. To be eligible, borrowers must receive reverse mortgage counseling explaining the fees, costs, and ramifications of getting a reverse mortgage. Reverse mortgage payouts can be in the form of a line of credit or lump sum, with limits on the size of the lump sum payout,” she wrote.
To circumvent rules limiting reverse mortgage lump sum payouts, investigators said, Diamond falsely represented to the reverse mortgage lenders that he had already made the promised home repairs and was entitled to be paid directly by the reverse mortgage lender, including by preparing loan applications which falsely represented that a fictitious entity was a creditor of the elderly homeowner, filing false liens against the elderly victims’ homes, and submitting false payoff letters, according to the 72-page affidavit.
The victims of the scheme mainly were seniors on Chicago’s West Side, officials said.
The investigation involved: “Reviewing records, including records of victims, reverse mortgage lenders, title companies, the Cook County Recorder of Deeds, numerous financial institutions, the Federal Reserve, telephone companies, the Secretary of State of (both) Illinois and Indiana, the Illinois Department of Financial & Professional Regulation and HUD, as well as documents, including affidavits of victims, filed in civil suits against Diamond,” Popovits wrote.
She added that the oldest victim was 98 and outlined the way he is alleged to have carried out the scheme. Authorities said Diamond:
- Falsely promised elderly homeowners that he would make certain home repairs. The type and cost of the home repairs that he falsely promised to make were a function of the amount of equity that he calculated would be available in the form of a payout from a reverse mortgage loan secured by the victims’ homes. The greater the equity available to the elderly homeowner, the more repairs he would falsely promise to make and the more he would charge.
- Falsely represented that he had been sent by the city and that the home repairs would not cost the elderly homeowner any money, such as by falsely promising that the repairs would be paid for through a government program, including a “free Chicago porch repair program.”
- Falsely represented to the elderly homeowners that they needed to sign certain documents to start the repair work and caused them to do so without the elderly homeowners knowing that they were obtaining a reverse mortgage loan.
- On occasions in which family members were opposed to the elderly homeowner dealing with him or obtaining a reverse mortgage loan, he would return to the home to speak to the elderly homeowner at a time when the opposing family members were not present.
- Caused the reverse mortgage counseling to be conducted over the telephone and then participated in the counseling by coaching or posing as the elderly homeowner or causing others to pose as the elderly homeowner.
The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.