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Former Realtor Sentenced to 4 Years in Federal Prison for Running Nearly $4 Million Fraud that Scammed Distressed Homeowners
press release, United States Department of Justice
   

A former realtor and longtime fugitive was sentenced today to 48 months in federal prison for scheming to defraud distressed homeowners out of nearly $4 million by falsely promising them help with their mortgages, but instead pocketing their money, causing many victims to lose their homes.

Ernesto Diaz, 66, a former realtor and former El Monte resident, was sentenced by United States District Judge Stephen V. Wilson, who also ordered Diaz to pay $3,061,159 in restitution to his victims.

At the conclusion of a three-day trial, a federal jury on September 13 found Diaz guilty of one count of conspiracy, two counts of mail fraud affecting a financial institution, and one count of mail fraud. The jury acquitted him on one mail fraud count.

Diaz, who fled to Mexico after entering into a plea agreement in this case in 2012, pleaded guilty on September 9 to a separate count of failure to appear in court while released on bond. He was a fugitive for seven years until the FBI arrested him in October 2019. A federal grand jury in February 2020 returned a superseding indictment against him, which led to this year’s trial.

According to evidence presented at his trial, from March 2010 to March 2011, Diaz and co-defendant Maria Marcella Gonzalez, 51, of Whittier, ran a fraudulent mortgage-elimination program that operated in Montebello under the names “Crown Point Education Inc.” and “Crown Point Inc.” Diaz and Gonzalez advertised to distressed homeowners that the Crown Point program could eliminate whatever balance existed on their mortgages.

Several homeowners testified at trial that they had fallen behind on their mortgage payments during the financial crisis of 2007-08 because of workplace injuries, medical bills and other personal circumstances. In exchange, the homeowners paid Crown Point thousands of dollars for its services, typically with a partial payment demanded at the program’s inception, followed by monthly fees.

Diaz and Gonzalez offered seminars describing the Crown Point program to prospective customers but refused to specify – citing the need to protect the company’s proprietary information – how they purportedly eliminated existing mortgages.

At the seminars, Diaz and Gonzalez guaranteed that the Crown Point program would be successful and had cleared the mortgage problems of past customers. Diaz and Gonzalez also met personally with customers and prospective customers to make similar promises of success, assuage concerns of customers who had seen no signs of success, and demand additional payments. Diaz and Gonzalez often counseled customers to cease mortgage payments to their lenders altogether and to pay Crown Point instead.

After clients signed up for the program and paid a fee – usually $15,000 per property – Diaz and Gonzalez directed others to mail packets of information to the clients’ lenders that falsely asserted that the client’s mortgages were invalid and that mortgages would be extinguished if the lenders did not respond. Many of the mailed documents were notarized to create the appearance of legitimacy, at times using the notary stamp of Diaz’s own sister without her knowledge or consent.

In fact, Crown Point had no success in eliminating customer mortgage debt and many customers – including Diaz’s brother – lost their homes.

One integral part of the scheme involved the filing of unauthorized bankruptcy petitions to delay the foreclosure process, leaving victims with the impression that the Crown Point program was working and inducing them to continue making payments, but damaging clients’ credit ratings in the process.

“Many, though not all, of [Diaz’s] victims could have qualified for loan modifications or legitimate foreclosure forbearance programs to save their homes but, in reliance on [Diaz’s] lies, were never able to avail themselves of these options,” prosecutors wrote in a sentencing memorandum.

Gonzalez pleaded guilty in July 2015 to a two-count superseding information charging her with making a false statement in a bankruptcy declaration. Judge Wilson sentenced her to 70 months in federal prison.

The FBI investigated this matter.

Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Julia Hu of the General Crimes Section prosecuted this case.



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