LOS ANGELES (KNX) — A former realtor was sentenced on Tuesday to four years in federal prison for allegedly scheming to defraud distressed homeowners out of nearly $4 million.
Ernesto Diaz, 66, formerly of El Monte, falsely promised homeowners help with mortgages, but instead stole their money, causing many victims to lose their homes to foreclosure, prosecutors said.
After a three-day trial in September, a jury found Diaz guilty of one count of conspiracy, two counts of mail fraud affecting a financial institution, and one count of general mail fraud.
According to court documents, from 2010 and 2011, Diaz and a co-defendant, Maria Marcella Gonzalez, 51, of Whittier, operated a fraudulent mortgage-elimination program in Montebello under the name “Crown Point Inc.”
Diaz and Gonzalez solicited distressed homeowners through seminars, claiming they could eliminate any balance left on a mortgage.
Several victims testified at trial that they had fallen behind on their mortgage payments during the financial crisis of 2008 due to workplace injuries, medical bills, and other personal problems. They said they paid Crown Point thousands of dollars for its services. The pair never explained how they planned to eliminate mortgage debt — claiming they needed to protect Crown Point’s “proprietary information.”
After clients signed up for Crown Point’s program, usually paying a $15,000 fee per property, Diaz and Gonzalez directed others to mail documents to clients’ lenders falsely claiming that their mortgages were invalid and would be extinguished if lenders did not respond.
Crown Point also filed unauthorized bankruptcy petitions to delay the foreclosure process, intended to impart to victims a false sense that the program was working. They would then be induced to make further payments to Diaz and Gonzalez, which damaged clients’ credit scores.
Crown Point had no success in eliminating mortgage debt, prosecutors said. Many customers lost their homes, including Diaz’s brother.
Diaz fled to Mexico after entering a plea agreement on the same charges in 2012. He was a fugitive for seven years until the FBI apprehended him in 2019.
“Many, though not all of [Diaz’s] victims could have qualified for loan modifications or legitimate foreclosure forbearance programs to save their homes,” prosecutors wrote in a sentencing memorandum. “But, in reliance on [Diaz’s] lies, were never able to avail themselves of these options.”
Diaz was ordered to pay over $3 million in restitution to his victims.
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