FEDERAL

This was a joint investigation with USPIS and the
Secret Service.
Fraudulent Loan Modification Scheme Lures
Clients with Infomercials and Fake Attorneys,
Sacramento, California
On April 11, 2013, in Sacramento County Superior
Court, California, Cynthia Flahive pled no contest
to taking advance fees associated with a loan
modification scheme and then not performing
the legal services as represented in violation of a
California statute. As a result of her plea, Flahive was
sentenced to 3 years of supervised release, 240 hours
of community service, and $9,000 in restitution
payable to six specific clients. On August 2, 2013,
Gregory Flahive pled guilty
to grand theft in Sacramento
County Superior Court for his
role in the mortgage modification
scheme. As a result of his plea,
Flahive was sentenced to one year
of incarceration, three years of
supervised release, and $30,609 in
restitution.
From January 2009 to December 2010, the Flahives
and conspirators at Flahive Law Corporation
marketed a fraudulent mortgage modification scheme
using radio ads and infomercials. Clients purportedly
spoke with attorneys in an intake department but
were actually speaking with unlicensed office workers.
Clients paid mortgage modification fees in advance,
but in most cases, no modifications were actually
obtained. Included in the group of mortgages for
which modifications were to be requested were
mortgages owned by the enterprises.
This was a joint investigation with the State of
California Attorney General’s Office and SIGTARP.
Attorney sentenced
to one year
incarceration.
Home Equity Conversion Mortgage
Scheme
FHA’s Home Equity Conversion Mortgage program
offers federally insured reverse mortgages for seniors
to convert equity to cash by borrowing against the
value of their home. The program is intended to
provide otherwise inaccessible cash to seniors, who
often have limited income. However, fraudsters have
devised a number of ways to rob seniors of the equity
they have built over their lives. For example, a loan
officer may convince a senior to purchase unnecessary
yet costly insurance using their loan proceeds. In
other cases, a family member or caretaker may divert
loan proceeds to their personal accounts. Fannie Mae
has actively purchased Home Equity Conversion
Mortgage loans.
Conviction for Defrauding Elderly
Homeowner, St. Louis, Missouri
On May 30, 2013, Larry
Bradshaw pled guilty to theft of
public funds and wire fraud in the
U.S. District Court for the Eastern
District of Missouri. As a result
of his plea, Bradshaw was sentenced to 18 months
of incarceration, 3 years of supervised release, and
$89,245.73 in restitution.
In 2008, Bradshaw, a former tenant of an elderly
victim, devised a scheme to defraud the victim
by using a power of attorney to obtain a reverse
mortgage on her residence and diverting over
$54,000 in loan proceeds to himself. Eventually,
Fannie Mae foreclosed on the home when the victim
failed to make payments on an insurance policy she
never knew she had. To date, the enterprise has not
taken action to force the victim out of her home.
Semiannual Report to the Congress • April 1, 2013–September 30, 2013 31