Fraud News in Texas

Self-proclaimed "Short Sale Queen" and associates indicted in federal mortgage fraud scheme

Tuesday, December 3, 2024

PLANO, Texas - Three Texas women have been charged with federal violations related to a mortgage fraud scheme in the Eastern District of Texas, announced U.S. Attorney Damien M. Diggs.

Nicole Espinosa, also known as Short Sale Queen, 35, of Plano; Stephanie Smith, also known as Stephanie Parks, 44, of Midlothian; and Selena Baltazar-Hill, 28, of Dallas, were indicted by a federal grand jury on November 20, 2024, and charged with federal violations related to a mortgage fraud scheme in the Eastern District of Texas.  The two-count indictment charges them with conspiracy to commit wire fraud affecting a financial institution and conspiracy to submit false statements to a federally insured financial institution.  The defendants have been arrested and are scheduled to appear before U.S. Magistrate Judge Aileen Goldman Durrett on December 4, 2024.

According to information presented in court, beginning in 2017, Espinosa, Smith, and Baltazar, along with others, are alleged to have operated a mortgage fraud scheme using various companies, including Short Sale Queen, L.L.C.  The defendants researched and located properties that were in the pre-foreclosure short sale process and approached the homeowners about listing the properties for sale.  After signing a listing agreement with the homeowners, the defendants submitted various fraudulent documents to financial institutions and mortgage companies for the purpose of freezing or halting the foreclosure process.  Such documents included falsified purchase agreements from purported “buyers,” as well as altered “proof of funds” letters showing the “buyers” had the means to purchase the property.  Based on these representations, the financial institutions halted foreclosure proceedings, waived fees collection, and unknowingly allowed the defendants time to find a real buyer, or in other instances, cancel the deal when they could not locate a legitimate buyer.  All told, the defendants are alleged to have fraudulently submitted documents for at least 88 properties totaling over $8 million in sales, obtained at least $390,000 in commissions and processing fees, and caused at least $2.5 million in losses to these financial institutions.  

If convicted, the defendants each face up to 30 years in federal prison.

This case is being investigated by the Department of Housing and Urban Development, Federal Housing Finance Agency, and Department of Veterans Affairs.  This case is being prosecuted by Assistant U.S. Attorney Anand Varadarajan.

A federal indictment is not evidence of guilt.  All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The full article can be read here.

SBA employee indicted in COVID-19 fraud scheme

Thursday, August 22, 2024

PLANO, Texas – A Carrollton man has been charged with federal violations related to a COVID-19 fraud scheme in the Eastern District of Texas, announced U.S. Attorney Damien M. Diggs. 

Faruk Syed, 44, was named in the two-count indictment returned by a federal grand jury on August 15, 2024, in the Eastern District of Texas.  The indictment charges Syed with conspiracy to commit wire fraud and money laundering.  Syed made his initial appearance today before U.S. Magistrate Judge Kimberly C. Priest Johnson.   

According to information presented in court, Syed was employed by the U.S. Small Business Administration as a loan specialist and was responsible for reviewing and approving applications for Economic Injury Disaster Loans (EIDL) related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Syed allegedly conspired to submit multiple fraudulent applications for EIDL loans requesting hundreds of thousands of dollars of CARES Act funds.  As an SBA loan specialist, Syed approved these fraudulent loan applications in his official capacity. He then received the loan proceeds and laundered the money through his Fidelity Investment account.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

If convicted, Syed faces up to 20 years in federal prison.

This case is being investigated by the SBA-OIG and prosecuted by Assistant U.S. Attorney Sean J. Taylor.

A grand jury indictment is not evidence of guilt.  All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The full article can be read here.

Argyle Fire Chief sentenced to prison for federal violations, ordered to pay over half-million in restitution

Friday, August 2, 2024

PLANO, Texas - The former Argyle Fire Chief has been sentenced for federal violations in the Eastern District of Texas, announced U.S. Attorney Damien M. Diggs.

Troy Mac Hohenberger, 65, pleaded guilty to multiple federal charges related to misuse and theft of funds from the Argyle Fire District, Inc. operating account, along with making false statements to the Department of Labor and was sentenced to 50 months in federal prison by U.S. District Judge Robert W. Schroeder, III on August 1, 2024. He was also ordered to pay $509,807.50 in restitution to the Argyle Fire District, Inc., and to forfeit $28,048.34.

According to information presented in court, Hohenberger stole money from the operating account of the Argyle Fire District, Inc., (which received federal funds in the form of Medicare reimbursements) and used over $490,000 of those funds to pay personal credit card bills.  Those personal credit card expenses included cash advances at casinos, payments related to a family member’s business in Hawaii, and other personal uses.  The evidence also showed that Hohenberger failed to fund firefighter retirement accounts in the time required by federal regulations, embezzled or stole the funds, and made false statements related to the ERISA-qualified firefighter retirement plan on a form submitted to the Department of Labor.  Hohenberger was indicted by a federal grand jury in November 2022.

The full article can be read here.

Florida promoter sentenced to 20 years for duping investors in fraudulent Southfork Ranch concert scheme

Friday, June 21, 2024

SHERMAN, Texas - An Orlando, Florida man has been sentenced to 20 years in federal prison for wire fraud in the Eastern District of Texas, announced U.S. Attorney Damien M. Diggs.

James Walker Watson, Jr., 68, pleaded guilty to wire fraud in May 2023 and was sentenced to 20 years in federal prison by U.S. District Judge Amos L. Mazzant, III, on June 20, 2024. Judge Mazzant announced restitution to victims would be determined at a separate hearing.

According to information presented in court, from 2016 to 2020, Walker devised and carried out a scheme to commit fraud against multiple individuals in the North Texas area by representing to them that he was a successful concert promoter and was looking for investors to give him money to put on concert events, including two purported concerts at the Southfork Ranch in Plano, Texas. Walker took the victims' money but failed to return the investments as he had promised. He would often tell investors that, without further investment and involvement with his ventures, they would not receive any of their money back. The fraudulent activity resulted in a loss to victims of approximately $3 million.

The full article can be read here.

Collin County man sentenced for bankruptcy-related fraud

Wednesday, March 20, 2024

SHERMAN, Texas - A McKinney man has been sentenced for bankruptcy-related fraud in the Eastern District of Texas, announced U.S. Attorney Damien M. Diggs.

Jacobie Travinski Johnson, 53, was convicted of concealing assets in a pending bankruptcy proceeding and was sentenced to 60 months in federal prison by U.S. District Judge Amos Mazzant on March 19, 2024.

According to information presented in court, Johnson filed a voluntary petition for Chapter 13 Bankruptcy in the Eastern District of Texas.  In order to take advantage of the relief offered through the bankruptcy process, Johnson was required to truthfully disclose his assets, including his accounts at any financial institution, to the bankruptcy court, the trustee, and his creditors.  Instead, Johnson concealed multiple accounts that he owned or controlled.  Johnson also concealed hundreds of thousands of dollars, which were proceeds from fraudulently obtained Paycheck Protection Program loans, that he deposited into the concealed accounts. 

The full article can be read here.

Four indicted in university athletic billing scheme and COVID-19 billing scheme

Wednesday, January 31, 2024

PLANO, Texas – Four individuals, including two physicians, have been indicted in the Eastern District of Texas charged with federal violations involving a university athletic billing scheme, announced U.S. Attorney Damien M. Diggs today.

Mouzon Bass, III, also known as Muzzy Bass, 58, of Highland Park; Lance West Wilson, 54, of Allen; and Robert Brent Scott, 59, of La Quinta, CA; were indicted by a federal grand jury in January 2024 and charged with conspiring to commit wire fraud, conspiring to commit healthcare fraud, and conspiring to commit money laundering. 

In a separate indictment returned in October 2023, Kyle Kelly Carter, 61, of Keller, was charged with conspiring to commit wire fraud.  The defendants have all made initial appearances in federal court this month.

According to the indictments, from approximately 2014 through 2023, the defendants are alleged to have been involved in a university-centered athletic department billing scheme.  Bass and Wilson used their company, Vivature, to submit false claims to private insurance carriers representing that physicians, like Scott and Carter, were providing medical services for injured student-athletes at universities across the country.  In reality, these physicians did not see or treat these student-athletes, and in many instances, were physically hundreds of miles away from where the student-athletes were receiving treatment.  The services were actually performed by athletic trainers employed by the universities’ athletic departments—who, most times, were specifically excluded from insurance companies’ reimbursement policies.  At the direction of Bass and Wilson, Vivature submitted thousands of false claims to the insurance companies, named Scott, Carter, and other physicians as the servicing providers, and used their NPI numbers on the claims’ paperwork.  In exchange for allowing the fraudulent use of their NPI and credentials, Vivature made regular payments to Scott, Carter, and other physicians. 

 A separate conspiracy involved only defendants Bass, Wilson, and Scott, who executed a scheme to fraudulently obtain Health Resources and Services Administration (“HRSA”) government funds earmarked for COVID-19 testing provided to uninsured Americans.  The defendants partnered with international resorts hosting American travelers abroad, offering to manage the billing and claims process for COVID-19 testing provided to these American travelers.  Then, the defendants submitted thousands of reimbursement claims to HRSA for such travelers, even though such travelers were privately insured and ineligible under the HRSA program. 

In total, the defendants are alleged to have collectively obtained over $70 million from the two schemes.  With these funds, they paid themselves millions of dollars; purchased real property including a multi-million dollar home, lakehouse, and international residence; and bought a multi-million dollar yacht. 

The full article can be read here.

Kaufman County man sentenced to 20 years in federal prison for defrauding investors of at least $2.7 million in the Eastern District of Texas

Thursday, January 25, 2024

SHERMAN, Texas - A Terrell man was sentenced to federal prison for defrauding investors in the Eastern District of Texas, announced U.S. Attorney Damien M. Diggs today.

Michael Disman, 41, pleaded guilty to wire fraud charges and was sentenced to 20 years in federal prison by U.S. District Judge Amos Mazzant on Jan. 25, 2024.  Disman was ordered to pay restitution of approximately $2.7 million to his victims.

According to information presented in court, between January 2018 and March 2022, Disman operated an investment fraud scheme using various companies he controlled, including “Dexter Development” and “Disman Energy.”  Disman solicited funds from victim investors for purported lucrative land development projects, when in reality, those projects were non-existent and the investor funds were spent elsewhere.  To execute his scheme, Disman made various material misrepresentations about investor payouts and the use of investor money, executing sham contracts and sharing real estate paperwork to add legitimacy.   Disman actually used the investor funds for various non-business purposes, including ATM cash withdrawals and drug purchases.  In total, Disman defrauded at least 17 victim investors and caused at least $2.7 million in losses. 

The full article can be read here.