Miami, Florida Federal Criminal Defense Law Blog

A three-year operation by the Federal Bureau of Investigation led to the arrest of four Florida residents last month. The three, Jim Sotolongo, Ramara Garrett, Stephanie Musselwhite and Christopher Mencis were indicted last week in Orlando on charges that they conducted a mortgage fraud scheme over a period of years. Mr. Sotolongo has prior experience with federal prosecutors. In 1995, he entered into a plea agreement on drug charges and money-laundering charges. He was facing up to 33 years in prison. Instead, he cooperated with government officials and received five years of probation.

The most recent charges include allegations of a conspiracy to make false statements to federally insured financial institutions and an attempt to defraud financial institutions to obtain money, assets and property. The alleged actions took place from 2005 to 2012. The FBI referred to the group as the "Sotolongo Mortgage Fraud Ring." He is accused of participating in roughly 70 fraudulent transactions, including buying and selling several multi-million dollar properties using false information.

In 1995, there was no criminal law concerning Medicare fraud. The problem was either considered too minor to address or it had not occurred to legislators that such a thing could exist. It is difficult to explain how something could go from being of no concern to being at least a $100 billion per year issue. Medicare and Medicaid and the ways in which those programs are managed may explain why health care fraud has become so common. Some doctors and hospitals contend that the reimbursement rates offered by those programs are too low for hospitals serving large numbers of eligible patients to survive. Moreover, the billing and reimbursement policies have encouraged questionable billing practices.

The Center for Medicaid and Medicare Services is responsible for determining when payments from these programs should not be made. In the past, years might pass from the time the CMS had reason to suspect incorrect billing and the time it took any action. If improper claims were denied from the beginning, law enforcement would not have to concern itself with recovering fraudulent payments and tracking down old mistakes. The government did not even begin reviewing claims prior to paying them until 2007.

The Mortgage Fraud Index was released this week by the publication Mortgage Daily and it confirms what previous reports have shown. Despite a five-year low in legal actions for mortgage fraud nationwide, such actions actually rose in Florida in the last quarter of 2012. According to the index, Florida saw a rise in these actions and once again was the nation's leader in claims for mortgage fraud. In the fourth quarter alone, there were $246.9 million worth of mortgage fraud cases in this state. California placed a distant second, more than $50 million behind. Florida made up nearly one-fifth of all mortgage fraud cases throughout the United States during that time period.

Early indicators show that the reduction in mortgage fraud claims may also be at end throughout the country. Some experts suggest that the improving real estate market will likewise offer expanded opportunities for fraudulent transactions. With prosecutors and investigators now well-versed in pursuing potentially fraudulent mortgage activity, prosecutions will likely remain a common sight in criminal courts.

After spending several days in a Florida correctional facility without bail, a man implicated in a mortgage scheme was granted a bail hearing in an Orlando courthouse today. The 47-year-old man was arrested on Friday after being the subject of a three-year Federal Bureau of Investigation probe into fraudulent mortgage activities. Two other people who were also implicated in the investigation were granted a $25,000 signature bond and released after making their first appearances in court.

The investigation concerned actions taken by the man and his associates from 2005 to 2012. The group is accused of making false statements with regards to mortgage loan applications. The false statements were intended to induce lenders to approve mortgages or secure more favorable terms based on the false information. The FBI believes that the group obtained roughly $50 million through fraud.