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Man Sentenced to 35 Years for ‘Foreclosure Rescue’ Fraud

fraud [1]One of 17 defendants in a "foreclosure rescue" fraud case received a 35-year prison sentence on September 4 for his role in the scam, according to U.S. Attorney for the Eastern District of California [2] Benjamin B. Wagner.

Charles Head, 40, of Pittsburgh, Pennsylvania, received the lengthy sentence from U.S. District Judge Kimberly J. Mueller. Head previously resided in Los Angeles and Orange County where he was the CEO of several financial institutions, including Creative Loans and Head Financial Services.

Mueller said during the sentencing that Head "created and implemented a very cynical scheme," according to a statement from the U.S. Department of Justice [3].

Head and the other 16 defendants were indicted in 2008 in two cases and charged with mail fraud and conspiracy to commit mail fraud, among other charges stemming from illegal activities by Head Financial Services, according to the statement. The evidence used to indict the defendants showed that they promised to aid homeowners facing foreclosure by helping them avoid that fate and repairing their credit. Without the homeowners' knowledge, the defendants substituted "straw buyers," often friends and family of the defendants, for the homeowners on the titles of the properties. The defendants then drained the homes of available equity once the straw buyers were on the titles and shared the proceeds among themselves.

The scam began in California but Head eventually expanded it nationwide, the statement said. The Department of Justice reported in their statement that the defendants netted more than $90 million in the scam, causing more than $50 million in losses, and stole the titles for more than 300 homes in a two and a half year period from January 2004 to June 2006. The victims in this case were left with no home, no equity, and damaged credit, according to the statement.

"This defendant (Head) purposely targeted the financially vulnerable during their time of greatest distress with promises of help," Wagner said in the statement. "Then he tricked them into handing over their most valuable asset, their home. When victims in one scheme grew scarce, he opened up a new scheme drawing in victims from across the country. Few economic crimes are more reprehensible. No sentence will undo the damage wrought by Charles Head and his fellow scammers, but today’s sentence brings a measure of justice for their victims."

Head and his brother Jeremy, 34, one of the other defendants, were convicted in May 2013, while Head and two other defendants were convicted in a separate trial in December 2013. In all, Charles Head was convicted of seven counts of mail fraud and two counts of conspiracy to commit mail fraud.

"The defendant preyed on struggling and trusting homeowners, literally stealing the American Dream out from under them, with no remorse," said José M. Martínez, special agent in charge, IRS-Criminal Investigation. "Today’s sentencing signifies the continued effort by the IRS, FBI and U.S. Attorney’s Office to investigate and prosecute those who commit mortgage fraud. IRS-CI is committed to pursuing those who line their pockets with profits from these schemes."

A hearing is set for November 22 to determine how much restitution Head will pay.