By Ogozi John
Two women in California have pleaded no contest to charges related to grand theft in a fraudulent mortgage loan scheme and obtaining money under false pretenses.
According to prosecutors, Penny O’Malley, a former loan officer with GMAC Mortgage allegedly devised a scheme that involved presenting false information on behalf of a loan applicant in order to make it seem like the applicant was qualified for the loan.
The loan application was made by Consuelo Herrera and her husband to finance the purchase of a property in Southeast Bakersfield. But the couple did not earn enough money to qualify them for the loan as Herrera was unemployed at the time.
O’Malley then convinced her step mother, Ellen Flores, to state in the loan application that Herrera worked in a liquor store that was owned by her stepmother’s husband. By giving this false information, the couple’s income was raised substantially, enabling them to qualify for the loan.
The loan which was granted in 2006 went into default in 2008 leading to losses of $158,572 for the U.S. Department of Housing and Development. But the fraud was not discovered until in 2010, when the HUD was carrying out mortgage fraud investigations.
The time taken for the fraud to be uncovered and the charges filed in court are now of major importance in this case, as defense attorneys are now arguing that the statute of limitations has expired. The alleged crimes are eight years old, and there is a three-year statute of limitations on the conspiracy charges, four years for the fraud charges.
Attorney H.A. Sala, representing Flores, has questioned what made prosecutors to take so so long in filing the charges.
But Prosecutor Gordon Isen maintains that the government only became aware of the alleged crimes in 2010, which is when the statute of limitations began counting.
“Our position is that, aside from the statute of limitations, Ellen Flores was not involved in fraudulent conduct, she did not knowingly submit fraudulent information to GMAC,” Sala said.
While the Herreras do not face any charges in the case, O’Malley and Flores who are currently free on bond now face a maximum of 270 days in jail, and 375 hours of community service, respectively. They also have to pay back $158,000.
Judge Thomas C. Clark has postponed hearing until August 25 to give the defense more time to prepare.