USA vs Christopher Warren by Robin Medecke

by 07 Mar 2009
Misrepresentation and other allegations abound about the misconduct of investment bankers like Bernard Madoff, the corporate misguidance and misbehavior from the likes of Lehman Brothers, Bear Stearns and other notable mortgage lending giants. Unimaginable uncontrolled excesses and predatory practices of mortgage bankers like Daniel Sadek?s Quick Loans et al, abound as well. As almost every government agency steps up their investigations into the fraud, we are now presented with the one case that may prove to be the ultimate poster-boy of mortgage broker fraud. His name is Christopher Jared Warren. ?Fun While it Lasted!? Lenders have been pulling away from TPO (third-party originations) as a general rule lately. Good brokers be damned, we have this one broker who illustrates, to the detriment of all others, the risks and costs associated with wholesale. Just a day before he fled (it is believed) to Mexico on a private jet he chartered for $156,000, Christopher Warren wrote a statement emailed to a Sacramento Bee reporter and subsequently posted on the web site of Triduanum Financial, a company he controlled. Warren admited to a career of committing fraud and teaching those in his supervision the techniques for doing the same. . As it circulated among the mortgage community and appeared in news reports and on blogs everywhere in ensuing days, responses ranged from ?nauseating? to ?outrageous.? It didn?t take long to reach national attention. "It was not apparently written as a confession, but as a resume. The author, Chris Warren, says he wants a job investigating mortgage fraud, and wanted to demonstrate that he has the background for the job. If he did what he said he did, he?s got to know more about mortgage fraud than just about anybody." That was the introductory paragraph of Warren?s 7-page essay posted on the Implode-O-Meter. I, like so many other industry veterans who read Warren?s account, were aghast. It came as no surprise, and was our unique privilege days later, to share with our readership the arrest warrant issued for Warren ( when the IRS decided to take action through the court. Ironically enough, Warren had been cooperating with the FBI and IRS officials in an ongoing fraud investigation before he decided to flee. The federal warrant estimated $100 million in damages resulted from the mortgage fraud and investment scheme Warren and others were involved in, spanning five states and approximately 500 properties. CitiMortgage alone was reported to have lost $6 million on 15 ?bogus? loans. Occurring between September 18, 2007 and July 7, 2008, the specific charges include allegations of conspiracy to commit bank fraud and conducting a continuing financial crimes enterprise, all of which occurred during Warren?s association with Loomis Wealth Solutions, Advanced Lending Group Inc. dba Nationwide Lending Group Inc., the NARAS Secured Fund #2 LLC and related entities. Warren had pled guilty to one count of mail fraud in an associated case against friend and former business partner Garret Gililland, who was indicted in August of 2008 on over twenty counts of mortgage fraud, money laundering, and conspiracy to manufacture marijuana plants. But that was just one investigation and one scheme. Warren admits to another $75 million in mortgages that ?contained some sorts of material frauds? originated while he worked at Ameriquest. He also admits to the theft of 680,000 customer records containing private information, and an additional $810 million in ?bad MBS securities? originated from his own company, WTL Financial Inc., prior to his employment with Nationwide Lending Group. His latest business venture, Triduanum Financial, was reported to have exceeded its $15 million warehouse lending facility by $20 million before it folded in January of 2009. Added up, this one person has caused or contributed to losses of nearly $1 billion, and that does not include the invaluable loss of privacy to those 680,000 former Ameriquest customers. Also posted on his company?s web site were these additional claims: HOW IS IT POSSIBLE? ? That Flagstar Mortgage didn?t catch Lender Services Direct Inc., and Loomis Wealth Solutions who conspired with correspondent lender Excel Funding to steal over $5,000,000 in seller-proceeds that are now missing. ? That CITI Mortgage didn?t catch correspondents Mortgage Bank of California and Bondcorp Realty Services over-finance $30,000,000 in bad mortgages with cash-back purchases for various buyer groups? How many of these loans are already now owned by our government, are tax-payer subsidized, or held by FNMA and Freddie Mac? ? That GMAC Mortgage LLC., bought over $3,000,000 in mortgages secured in the Orlando Academy Cay Club aka ?The Greens? on $400,000 appraisals when there are over 30 active listings under $125,000? ? Taylor Bean and Whitaker were not aware that over $5,000,000 in mortgages sold to them were never recorded. It is truly revolting to the ethical, honest and hard-working professionals in the mortgage industry to read these things. But Warren takes the outrage one step further, by accusing experience as being the weakest link in the system: ?The regulators, managers, qc department employees, guideline writers, and board members of mortgage lending institutions and banks are all, when averaged, over the age of forty seven. The average mortgage fraudster is in mid twenties to early thirties. The problem is the 5% of fraudsters out there are extremely intelligent, agile, and constantly innovating techniques to beat every effort of the anti-fraud forces in the banking industry. Age plays into this, because the youth is innovative and aggressive, and as we age and approach AARP land, we become less nimble in our mind, closed to new ideas.? I would make the exact opposite argument, that the lack of experienced staff in the primary and secondary markets actually enable fraudsters like Warren. An inexperienced new hire assigned to do a cursory file review for completeness is much less likely to notice the whited-out box on a 1003 or misdated and missing disclosures. The college-grad hired by the local bank as a funder was likely never prepared to keep an eye out for the invalid notary or catch forged signatures. A processor or junior underwriter with the typically required ?1-2 years of experience? is not generally going to be savvy enough to discern details buried in fraudulent tax returns, phony leases or modified sales contracts. And the clerk working in the wire department at the warehouse bank may not catch a discrepancy in the intended recipient?s instructions when ordering funds. But those of us with a smattering of gray hair have seen it before. We know what to look for and where ? and we DO catch it. Those of us ?approaching AARP land? didn?t jump on the mortgage bandwagon just for the ride in the boom years. We deeply resent the actions of those unscrupulous few who have forever tainted the industry?s reputation with their actions. As we watch the myriad of brokerage firms, wholesalers and warehouse lenders increasingly forced to withdraw from the market, it has become painfully clear that inexperience and greed -- the very qualities that Warren espoused -- have eroded what was once a revered occupation. ?Not so happy now!? Warren was arrested by the U.S. Border Control authorities trying to re-enter the country from Canada after a global jaunt that led him to Lebanon. He was carrying Swiss Bank Certificates for $1.1 million in gold, 4 ounces of platinum valued at $1,420 each, and $70,000 cash. Authorities said $4 to $5 million in gold believed to have been ?also brought to Lebanon? was not recovered. The charges pending against Christopher Warren carry stiff penalties. On the count of conspiracy to commit bank fraud, he faces a maximum 30-year prison term. The charge of mail fraud can carry a 20-year term. And it will be 10-years to life should he be found guilty on the allegation of conducting a continuing financial crime. But with the inevitable court battle and endless appeals, this will ultimately play out to be yet another example of bureaucratic red-tape and governmental interference in the market?s ability to be able to regulate and heal itself. Even if he is found guilty and serves the time, it will never replace the millions he cost the industry and consumers. Nor will it repair the irreparable damage done to the image of mortgage brokers and the affect fraudulent behavior has had on the willingness and profitability for lenders to continue to participate in the secondary market. Warren claimed to be the hapless ?student ? of fraudulent practices by way of teachings taken from his work experience with Ameriquest between 2001 and 2004. He took that knowledge into business ventures he established afterward, carrying on the same practices he claims he had no knowledge were ?federal violations.? That?s simply ludicrous. Did he cheat on the exam for his broker?s license? And what legitimate business owner does not endeavor to educate themselves on all aspects of law with regard to their business and make every attempt to remain in compliance to maintain its viability? At what point did the marvelous revelation that all of this was horribly damaging and illegal occur? The sheer audacity of his claims to being a one-man solution for fighting mortgage fraud boggles the mind: ?Almost a billion dollars of toxic assets came from me making others above me rich beyond my imagination. They asked for more and more, knowingly, and I gave it to them. Now I intend to fix it and help the best I can by sharing what I have learned and know. I am the best at what I was taught and then re-created again and again and mastered myself. I am the best man for shutting it down. Completely and forever.? ?This is what is wrong and how to fix it. I am the man for the job, Chris Warren, have the management experience, the banking experience, and could assist in the oversight of the most major transformation of mortgage regulation without changing one guideline and still completely eliminate mortgage fraud and restore confidence in the American dream and the securities that that very dream provides for investors.? So now you suggest that we, as taxpayers and mortgage industry professionals, should hire YOU to police US? Not even the least experienced among us are that na



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