David Singui, 52, was sentenced to 94 months in federal prison last week. He was also ordered to pay more than $4 million in restitution. Singui is the former CEO of Direct Money Source (DMS), a company prosecutors say promised to help distressed homeowners avoid foreclosure, but instead stole the equity in homes and served as the homeowners’ “imposter landlord.”
According to the U.S. Attorney’s Office, homeowners were induced to sell their homes to straw borrowers sponsored by DMS on the understanding that the company would hold the properties for one year while they repaired their credit. The homeowners would then be in a position to repurchase the properties. Instead, DMS and Singui took permanent title to the homes and misappropriated the equity. DMS and Singui served as landlords for the distressed properties, collecting rent from the homeowners for more than five years. The scheme cost homeowners more than $4 million and lenders more than $11 million, according to the U.S. Attorney’s Office.
“Mortgage rescue schemes cause significant harm to distressed homeowners, as well as to financial institutions that are often defrauded in the scams,” said United States Attorney Eileen M. Decker. “These schemes target vulnerable victims who are already in financial jeopardy and make their plights even worse. Some of the victims in this case were left homeless by the financial predators who targeted them, including Singui.”
DMS took the title to about 50 distressed homes, prosecutors said. The company usually ended up with about $100,000 equity per transaction, plus an average of $35,000 in fees and commissions. Meanwhile, the company’s straw borrowers usually ended up owing around $300,000 or more on loans that defaulted, since DMS didn’t make mortgage payments as promised.
“The defendant preyed on struggling and trusting homeowners, literally stealing the American Dream out from under them, with no remorse,” said IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “Today’s sentencing exemplifies the continued effort by federal law enforcement 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.”
The former CEO of a California mortgage brokerage is headed to jail for, essentially, stealing homes out from under their owners and then renting them right back.