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The Honolulu Advertiser
Posted on: Friday, April 17, 2009

Man pleads guilty to fraud

By Peter Boylan
Advertiser Staff Writer

A Honolulu man faces five years in prison, a $250,000 fine and payment of restitution to an evicted homeowner after pleading guilty yesterday to aiding a Honolulu mortgage company accused of orchestrating a foreclosure bailout scheme and stealing hundreds of thousands of dollars from banks and distressed homeowners.

Rick Kealoha Pa Jr. pleaded guilty to wire fraud and conspiracy before U.S. Magistrate Judge Leslie E. Kobayashi. Sentencing is set for Aug. 20.

Pa also faces three years' probation, a $100 special assessment. He will pay restitution in an amount to be determined by the court.

Pa was paid $10,000 to submit falsified mortgage loan appli-cations, according to court documents. When the scam fell apart, a Makakilo family was evicted from their home.

Pa was one of several loan officers employed by John M. Dimitrion, founder and chief executive of Mortgage Alliance LLC, and his wife, Julie A.B. Dimitrion, the firm's chief financial officer.

The Dimitrions are accused of conspiracy to commit mail fraud, wire fraud, money laundering and making false statements on loan applications to obtain $1.3 million in new loans from 2005 to 2007.

Ten people, including the Dimitrions, have been arrested and charged in the past nine months as the result of a continuing FBI investigation into mortgage fraud in Hawai'i.

Dimitrion and his associates are accused of finding homeowners on the cusp of foreclosure and offering help if the homeowners agreed to a temporary sale of the house to a third-party "investor," according to court documents.

They allegedly told the homeowners they could remain in their homes and that their title would be returned to them after a set period of time. But Mortgage Alliance allegedly stole the proceeds by funneling the money into fake escrow accounts, and the new loan would go into default, according to court documents.

On March 2, 2006, Pa agreed to help the Dimitrions with a fraudulent real estate transaction involving a home on Palahia Street in Makakilo, according to court documents.

Pa signed a loan application with New Century Mortgage Corp., falsifying his intent to occupy the home and his financial standing and income, according to court documents.

Based on the fraudulent application, on March 7, 2006, New Century made a wire transfer totaling $294,375 to Hawaii Escrow & Title Inc.

The amount of the new loan exceeded the amount of the old loan and the homeowner was unable to make the payments. The loan went into default and the homeowner was evicted, according to court documents.

Reach Peter Boylan at pboylan@honoluluadvertiser.com.