Honolulu mortgage company executives indicted in scam
By Peter Boylan
Advertiser Staff Writer
By Peter Boylan
The two top executives of a Honolulu mortgage company were indicted by a federal grand jury for allegedly coordinating a scheme that bilked banks and troubled homeowners out of hundreds of thousands of dollars, court documents show.
John M. Dimitrion, founder and chief executive of Mortgage Alliance LLC and his wife, Julie A.B. Dimitrion, the firm's chief financial officer, were indicted with Rick Kealoha Pa Jr. and Benjamin Yoshito Thompson after they allegedly defrauded homeowners and lending institutions by promising to stave off foreclosure.
The indictments are the result of a more than yearlong FBI investigation into mortgage fraud in Hawai'i. FBI agents made the arrests yesterday.
"It's part of an ongoing investigation into mortgage fraud crimes in Hawai'i," said assistant U.S. attorney Clare E. Connors, who is prosecuting the case.
The four 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 between 2005 and 2007. Of that money, $139,114 was used at the discretion of John and Julie Dimitrion and an undisclosed amount went to Mortgage Alliance, Pa and Thompson.
If convicted, the four face up to 20 years in prison on each charge.
They are accused of targeting homeowners on the brink of foreclosure — including some who were members of Calvary Chapel Pearl Harbor — and offering relief if the homeowners agreed to a temporary sale of the house to a third party "investor" who worked for John Dimitrion, according to court documents.
The four allegedly told the homeowners they could remain in their homes and their title would be returned to them after a set period of time.
Homeowners paid John Dimitrion $20,000 for the service, thinking their mortgage payments would be handled by Dimitrion's company, court documents said. John Dimitrion and his associates applied for larger loans than what the homeowners owed and allegedly stole the proceeds by funneling the money into fake escrow accounts created by Julie Dimitrion, the documents said.
In each case the homeowner was unable to make the payments on the larger loan, the documents show.
John and Julie Dimitrion took the money from the escrow accounts for themselves and failed to make all the monthly payments for the distressed homeowners, the documents said. When the loan defaulted, the "investors" who worked for Dimitrion initiated eviction proceedings against the homeowners, according to the court documents.
The case is part of ongoing investigations of mortgage fraud in Hawai'i that the FBI's Honolulu division has been handling for more than a year.
In May 2008, five people — John Gilbert Mendoza, Antonio Alcantara Jr., Ira Altwegg, Albert A. Alimoot Jr. and Evan M. Koizumi — were indicted as a result of the same investigation. Mendoza and Altwegg were former employees of Mortgage Alliance LLC.
Phone calls to Mortgage Alliance's Alakea Street office seeking comment for this story were not answered yesterday.
At the time of the earlier indictments, John Dimitrion told The Advertiser that his company was aboveboard.
"We don't tolerate any of that in our company," he said in a May 29, 2008, interview. "I've fired several people after catching them in fraudulent activity, but with so many transactions going through, you kind of have to trust our loan officers."
Mortgage Alliance LLC was founded by John Dimitrion in 2001 and at one time employed between 60 and 80 people.
In 2007, Hawaii Business magazine ranked it the fourth-best small company to work for in the state, ahead of the local offices of American Express, Edward Jones and Deloitte and Touche LLP.
The company's Web site, www.mortgagealliancehawaii.com, has a picture of John and Julie Dimitrion holding an award from Hawaii Business magazine.
Thompson made his initial appearance in front of U.S. Magistrate Kevin S.C. Chang yesterday afternoon. He entered a plea of not guilty and was released on $25,000 bail.
John and Julie Dimitrion are in federal custody and are scheduled to make their initial appearance in U.S. District Court today. Pa is on the Mainland and is being sought by FBI agents.
Using online advertising and first-person solicitations, John Dimitrion and his crew sought out homeowners facing foreclosure and enlisted them in their foreclosure bailout program, according to the federal indictment unsealed in U.S. District Court yesterday.
John Dimitrion charged the homeowners $10,000 to pay the "investor" who would buy their home but not take possession, court documents said. He charged another $10,000 to put the majority of the proceeds from the loan transaction into an account maintained by Global Financial Holdings LLC., an unlicensed escrow company created by Julie Dimitrion, according to the court documents.
By agreement between the fake investor and the homeowner, the money in the Global Financial bank account was supposed to be used to cover monthly mortgage payments, taxes, association fees and other costs associated with the properties, according to court documents.
When the homeowner ran into difficulty making payments on the new mortgage, the homeowner was told the money in the Global Financial account would cover it. John Dimitrion told the homeowners that when they got their title back, they would get the leftover loan proceeds from the Global Financial account, court documents said.
For the fake investor to get a new loan for the property, he or she had to lie to the bank by saying they intended to live in the home.
The fake investor, aided by employees of Mortgage Alliance, prepared and submitted fake documentation to the banks, the documents said.
The banks then transferred the loan proceeds from their Mainland accounts to the accounts of escrow companies in Hawai'i responsible for closing the fraudulent real estate transaction, according to court documents.
In each case, the amount of the new loan taken out in the name of the allegedly fake investor was larger than the original loan owed by the homeowner, which resulted in large loan proceeds.
John Dimitrion controlled the escrow accounts and decided how the money was distributed, according to court records. In each case the homeowner was unable to make their payments and Dimitrion and his associates attempted to evict them.
The indictment against Dimitrion and his associates outlines fraud that resulted in eviction proceedings against two 'Ewa Beach homeowners and the owner of a condominium in Kapolei.
In the first 'Ewa Beach case, on July 28, 2005, John Dimitrion met with the owner of the home at 91-1033 Kaiakua St. who was struggling to make monthly mortgage payments, according to court documents. Dimitrion introduced the homeowner to Thompson and said that because Thompson had good credit, he could take title to the property until the homeowner's credit was repaired, the documents say.
Dimitrion told the homeowner that because his home value had increased significantly since he first bought it, the new loan in Thompson's name would dig into the equity in the home. The loan proceeds from the transaction would be put into Global Financial's account and would be used to pay the monthly mortgage payments.
Dimitrion told the homeowners the service would cost $20,000, according to the indictment.
Dimitrion and Thompson signed two loan applications for the Kaiakua Street house and sent them to Fremont Investment and Loan.
The applications misrepresented that Thompson intended to occupy the house and included false information about Thompson's employment, bank account balances and tax returns, according to court documents.
On July 29, 2005, Fremont Investment and Loan funded the two loans and made two wire transfers totaling $701,387 from a California bank to the escrow company's account in Hawai'i.
John Dimitrion decided how to disburse the money from the escrow company by giving $10,000 to Thompson, $68,000 to Global Financial, and $16,000 in fees to Mortgage Alliance, according to the indictment.
Reach Peter Boylan at firstname.lastname@example.org.