Friday, March 25, 2005
Loan Brokers arrested on Theft charges
Santa Clara District Attorney Press Release – March 24, 2005
Yen B. Dang, Deputy District Attorney of the Santa Clara (CA) Consumer Protection Unit announced that on March 23, 2005, Esperanza Valverde, age 37, and Herman Covarrubias, age 37, both of San Jose, California, were arrested and charged with multiple counts of grand theft involving fraudulent activity in the procurement of loans. Covarrubias and Valverde operated a mortgage brokerage company called Summit Mortgage One in Milpitas, California. The District Attorney’s Consumer Protection Unit received numerous consumer complaints against Valverde, Covarrubias and Summit Mortgage alleging the defendants engaged in a pattern of fraud and predatory lending practices. The victims were predominantly Spanish- speaking and many did not read or write English. The defendants misled borrowers into accepting adjustable rate loans when the borrowers thought that they were getting fixed rate loans. In addition the defendants falsified loan information, misled borrowers into accepting higher loan amounts, concealed their exorbitant broker’s fee and misrepresented the costs of the loan.
Valverde and Covarrubias gained the confidence of their victims by speaking with them in Spanish and falsely representing their relationships with various banks and lenders. Valverde falsely told victims she was paid by the banks or lenders when in fact she actually charged the borrowers a broker’s fee averaging five percent of the loan amount. The investigation revealed that Valverde and Covarrubias failed to provide many required disclosures to borrowers prior to the borrowers being obligated on the loans. These violations included failing to provide loan documents in a timely manner and failing to provide documents required to be in Spanish, including the broker’s statement of costs and expenses. As a result of the charges, Valverde faces up to seventeen years in prison and Covarrubias faces up to fourteen years in prison.
If you believe that you are a victim of Summit Mortgage One, Esperanza Valverde, or Herman Covarrubias, please contact Investigator Tom Wilson at (408) 792-2940 or Investigator Assistant Cristina De La Mora at (408) 792-2657.
Update on October 21, 2008 by Registered CommenterThe Editor – Ian Shuter – DMS
In the following press release the Santa Clara (CA) District Attorney announced that after a three-month trial, a Santa Clara County jury convicted 41-year old Esperanza Valverde and 40-year old Herman Covarrubias of multiple felony counts of grand theft and forgery in connection with their mortgage business, Summit Mortgage One. The jury acquitted two defendants, Cesar Valverde Ponte and Cayetano Alberto De La Ros, of aiding the fraud.
The case involved over $10 million in fraudulent sub-prime loans, 23 borrowers, and five lenders. The jury found that Valverde and Covarrubias caused losses in excess of $2,500,000.
Valverde and Covarrubias falsified numerous loan applications submitted to lenders. They misrepresented the borrowers’ ability to repay the loans by inflating those borrowers’ income on the applications. They submitted false income tax returns, false W-2 statements, false pay stubs, and false employment verification letters to the lenders.
Valverde and Covarrubias also misled the borrowers, predominantly Spanish-speakers, into signing up for adjustable rate loans instead of the fixed rate loans they had been promised. The defendants misrepresented, and in some cases outright concealed, the broker’s fees they collected from the borrowers.
Valverde faces a maximum term of 36 years in prison; Covarrubias faces up to 24 years.
Update on May 7, 2009 by Registered CommenterThe Editor – Ian Shuter – DMS
The San Jose Mercury News reports that on May 5, 2009 Santa Clara County Superior Court Judge Vincent Chiarello sentenced Esperanza Valverde, 41, to 23 years and 8 months, and her husband, Herman Covarrubias, also 41, to 19 years and 8 months in prison. The couple was ordered to pay more than $900,000 in restitution to victims.
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