MILWAUKEE-Federal prosecutors have charged a second man in the Walworth County mortgage fraud scam.
Jose Valadez agreed to plead guilty Wednesday to a single count of federal wire fraud for using another man's identifying information and acting as a straw buyer in the sale of a home, according to a plea agreement filed in federal court.
Valadez, 53, pretended to be another man when he went to a title company to close on a lakefront home at 900 Inlet Shore Drive, Delavan, according to the plea agreement. He presented a Wisconsin identification card with his picture on it, but the card had the name and personal information of the other man.
Valadez signed all of the mortgage documents in the other man's name and never made any loan payments on the $300,000 house, according to the plea.
The house was sold five months later for $30,000 more and went into foreclosure about eight months after that, according to county tax roll documents.
The man, whose identity apparently was stolen, was listed as the seller in the latter transaction, according to tax roll documents. The man told FBI agents he never purchased the property, according to court documents.
The home now sits with weeds almost reaching to the bottom of the front windows.
According to the plea, Valadez was paid $1,500 by another scheme participant for acting as the straw buyer.
Charging documents did not list Valadez's home address.
According to tax records, Valadez Furniture, 123 Park Place, Delavan, is owned by a man named Jose Valadez.
FBI agents searched Valadez Furniture on Feb. 19, 2006, seeking employment records, W-2 forms and correspondence between the owners, managers or employees of the furniture store and Lake Geneva mortgage broker James J. Lytle, according to the search warrant.
The FBI agent who led the investigation believes Jose Valadez owns the store, according to the search warrant affidavit.
People at Valadez Furniture are suspected of providing false information to verify employment of several home buyers, whose names were used in fraudulent real estate transactions, according to the affidavit.
An FBI informant, who says he knows Lytle, said Lytle told him that Valadez contributed to the scheme by giving employment verification for people he did not actually employ. That fake employment information then was used on loan applications, according to the affidavit.
Lytle told the informant he paid Valadez each time a loan was approved with information Valdez provided, according to the affidavit.
The Janesville Gazette was not able to reach Valadez for comment. A call to the business went unanswered.
Lytle pleaded guilty May 15 to wire fraud for orchestrating the mortgage fraud scheme, which relied on using straw buyers and fraudulent information to obtain home loans, according to his plea agreement.
He facilitated the fraudulent sale of about 19 Walworth County properties to make money from the home purchases. The home values were inflated and Lytle would skim money off the top of the loans for facilitating the sales, according to his plea.
He made between $3,000 and $20,000 per transaction and swindled eight mortgage lending companies out of about $4 million, according to court documents. It is unclear how much money he made from the scam.
Lytle shared some of the money he made with others who participated in the scheme, including "persons who were recruited to act as straw buyers of the properties," and people who helped him in locating straw buyers, according to his plea.
An arraignment for Valadez has not been set. The maximum penalty for wire fraud is 20 years in prison and fines up to $250,000.
Valadez has agreed to cooperate with prosecutors and testify against others who participated in the scheme, according to the plea.
His attorney, Paul Barrett, said Valadez played a minor role in the scheme, and he expects others to be charged.
