(Published Thursday, September 27, 2007 11:21:36 AM CST)
A d v e r t i s e m e n t
By Mike Heine mheine@gazetteextra.com
A third suspect in Walworth County's largest mortgage fraud investigation has admitted swindling six mortgage lending companies out of more than $2.9 million through 13 bogus sales of 12 properties.
Martin Valadez, 31, Delavan, signed a federal plea agreement Sept. 11 admitting he secured straw buyers and the false identities used to purchase homes at inflated values that the straw buyers never intended to live in.
He is charged with a single count of wire fraud.
Prosecutors say Valadez participated in the scheme with James Lytle, 33, of Lake Geneva, and his father, Jose Valadez, 53, Delavan, both of whom have signed plea agreements admitting wire fraud. Others may have participated in the scheme, and further charges are possible, Assistant United States Attorney Carol Kraft said.
"He was a major player in the fraud scheme," Kraft said of Martin Valadez, who was recently released from prison for his second cocaine delivery conviction.
Martin Valadez was in custody for violating his probation because of his admitted involvement in the scam. He admitted last year to using fraudulent information in four mortgage acquisitions, according to circuit court documents.
Martin Valadez has been cooperative with the investigation, Kraft said.
His attorney, Robert C. Howard, declined to comment.
With the straw buyers by his side and false identities in hand, Martin sometimes attended the property closings with Lytle. He also posed as a translator for straw buyers, who pretended they did not speak English, according to his plea.
Martin Valadez and Lytle, who once worked together at a Lake Geneva brokerage company, were paid by the property sellers, who also participated in the scheme. Valadez and Lytle, in turn, compensated the straw buyers and others for their participation, according to court documents.
As the mortgage broker, Lytle made between $3,000 and $20,000 per sale and shared proceeds with other scheme participants, according to his plea. Martin's plea does not say what he made from the scheme, but Kraft said the two were essentially the leading partners.
The lending companies lost out because most of the properties went into foreclosure and were sold at a loss shortly thereafter, according to the plea.
Lytle is accused of orchestrating a half-dozen more fraudulent home sales without Martin Valadez, bringing total losses in the scheme to more than $4 million for eight lending companies, according to his plea.
Jose Valadez is accused of posing as a named buyer during a home sale. His business, Valadez Furniture in Delavan, also provided employment and account history of several homebuyers, whose names were used in fraudulent real estate transactions, according to a federal search warrant affidavit.
The scheme also used falsified credit and employment histories, appraisal documents and loan documents, according to court documents.
Of the homes Martin Valadez participated in selling, six were in Delavan, four were in Lake Geneva, with others in Williams Bay and Whitewater. One home was sold twice, according to court documents. Sale prices ranged from $122,900 to $330,000.
WHAT'S NEXT?
Martin Valadez will have a plea hearing Friday, Oct. 12. He faces a maximum penalty of 20 years in prison and fines up to $250,000.
James Lytle's plea hearing is Tuesday, Oct. 2.
Jose Valadez has a status conference Friday, Oct. 12, when a plea hearing will likely be scheduled.
If all plead guilty, as expected with the signed pleas, sentencing hearings would be scheduled later.
