Linda Dung Tran, 33, is accused of 29 felony counts that include conspiracy to commit bank fraud, bank fraud, making false statements to a bank, engaging in monetary transactions using criminally derived property and aiding and abetting. Pablo Curiel, 71, of San Jose is charged with 17 counts that include conspiracy to commit bank fraud, bank fraud, making false statements to a bank and aiding and abetting.
If convicted of all charges, Tran faces a maximum of 760 years in federal prison and more than $24.5 million in fines. Curiel faces 390 years in prison and more than $13 million in fines, according to the indictment.
Tran and Curiel are accused of being part of a group that included Norma and Claudia Valdovinos, agents at Century 21 Golden Hills Realtors, and others that allegedly defrauded a series of banks from 2005 to 2007.
The defendants' scheme involved kickbacks and secret down payments, all without the borrowers' knowledge, according to the indictment. Upwards of $40 million in loans were provided to buyers who would not have received loans if not for the defendants' fraud, according to the U.S. Department of Justice.
Tran allegedly paid Norma Valdovinos kickbacks to overlook fraudulent stated-income information on the borrowers' applications. Tran also arranged for Curiel to provide down payments for the stated-income loans, the indictment stated.
But the down payments to the banks were made in secret through escrow companies with notes from the borrowers, according to the indictment. Curiel thus secured the loans through a deed of trust, which he filed after the close of escrow so the banks that were providing first and second loans did not learn about the third deed of trust.
Curiel and Tran made sure the down payment was funded in a way that disguised that the down payment was borrowed, according to the indictment. Curiel allegedly charged borrowers, including an East Palo Alto family, Miguel and Rafael Cacho Vega, interest-only payments for two years at 10 percent, plus a balloon payment of 110 to 125 percent at the end of the 2-year term.
Financial institutions that were defrauded included Greenpoint Mortgage, Washington Mutual, Countrywide Home Loans, National City Bank and Downey Savings and Loan, according to the indictment.
In the East Palo Alto case, Miguel Cacho Vega, a tile setter, was referred by Century 21 Golden Hills Realtors to Tran in 2006 to secure a $20,000 loan to pay off credit-card debts.
Tran agreed and told him that she needed his brother Rafael to co-sign the loan.
But instead of obtaining a $20,000 loan, Tran allegedly "sold" Miguel Cacho Vega's home to Rafael without either man's knowledge, according to the lawsuit filed by the nonprofit Community Legal Services in East Palo Alto. She did so by taking out a $675,000 loan from Downey Savings & Loan Association to pay off Cacho Vega's original home loan, allegedly without his knowledge.
She obtained a down payment for the Downey loan from Curiel for $75,000. Curiel received a deed of trust after the fact without the bank knowing, then charged exorbitant balloon payments to the Cacho Vegas, the indictment states.
Tran gave Cacho Vega the $20,000 he wanted, but took his name off the title without telling him and pocketed $190,000, according to court papers.
Cacho Vega lost the home to foreclosure in 2008, the civil suit alleged. (The Weekly published a story about the Cacho Vega case on June 26, 2009.)
Miguel and Rafael Cacho Vega sued Tran and Curiel in December 2007 for fraud. A federal judge in February 2010 awarded Miguel Cacho Vega $136,942 and Rafael $30,000, plus $22,385 to both brothers after Tran defaulted in their cases.
Robert Kane, one of the Cacho Vegas' attorneys, said the brothers have not yet received any compensation. Tran filed for bankruptcy and the brothers could have to wait until after the criminal trial. If Tran and Curiel are convicted, compensation could be a requirement of their sentence or any plea deal, he said.
Similar cases involving Tran and Curiel have emerged in federal court.
In a separate civil case, 12 Latino clients in San Jose were allegedly similarly defrauded, according to a lawsuit by the nonprofit Law Foundation of Silicon Valley and Greenberg Traurig, LLP, an East Palo Alto law firm. The plaintiffs' attorneys declined to comment because the case is still actively being litigated, they said.
In another federal civil case filed July 2, 2010, the Federal Deposit Insurance Corporation (FDIC), is suing seven Latino victims of Tran and Curiel — including Rafael Cacho Vega — for fraud along with Curiel and Tran's companies as a result of the fraudulent loans taken out on their behalf from the now-collapsed Downey Savings & Loan Association.
Kane said he was successful in getting the FDIC to drop Cacho Vega from the suit once a declaration was received that detailed how he was misled.
The victims are from East Palo Alto, San Jose, Santa Clara, Gilroy, Newark and Beaumont (in southern California), according to court papers.
Robert Carey, attorney for Tran, said he could not comment on the case because it is in litigation.
Tran conducted business as Absolute Investment Group, Palacio Mortgage and Tara Home Financial Services in San Jose.
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