News Column

Loan officer, stepmother accused of conspiracy in home loan fraud case

July 13, 2014

By Jason Kotowski, The Bakersfield Californian



July 13--Consuelo Herrera and her husband didn't make enough money to qualify for a loan to purchase the property they wanted in southeast Bakersfield.

Prosecutors say Penny O'Malley, a former loan officer with GMAC Mortgage, came up with a solution.

According to prosecutors, she convinced her stepmother to provide information on the loan application stating that Herrera worked at a liquor store owned by the stepmother's husband, thereby falsely increasing the couple's income and qualifying them for the loan.

The loan was granted in 2006, and defaulted on in 2008. But it wasn't until 2010 the alleged crime was discovered during an investigation into mortgage fraud by the U.S. Department of Housing and Development.

The total loss from the fraud was $158,572, according to prosecutors.

Both O'Malley and her stepmother, Ellen Flores, were charged in December 2013 with conspiracy, grand theft and other crimes. Prosecutor Gordon Isen amended the complaint Friday to charge each woman with five additional felonies -- including perjury and obtaining money by false pretenses -- bringing the total number of charges against each defendant to 11.

O'Malley and Flores are free on bond.

The timing of the alleged crimes and the filing of charges is of particular importance in this case because defense attorneys are arguing the statute of limitations has expired. The alleged crimes are eight years old, and there is a three-year statute of limitations on the conspiracy charges, four years for the fraud charges.

Isen contends the government didn't became aware of the alleged fraud until Sept. 15 2010, and that's when the clock started ticking on the statute of limitations.

Attorney H.A. Sala, representing Flores, said Friday one of the most significant issues in the case is why prosecutors delayed so long in pursuing charges.

"Our position is that, aside from the statute of limitations, Ellen Flores was not involved in fraudulent conduct," Sala said. "She did not knowingly submit fraudulent information to GMAC."

O'Malley's attorney, Kyle J. Humphrey, said he would wait until the preliminary hearing is over before commenting.

The hearing began Tuesday and continued through Friday and, because of the added charges, Judge Thomas C. Clark has postponed it until Aug. 25 to give the defense more time to prepare.

The Herreras are not charged in the case. It was during an interview with a HUD special agent that Juan Herrera, Consuelo's husband, said his wife was never employed by the liquor store.

In fact, she was unemployed at the time they applied for the home loan.

___

(c)2014 The Bakersfield Californian (Bakersfield, Calif.)

Visit The Bakersfield Californian (Bakersfield, Calif.) at www.bakersfield.com

Distributed by MCT Information Services


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Bakersfield Californian, The (CA)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters