Title
Receive and accept the Annual Real Estate Fraud Report for Fiscal Year (“FY”) 2023-24 submitted by the District Attorney’s Office in accordance with California Government Code section 27388, subdivision (d).
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors:
Receive and accept the Annual Real Estate Fraud Report for Fiscal Year (“FY”) 2023-24 submitted by the District Attorney’s Office in accordance with California Government Code section 27388, subdivision (d).
SUMMARY:
The District Attorney’s Office hereby submits its Annual Real Estate Fraud Report for FY 2023 - 24 for the Board of Supervisors to evaluate the District Attorney’s Office’s effectiveness in investigating, prosecuting, and deterring real estate fraud.
DISCUSSION:
The District Attorney’s Office received 16 real estate fraud referrals during FY 2023-24. These referrals came from multiple sources, including local police agencies, private sector professionals, and Monterey County residents. They demonstrate that real estate fraud continues to pose a risk to Monterey County homeowners and residents. The new referrals involved a variety of alleged fraud schemes, including the recording of fraudulent deeds, classic timeshare-related frauds, fraudulent sale of vacant land by impersonating the absentee owner, mortgage loan fraud, and unlicensed real estate activity. Many referrals came from people who have worked with our office in other cases and so know how to spot other frauds. This speaks to the benefit of continued prosecution of these crimes, and the of the value of community outreach.
Additionally, in FY 2017-18, the San Francisco Division of the Federal Bureau of Investigation (“FBI”) and the Monterey County District Attorney’s Office announced the creation of a new task force, the Monterey County Financial Crime Task Force (“MCFCTF”), whose mission is to identify, investigate, and prosecute individuals engaged in financial crimes, including real estate fraud. Throughout FY 2023-24, the FBI and the District Attorney’s Office have continued to work together in identifying and investigating new cases of real estate fraud on a greater scale. All cases identified in this report that were jointly investigated by the MCFCTF are marked with an asterisk (*).
New Referrals & Ongoing Investigations
Of the 16 new referrals, all 16 required investigations beyond customary file review, background checks, and legal research to analyze whether a local or statewide action may be brought that can be proven beyond a reasonable doubt, if criminal, or by a preponderance of the evidence, if civil. These cases require the investment of considerable investigative resources, including the preparation and execution of search warrants on financial institutions, homes, and places of business, before the District Attorney can make charging decisions. Financial documents obtained in real estate fraud matters typically require analysis of the flow of funds by the District Attorney’s Accountant III to determine the nature and extent of the fraud, and often require coordination with other Monterey County agencies, such as the Clerk-Recorder and Assessor, with state agencies such as the DRE, DFPI, and with other counties.
Prosecutions Filed in FY 2023-24
During FY 2023-24, the District Attorney’s Office charged two new criminal cases.
• People v. Gunderson: The People filed two felony charges of identify theft, one misdemeanor charge of practicing real estate without a license, and one misdemeanor charge of false advertising. Mr. Gunderson advertised and pitched timeshare exit services without a license, but was in fact selling a new timeshare plan. Mr. Gunderson collected the personal information of attendees at the seminar, and new credit cards were opened in their name which were then charged by Mr. Gunderson’s employer. This case had a preliminary examination scheduled for July 2024, and a resolution is expected in the next fiscal year.
• People v. Aquino: The People filed several felonies including filing a false document and forgery. Mr. Aquino filed false grant deeds, transferring various properties around Monterey County to his ownership. Additionally, he made various payments to the County Assessor’s office in hopes of bolstering his falsified claims, although he made those payments through fraudulent checks. He has pled to one count of filing a false document and awaits sentencing so a resolution is expected in the next fiscal year.
Ongoing Filed Real Estate Fraud Cases
All cases opened in FY 2023-24 are ongoing. All ongoing cases in the previous year’s report have concluded.
Real Estate Fraud Civil Settlements and Criminal Convictions
In FY 2023-24, the District Attorney’s Office obtained a misdemeanor criminal conviction in one matter, and felony criminal convictions in three actions, all involving real estate fraud, and all affecting Monterey County residents:
• People v. Kirsten Johnson: The People filed a complaint alleging 10 felonies ranging from forging real estate deeds and filing false documents to grand theft and perjury. Specifically, Ms. Johnson forged two deeds transferring a house and condo from a victim to Ms. Johnson. Ms. Johnson filed those fake deeds with the Monterey County Clerk-Recorder. Later, she used her fraudulently obtained title to market the properties, stealing hundreds of thousands of dollars from an unsuspecting victim who believed he was buying a house. Ms. Johnson used those stolen funds to purchase a variety of assets, including another house. The People filed a “seize and freeze” motion pursuant to the “Aggravated White Collar Crime” provisions under Penal Code section 186.11, which allowed the People on behalf of the victims to preserve assets. This preservation included the placement of a lis pendens upon property Ms. Johnson purchased following the false sale. The Court granted a temporary restraining order, and the people are pursuing a preliminary injunction to preserve these assets until the end of the case, when they will be liquidated to fund restitution on behalf of the victims. A resolution of this case would also allow the victim’s title to be properly restored pursuant to Penal Code section 115(e). Ms. Johnson has a prior conviction for forgery. A jury trial was set in this case for July 10, 2023 and she entered a plea to all counts on the first day of trial. She was sentenced to five years in the California Department of Corrections and Rehabilitation.
Public Outreach
The District Attorney continues to engage in public outreach for purposes of detecting and identifying real estate fraud in Monterey County. Now in its eighth year, the Tri-county Real Estate Advisory Team (“REFAT”) met twice during FY 2023-24: November 16, 2023 and February 8, 2024. Both of these meetings were in-person with an option to attend over Zoom to encourage participation. REFAT meetings are organized on a rotating basis between Monterey and Santa Cruz counties and chaired by Monterey County District Attorney Jeannine M. Pacioni and are attended by prosecutors and investigators from Monterey, Santa Cruz and San Benito counties. Additional REFAT participants include the employees of the California Bureau of Real Estate, representatives from elected offices, local law enforcement officials and private sector professionals. Each REFAT meeting features a keynote speaker who presents on fraud trends impacting local real estate markets. A roundtable discussion follows.
Prosecutors assigned to the District Attorney’s Office’s Real Estate Fraud Unit also continue to be active members of the California District Attorney Associations’ Real Estate Fraud Committee, which meets several times per year.
Additionally, members of the Real Estate Fraud Unit, including attorneys and investigators, have prepared a presentation on how to detect and protect against real estate fraud. This presentation has been given to various groups around Monterey County.
The investigation and successful prosecution, criminal or civil, of real estate fraud activity in Monterey County will continue to be resource intensive. The continued availability of revenue from recording fees is critical to the District Attorney’s Office’s ongoing efforts to deter, investigate, and prosecute real estate fraud cases. To the extent possible, in accordance with Government Code section 27388, subdivision (f), emphasis will continue to be placed on fraud involving the largest number of victims and individuals whose residences are in danger of, or actually in, foreclosure.
Real Estate Fraud Statistics for Fiscal Year 2023-24
New Referrals: 16
Investigations Opened: 16
Joint MCFCTF Investigations: 0
Arrests: 2
Criminal Complaints: 2
Convictions: 1
Civil Judgments and Compromises: 0
Appeals: 0
OTHER AGENCY INVOLVEMENT:
In FY 2023-24, the District Attorney’s Office worked closely with various state and federal agencies to investigate and prosecute real estate fraud cases. These agencies included the Federal Bureau of Investigation, the California Department of Real Estate, and the real estate fraud units of other California District Attorney’s Offices.
FINANCING:
Total cost of the program was $354,476 for FY 2023-24. Those costs involved investigation and prosecution activities. Total funds available were $522,313, resulting in a net county cost of $0.00.
Revenues
Beginning Balance: $ 294,023
FY 2023-24 Income: $ 228,290
Total Funds Available: $ 522,313
Expenditures
Salaries & Benefits: $ 338,971
Supplies & Services: $ 15,505
Total Expenditures: $ 354,476
Ending Balance $ 167,837
BOARD OF SUPERVISORS STRATEGIC INITIATIVES:
Mark a check to the related Board of Supervisors Strategic Initiatives
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__Administration
__Health & Human Services
__Infrastructure
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Prepared by: Mirco Haag, Deputy District Attorney, Ext. 7713
Bruce Suckow, Finance Manager, Ext. 5259
Approved by: Jeannine M. Pacioni, District Attorney, Ext. 5470