Two dozen charged in alleged gang-led mortgage fraud (Reuters)

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Reuters - Two dozen people were indicted on racketeering and other charges for allegedly conducting a wide-ranging mortgage fraud based in San Diego and led by a street gang member, according an indictment unsealed on Tuesday.

The lead defendant, Darnell Bell, a documented member of the Lincoln Park street gang in Los Angeles, received at least $9 million in proceeds from the enterprise, prosecutors said.

Bell's status as an active member of the Lincoln Park street gang helped him recruit straw buyers for 220 properties with a total sales price of $100 million, and later maintain discipline among them, according the indictment.

"It was relevant not so much to running the (real estate) scheme but to managing (the people)," Assistant U.S. Attorney Nicole Acton Jones said.

Another defendant, Stanley Gentry, let the conspirators use his real estate license in exchange for a $10,000 monthly payment and a percentage of the commission and broker's fees from each purchase, prosecutors said.

Defendant Billie Bishop was an escrow officer who helped with the enterprise's fraudulent purchases of more than 100 properties, prosecutors said.

The defendants allegedly used straw buyers and inflated appraisals to purchase homes that had sat on the market for extended periods and had been reduced in price.

They submitted offers that exceeded the homes' asking prices, and had the overage paid to a shell construction company that they claimed would make upgrades or handicap modifications to the properties, prosecutors said.

The defendants instead disbursed the "kickback amount" to members and associates of the enterprise as payments for their participation, the indictment said.

Lenders later foreclosed on the properties, taking "severe financial losses," after the straw buyers failed to make payments, the indictment said.

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