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Lost Wallet's ID Cards Spawned Mortgage Fraud

By Tom Jackman
Washington Post Staff Writer
Tuesday, July 31, 2007

It was a little baffling when Jose F. Lara got a check in the mail for almost $2,800 from a bank in Arlington County in December. When the bank told him that it was the overpayment on his second mortgage, things got really baffling.

He didn't have a second mortgage.

Turned out it all tracked back to that day last year when Lara's wallet was stolen. Elizabeth Cabrera-Rivera found it and used Lara's identification to buy . . . a house.

A $419,000 townhouse in Springfield. With no money down.

A townhouse she and her family moved into, refinanced and then quickly fled not long after Lara turned up at the bank in December. Some of Cabrera-Rivera's Christmas decorations are still on the tree out front, and the place remains empty.

It's not as if identity theft is a new concept. Billions of dollars' worth of electronic devices, clothes, maybe even cars are fraudulently purchased each year. But a house?

"They don't really see themselves as doing something wrong as long as they pay the bill," said Mari J. Frank, a California lawyer, identity fraud victim and author of numerous books and articles on the subject. And Cabrera-Rivera had, in fact, been making the mortgage payments.

Yesterday, Cabrera-Rivera, 40, pleaded guilty in Arlington County Circuit Court to identity fraud, credit card theft, conspiracy and obtaining a loan under false pretenses. She was taken into custody from the courtroom after weeping through much of the brief hearing. She is scheduled to be sentenced Nov. 9, when she faces a minimum two-year prison sentence on the fraud charge and up to 20 years on the theft charge. Arlington Circuit Court Judge Benjamin Kendrick can reduce or suspend those terms.

Cabrera-Rivera did not make a statement in court -- other than to blurt out, "I'm guilty of all of this" -- but her attorney, Alberto Salvado, said the scam was "a result of not only her unclean hands, but also the mortgage brokers from the beginning, who allowed this loan to go through without checking the income taxes of Jose Lara." Salvado said it was difficult for Cabrera-Rivera to buy a house, and so with her brother allegedly posing as Lara, she obtained financing from predatory lenders.

"She didn't buy a car and drive away," Salvado said. "She bought a house and moved in."

Deputy Commonwealth's Attorney Lisa A. Wilson said Cabrera-Rivera had her brother, Juan Carlos Cabrera-Rivera, pose as Lara on several occasions, using Lara's driver's license, Social Security card and health insurance card. The brother has since left the country, Salvado said.

Lara, a 42-year-old married father of three, lives in Winchester, Va., and works as a printer. He did not actually lose any money in the scam because Cabrera-Rivera made her payments and because she had "Lara" deed the house over to her for free, "for natural love and affection and as a gift," according to the gift deed filed in Fairfax County about five weeks after the September 2006 purchase.

"It's affected me," Lara said. "Sometimes I have headaches, a lot of stress," and he missed time from work dealing with the case. Not long after he got the check, for overpayment of closing costs, he started getting monthly statements. "When you get a bill that's not yours, it's frustrating," he said.

Land records indicate that Cabrera-Rivera used Lara's identity three times in three counties. The first time was in September, when WestStar Mortgage Inc. in Woodbridge approved a first mortgage for $335,200 and a second mortgage for $83,800. The mortgages covered the entire cost of the townhouse on Westbury Oaks Court, near Old Keene Mill Road in Springfield.

Officials from WestStar did not respond to phone and e-mail messages yesterday.

Next, in early November, Cabrera-Rivera obtained a gift deed, in which her brother, posing as Lara, signed the house over to her. Court records indicate that the deed was prepared by a Fairfax lawyer, Rocco J. DeLeonardis. He did not return calls yesterday.

Also that month, Cabrera-Rivera and her brother went to a BB&T bank branch in Arlington and applied for a $90,000 loan to refinance her second mortgage, Wilson said. That was approved, too, but BB&T apparently overestimated the closing costs, so it sent a check to the real Jose Lara, who sparked the investigation by returning the check.

BB&T would not comment because the case is pending, a corporate spokeswoman said yesterday.

BB&T called Arlington police and arranged for Cabrera-Rivera to come in to a branch to fill out more forms, and she brought along her husband to pose as Lara, Wilson said. Both were arrested. Her husband, Lorenzo Castro, awaits trial on misdemeanor charges.

"That's kind of unusual," said William J. Kresse, a professor who has studied identity fraud. "Usually the thieves want to get their hands on cash, not real estate. And it's unusual in that they made the payments."

Kresse, a professor at Saint Xavier University in Chicago, compiled data from nearly 29,000 identity theft cases in Chicago between 2000 and 2006. He discovered that low-income people are victimized disproportionately, that 60 percent of the identity thefts were committed by a friend or relative of the victim, and that the Internet was used to steal identities in less than 5 percent of cases.

Burglaries, robberies and pickpocketing lead to most identity theft cases, Kresse said. Chicago police are now distributing pamphlets to victims of such crimes, telling them to prepare for possible identity theft.

"The mortgage brokers are really the people who should be looked at," said Salvado, arguing that lenders helped create the situation. "Somewhere in the U.S., a dog has gotten a loan."

Officials with the Virginia Association of Mortgage Brokers did not return calls. The federal Financial Crimes Enforcement Network reported last year that as many as two-thirds of mortgages are now arranged by mortgage brokers and that there are no national standards for licensing and oversight of mortgage brokers.

WestStar, which financed the first and second mortgages on the Springfield townhouse for $419,000 at 7.125 percent interest, advertises on its Web site "no documentation loans" in which "you can avoid the need to verify your income."

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