California "Mortgage & Real Estate Fraud" Defense Attorneys

Charged with real estate or mortgage fraud? We can help.

We represent mortgage brokers, real estate agents, appraisers, notaries, contractors, as well as common buyers and sellers, who have been accused of crimes stemming from real estate transactions.

And because our criminal defense law firm is comprised of former police investigators and deputy district attorneys, we benefit from decades of collective experience investigating, prosecuting and…most importantly…defending such cases.

In this article, our California real estate fraud defense attorneys¹ explain the following:

1. The Legal Definition of Real Estate and Mortgage Fraud

1.1. The investigation process

1.2. Real estate / mortgage fraud charges

1.2(a) California Civil Code 2945.4
foreclosure fraud

1.2(b) Civil Code 890 rent skimming

1.2(c) Penal Code 487 PC California’s grand theft law

2. Common Examples

2.1. Foreclosure bailout

2.1(a) Title transfer

2.1(b) Bait and switch

2.1(c) Phantom help scams

2.2. Straw buyers schemes

2.3. Forging deeds

2.4. Illegal property "flipping"

2.5. Predatory lending

3. Legal Defenses

3.1. The rent was used for unforeseen medical expenses or to fix physical defects

3.2. You had consent to enter into a transaction with
the property

3.3. You didn’t have fraudulent intent

3.4. False accusations / mistaken identity

3.5. Plea bargains

4. Penalties, Punishment, and Sentencing

4.1. Sentencing for California Civil Code 2945.4
foreclosure fraud

4.2. Civil Code 890 rent skimming

4.3. Penal Code 487 PC grand theft

4.4. Additional penalties

If, after reading this article, you would like more information, we invite you to contact us at Shouse Law Group.

In addition, you may also find helpful information in our related articles on California’s Fraud Laws; Identity Theft; Penal Code 487 PC Grand Theft; Penal Code 470 PC Forgery; Penal Code 602 PC Trespass; California’s Elder Abuse Laws; Mail Fraud; White Collar Crimes; Federal Crimes; Wobblers; Felonies; Misdemeanors; Crimes of Moral Turpitude; How Criminal Convictions Affect Professional Licenses; and California Legal Defenses.

1. The Legal Definition of Real Estate and Mortgage Fraud

Violating California’s real estate and mortgage fraud law subjects you to prosecution under the broader category of California fraud laws. "Fraud" is generically defined as any deliberate deception practiced in order to secure an unlawful or unfair financial gain.

Real estate fraud or mortgage fraud is therefore any deliberate false representation that is made in connection with any portion of a real estate transaction. What’s interesting about this offense is that it is both (1) a crime in and of itself, and (2) comprised of other crimes, such as

• grand theft,



• identity theft, and



• forgery,

just to name a few. And because this type of fraud involves a non-violent financial crime, it is considered a "white collar" crime.

These types of white collar crimes can be filed as state crimes and/or federal crimes, subjecting an offender to both state and federal prosecution. If the real estate or mortgage fraud involves allegations of mail fraud or conspiracies that run across state lines, the case may be prosecuted by a federal prosecuting agency.

However, most California real estate / mortgage fraud cases are prosecuted by state law enforcement agencies, which will be the focus of this article.

1.1. The investigation process

Amidst California’s property boom and bust, real estate and mortgage fraud is on the rise. And because this type of crime can ultimately deprive a person…an unsuspecting person…of his/her home, it is among the most devastating types of fraud.

Consequently, many local district attorneys’ offices now devote significant resources to developing special units that focus on prosecuting these types of crimes. Prosecuting agencies receive complaints from

• the public,



• local law enforcement agencies,



• the press (who might get wind of a fraud "ring"…that is, a group of individuals who participate in multiple organized scams designed to reap large profits), and



• the California Department of Real Estate (DRE) who not only also receive public complaints but who also initiate their own complaints when they notice "red flags" involved in pending real estate transactions.

These "red flags" may include (but are not limited to):

• receiving multiple complaints about the same real estate agent,



• recognizing that a home is being sold for much more than market value, or



• noticing real estate contracts that include either (1) inflated fees, or (2) unethical requirements (for example, a clause that indicates that a buyer is required to pay a fee to a short-sale negotiator in order to have his/her offer even considered…a practice also referred to as "short sale" fraud).

If, after the investigation, the prosecuting agency believes it he/she can convince a unanimous 12-member jury that the suspect individual is guilty beyond a reasonable doubt…that is, to a moral certainty…it typically files charges.

And, unfortunately, prosecutors sometimes pursue cases even without solid evidence of criminality. Public pressure, political pressure, police pressure, overzealousness and even ego can lead the prosecution to file charges merely because of the fact that state agencies have devoted so many resources to combating this problem…regardless of whether the evidence legitimately supports the charges.

1.2. Real estate / mortgage fraud charges

California real estate fraud charges typically get filed under

• California Civil Code 2945.4 foreclosure fraud,



• California Civil Code 890 rent skimming, and



• Penal Code 487 PC California’s grand theft law.

It is important to note that this is by no means an exhaustive list of laws that are related to California real estate and mortgage fraud. The above offenses are simply the most commonly prosecuted. Additional violations are discussed throughout this article.

1.2(a) California Civil Code 2945.4 -- Foreclosure fraud

California Civil Code 2945.4 prohibits "foreclosure fraud"…a very common type of real estate fraud given today’s current housing crisis.² A root factor is that pending foreclosures are public record, which means that anyone can obtain this information to target distressed homeowners.

Civil Code 2945.4 California foreclosure fraud takes place when an individual offers to "rescue" the homeowner from losing his/her home. As part of the rescue, the "rescuer" convinces the desperate homeowner either to

1. sign paperwork which…unbeknownst to the homeowner…allows the rescuer to drain the homes equity for him/herself (assuming there is, in fact, equity in the home) -- an example of this would be if the rescuer takes out a second loan and walks away with those proceeds, or



2. sell the rescuer the property under the false promise that the homeowner can "rent back" the property until he/she is able to repurchase it.

Prosecutors can convict you of violating California’s foreclosure fraud law under Civil Code 2945.4 if you

• collect…or, for that matter even charge…compensation before performing each and every legitimate service that you agreed to perform on behalf of the homeowner,



• charge or collect excessive fees for your services,



• take a lien on the property, require any other security as collateral for compensation, or take any interest in the property (for example, buying the property from the owner so that he/she can rent back as described above),



• take money or property from a third party in connection with the services that you have agreed to perform for the homeowner without fully disclosing that information to the homeowner,



• take a power of attorney from the homeowner (a "power of attorney" is a document that authorizes someone to act on another person’s behalf in a legal or business matter), or



• induce or attempt to induce the owner into signing an illegal contract (that is, one that doesn’t comport with all statutory rules and regulations).³

1.2(b) California Civil Code 890 -- Rent skimming

Civil Code 890 California's rent skimming law prohibits what is known as rent skimming. "Rent skimming" involves

• using rent proceeds from your residential rental property at any time during the first year after acquiring the property without first applying it…or an equivalent amount…to your mortgage (essentially collecting income without paying off your obligatory debt), or



• fraudulently renting a property (that you don’t own or have authority to rent…a violation of Penal Code 602 PC California’s trespass law) to occupants and then collecting that rent for your own use.⁴

You engage in "multiple acts of rent skimming" when you knowingly and willfully "rent skim" with respect to each of five or more properties acquired within any two-year period.⁵

Engaging in multiple acts of rent skimming subjects you to criminal penalties, whereas single acts of rent skimming only subject you to civil penalties⁶ (both of which are discussed below under Section 4. Penalties, Punishment, and Sentencing).

1.2(c) Penal Code 487 PC California’s grand theft law

Almost all instances of real estate or mortgage fraud are prohibited under Penal Code 487 PC California’s grand theft law. This law makes it a crime to take another person’s property unlawfully when that property is valued above $950.⁷

This means that any time you deliberately deceive another person out of

• his/her home,



• equity in his/her home,



• rent that you are not legally entitled to collect, etc.,

in an amount greater than $950, prosecutors can charge you with grand theft in addition to or in lieu of the above Civil Code violations.

2. Common Examples

Although there are almost countless ways for an individual to violate California’s mortgage and real estate fraud laws, there are some schemes that are more common than others.⁸ Many of these overlap. Some include (but are not limited to):

2.1. Foreclosure bailout

People most susceptible to foreclosure fraud…and therefore a foreclosure bailout…are those who are unable to make their mortgage payments, typically have no equity in their home, and simply want to "walk away" with their credit intact as much as possible. Some of the common bailout scams include:

2.1(a) Title transfer

Referenced above, this California real estate fraud involves convincing the homeowner to sign over the title to his/her house under the false assumption that he/she will be able to remain in the home by renting it back and will ultimately be able to repurchase it from the new owner.

The new owner then acquires any existing equity that remains in the property (as the new owner) and eventually evicts the renter.

2.1(b) Bait and switch

Victims of this type of California real estate or mortgage fraud believe they are signing documents that will help secure a new lower mortgage payment when, in fact, they are unwittingly signing away their property.

Sometimes the individual perpetrating the fraud presents blank documents and assures the homeowner he/she will fill in later according to the terms agreed upon; other times the writing is so small, illegible, and convoluted that the owner simply doesn’t understand what he/she is signing.

2.1(c) Phantom help scams

With California phantom help scams, the "rescuer" promises to take action to help the homeowner prevent the pending foreclosure in exchange for an upfront fee. By the time the owner realizes that the "rescuer" has performed little or no work on his/her behalf, it’s often too late to stop the foreclosure.

Another way phantom help schemes take place is when an individual markets a property (one under a pending foreclosure) to an unsophisticated victim who doesn’t understand the escrow or title insurance process. The individual collects a down payment from the alleged victim, hands over an unrecorded deed, and allows the alleged victim…who believes he/she is the new homeowner…to move in. The alleged victim makes monthly payments to the suspect and is then evicted by the legitimate purchaser who buys the property directly from the bank.

2.2. Straw buyers schemes

California straw buyer schemes are becoming quite common. A "straw" buyer is a person who buys a property for someone else (typically because the "straw" has good credit, whereas the other individual does not). There are almost countless ways that straw buyers come into play with California real estate and mortgage fraud.

Straw buyers’ names and information can be used to create false documents in support of loan applications whereupon the proceeds are then funneled into the account of the individual perpetrating the fraud.

Straw buyers not only include unsophisticated buyers who are not affiliated with the real estate industry, but also escrow agents, real estate appraisers, and notary publics. The individual who perpetrated the fraud collects the loan proceeds, fails to make the payments, and leaves the "straw" to pay for the loan. And, depending on the circumstances, the straw may have subjected him/herself to criminal charges as well.

2.3. Forging deeds

Oftentimes those engaging in real estate or mortgage fraud will target homes that have large amounts of equity…homes that are generally owned by unsuspecting elderly persons…which also violates California’s elder abuse laws.

The individual simply assumes the identity of a property’s true owner (thus violating California’s identity theft law) and forges names on grant and trust deeds. By forging real estate deeds the individual is able to obtain the loan proceeds, by either borrowing against the property or by selling the property, thereby stealing the home’s equity.

Other times the individual will forge the deed prior to its recording to alter the interest owned or amount borrowed. In either event, the suspect then subjects him or herself to prosecution under Penal Code 470 PC California’s forgery law as well.

Forging escrow documents is also a popular method of committing real estate fraud. This type of fraud takes place when someone forges a signature and/or personal information on escrow documents in order to obtain escrow deposits to which they are not entitled.

2.4. Illegal property "flipping"

Flipping is an offense that is usually committed by real estate agents, mortgage brokers, and/or appraisers. "Illegal property flipping" takes place when the value of a property is unjustly inflated based on a fraudulent appraisal and an unsuspecting buyer purchases the property, thereby owing much more on the home than it is worth.

It should be noted that this type of "flipping" is a different type of flipping than the legal practice of buying a home at a discount and fixing it up to make a profit.

2.5. Predatory lending

Predatory lending takes place when a mortgage broker creates a loan (typically a refinance loan) that is loaded with excessive and even unnecessary fees that provide no benefit to the borrower in an effort to pad his/her commission.

3. Legal Defenses

Fortunately there are a variety of legal defenses that a California real estate fraud defense lawyer could present on your behalf. Some of the most common include (but are not limited to):

3.1. The rent was used for unforeseen medical expenses or to fix physical defects

You are not guilty of violating California Civil Code 890 "rent skimming" if you used the rent proceeds within 30 days of receipt to

1. pay healthcare providers for necessary and unforeseen medical expenses for yourself or your family, or



2. pay licensed contractors or material suppliers to correct violations of law relating to habitability of the premises, and you have no other source of income to pay those debts.⁹

3.2. You had consent to enter into a transaction with the property

If you obtained consent to represent the owner in a transaction, then you probably aren’t liable for a crime. The caveat here is that you must not have fraudulently obtained that consent. If you had a good faith belief that you were legitimately helping another person, that’s likely to serve as an effective legal defense.

As Rancho Cucamonga criminal defense attorney Michael Scafiddi¹⁰ explains, "If you obtained consent to help another person with any aspect of a real estate transaction…and are then accused of committing a crime…it is critical that you consult with a California real estate fraud defense lawyer as soon as possible. A savvy attorney can help tailor a "consent" defense that will excuse your otherwise criminal conduct or, at the very least, cast enough doubt on the prosecution’s case to warrant a reduced charge."

3.3. You didn’t have fraudulent intent

Before the prosecutor can prove that you are guilty of violating any California fraud law, he/she must first prove that you had fraudulent intent. If they can’t prove that you acted with the specific intent to defraud, they probably don’t have a legitimate case against you.

Similar to the defense in 3.2, if you had good intentions…and were legitimately trying to help another person and not just trying to benefit yourself…you should be acquitted.

3.4. False accusations / mistaken identity

There are a number of reasons why an innocent person could be falsely accused of real estate or mortgage fraud. The real culprits may be trying to escape their own liability by diverting attention from themselves to you.

Perhaps you were the victim of identity theft and…as a result…you were also the victim of mistaken identity, since someone else used your name and information to secure a fraudulent loan or escrow deposit.

As former police investigators and prosecutors we know that things are not always as they seem. We have the inside experience that is essential to reveal your innocence.

3.5. Plea bargaining

Even when the evidence against you is beyond dispute, a skilled California mortgage fraud defense lawyer will attempt to negotiate a plea bargain for a reduced charge and/or sentence. For example, it may be possible to get a felony grand theft charged lowered to a misdemeanor...or to work out a deal that involves victim restitution but no actual jail time.

4. Penalties, Punishment, and Sentencing

Below is a summary of sentencing for the most commonly prosecuted offenses detailed above…California Civil Code sections 2945.4 an 890 and Penal Code 487 PC.

4.1. Sentencing for California Civil Code 2945.4 foreclosure fraud

California Civil Code 2945.4 is what’s known as a wobbler. A "wobbler" is an offense that prosecutors can charge as either a felony or a misdemeanor, depending on

1. the facts of the case, and



2. your criminal history.

If convicted of this offense as a felony, you face 16 months, or two or three years in the California state prison and a maximum $10,000 fine. If convicted of this offense as a misdemeanor, you face the same fine and a maximum one year in a county jail.¹¹

This law has a special provision that allows the punishment to be added to any penalties imposed in connection with other related charges.¹²

4.2. Civil Code 890 rent skimming

California Civil Code 890 rent skimming is a civil offense if the accused is not charged with committing multiple acts of rent skimming.¹³ If multiple acts are alleged, the offense may be filed civilly and criminally.¹⁴

Civil remedies include recovery of actual damages (that is, the amount the victim lost) and reasonable attorney’s fees and costs. Depending on the circumstances, the defendant may be required to pay more substantial fines as well.¹⁵

If the offense is filed in criminal court because it alleges multiple acts of rent skimming, the defendant faces a wobbler, punishable by the same penalties listed above under foreclosure fraud.

Each additional act of skimming subjects an offender to the same penalties. This means that, for example, a person who engages in seven acts of rent skimming faces up to nine years in the state prison and a maximum fine of $30,000.

Similarly, a person who has been previously convicted of multiple acts of rent skimming will fact these same penalties for even one subsequent similar act. This means that an individual previously convicted still faces up to three years in prison for committing even one act of subsequent rent skimming.

And…just like foreclosure fraud…these penalties are in addition to any others that the judge imposes.¹⁶

4.3. Penal Code 487 PC grand theft

Penal Code 487 PC grand theft is also a wobbler. If convicted of grand theft as a felony, you face 16 months, or two or three years in the state prison and a maximum $10,000 fine. If convicted of the misdemeanor, you face up to one year in a county jail and a maximum $1,000 fine.¹⁷

4.4. Additional penalties

In addition to the penalties noted above…and to any other penalties that might be imposed with a conviction for this offense…a conviction for California real estate and mortgage fraud subjects you to

• an additional and consecutive one-to-four years in the state prison if the homeowner or renter was deprived of more than $65,000,¹⁸



• an additional and consecutive one-to-five years in the state prison and either a maximum $500,000 fine or double the amount of the fraud, whichever is greater, if the homeowner or renter was deprived of more than $100,000 and the defendant was convicted of two or more felonies involving fraud in the same criminal proceeding (∗this penalty may even be imposed on top of the additional one-to-four years that is added on by the punishment just referenced above),¹⁹



• a probation sentence under California’s probation laws (California’s probation laws allow a judge to impose any terms and conditions that he/she feels are appropriate for punishment and rehabilitation so long as they are logically related to the offense),²⁰ and



• professional discipline if you hold a California professional license (given that criminal convictions can affect professional licenses…especially when the crime is classified as a crime of moral turpitude which is typically the case with fraud offenses).²¹

A person with prior strikes on his record could also face enhanced sentencing under California’s three strikes law.²² In a pending real estate fraud case, the Los Angeles District Attorney is trying to invoke California’s three strikes law against a defendant who is charged with 23 felonies all involving real estate fraud who was previously convicted of two "strike" offenses.²³

This means that if he is convicted…and the current felonies count as a third strike…the defendant faces 25-years-to-life for each of the 23 felony convictions. If imposed, this would set a legal precedent for a California real estate fraud case, as the three strikes law has never been imposed in connection with a white collar offense.

Call us for help…

For questions about California’s real estate and mortgage laws, or to discuss your case confidentially with one of our California criminal defense attorneys, do not hesitate to contact us at Shouse Law Group.

We have local criminal law offices in and around Los Angeles, San Diego, Orange County, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.

Additionally, our Nevada criminal defense attorneys are available to answer any questions about Las Vegas Nevada’s mortgage fraud laws. For more information, we invite you to contact our local attorneys at one of our Nevada law offices, located in Reno and Las Vegas.²⁴

Legal References:

¹Our California criminal defense attorneys have local Los Angeles law offices in Beverly Hills, Burbank, Glendale, Lancaster, Long Beach, Los Angeles, Pasadena, Pomona, Torrance, Van Nuys, West Covina, and Whittier. We have additional law offices conveniently located throughout the state in Orange County, San Diego, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.

²California Civil Code 2945.4 -- Prohibited practices (Foreclosure fraud). ("It shall be a violation for a foreclosure consultant to: (a) Claim, demand, charge, collect, or receive any compensation until after the foreclosure consultant has fully performed each and every service the foreclosure consultant contracted to perform or represented that he or she would perform. (b) Claim, demand, charge, collect, or receive any fee, interest, or any other compensation for any reason which exceeds 10 percent per annum of the amount of any loan which the foreclosure consultant may make to the owner. (c) Take any wage assignment, any lien of any type on real or personal property, or other security to secure the payment of compensation. That security shall be void and unenforceable. (d) Receive any consideration from any third party in connection with services rendered to an owner unless that consideration is fully disclosed to the owner. (e) Acquire any interest in a residence in foreclosure from an owner with whom the foreclosure consultant has contracted. Any interest acquired in violation of this subdivision shall be voidable, provided that nothing herein shall affect or defeat the title of a bona fide purchaser or encumbrancer for value and without notice of a violation of this article. Knowledge that the property was "residential real property in foreclosure," does not constitute notice of a violation of this article. This subdivision may not be deemed to abrogate any duty of inquiry which exists as to rights or interests of persons in possession of residential real property in foreclosure. (f) Take any power of attorney from an owner for any purpose. (g) Induce or attempt to induce any owner to enter into a contract which does not comply in all respects with Sections 2945.2 and 2945.3. (h) Enter into an agreement at any time to assist the owner in arranging, or arrange for the owner, the release of surplus funds after the trustee's sale is conducted, whether the agreement involves direct payment, assignment, deed, power of attorney, assignment of claim from an owner to the foreclosure consultant or any person designated by the foreclosure consultant, or any other compensation.")

³See same, i.e., California Civil Code 2945.4 -- Prohibited practices (Foreclosure fraud).

⁴California Civil Code 890 -- Definitions (Rent skimming). ("(a)(1) "Rent skimming" means using revenue received from the rental of a parcel of residential real property at any time during the first year period after acquiring that property without first applying the revenue or an equivalent amount to the payments due on all mortgages and deeds of trust encumbering that property. (2) For purposes of this section, "rent skimming" also means receiving revenue from the rental of a parcel of residential real property where the person receiving that revenue, without the consent of the owner or owner's agent, asserted possession or ownership of the residential property, whether under a false claim of title, by trespass, or any other unauthorized means, rented the property to another, and collected rents from the other person for the rental of the property. This paragraph does not apply to any tenant, subtenant, lessee, sublessee, or assignee, nor to any other hirer having a lawful occupancy interest in the residential dwelling. (b) "Multiple acts of rent skimming" means knowingly and willfully rent skimming with respect to each of five or more parcels of residential real property acquired within any two-year period. (c) "Person" means any natural person, any form of business organization, its officers and directors, and any natural person who authorizes rent skimming or who, being in a position of control, fails to prevent another from rent skimming.")

See also People v. Lapcheske (1999) 73 Cal.App.4th 571 – summary. ("The Court of Appeal, McKinster, J., held that: (1) scheme in which defendant took over residential real properties he believed to have been abandoned, and occupied properties by placing tenants in properties and collecting rents, resulted in acquisition of property through occupancy, and thus could support rent skimming charges; and (2) fact that defendant was adversely possessing property, which conferred title by occupancy and made him subject to rent skimming statutes, did not bar his conviction on trespassing charges; but (3) defendant had legal right to place tenants on property and collect rents, and could not be convicted of grand theft based on retention of rents.")

See also People v. Bell (1996) 45 Cal.App.4th 1030, 1039 (overruled on other grounds). ("Appellants ran a rent skimming operation. Rent skimming occurs when, in the first year after acquiring residential real property, rent received for such property is used without first applying it to the payment due on mortgages and deeds of trust encumbering that property. Rent skimming is a crime when a person engages in such conduct with regard to five or more parcels within a two-year period. (Civ.Code, §§ 890-894.). Appellants established post office boxes, opened bank accounts and filed articles of incorporation using various names. Using legal notices in newspapers, they identified residential real property going into foreclosure. Robert approached the homeowners and explained that if the owners conveyed the property to him, he could assume the obligation on their deed of trust and they could walk away with their credit intact. The homeowners signed one or more grant deeds conveying their interest to one of appellants' fictitious business entities or signed a blank deed. In some cases the homeowner remained in the residence and paid rent; in the other cases, the owner moved out and appellants rented the property to others. Appellants then applied for bankruptcy in the name of the entity to which the subject real property had been conveyed and foreclosure was automatically stayed. The stay delayed foreclosure and extended the period during which appellants could collect rents. In some cases when stays were lifted, appellants filed subsequent applications for bankruptcy on the same parcel. In every case after filing for bankruptcy, appellants took no further action on the petitions, as required to move the matters to discharge, and the petitions were dismissed by the bankruptcy court. Appellants applied none of the rent monies to the deeds of trust encumbering the property.")

⁵See California Civil Code 890, endnote 4, above.

⁶California Civil Code 891 -- Civil rights and remedies; invalidity of waiver; applicability of statutes. ("(a) A seller of an interest in residential real property who received a promissory note or other evidence of indebtedness for all or a portion of its purchase price secured by a lien on the property may bring an action against any person who has engaged in rent skimming with respect to that property. A seller who prevails in the action shall recover all actual damages and reasonable attorney's fees and costs. The court may award any appropriate equitable relief. The court shall award exemplary damages of not less than three times the actual damages if the defendant has engaged in multiple acts of rent skimming and may award exemplary damages in other cases. (b) A seller of an interest in residential real property who reacquires the interest from a person who has engaged in rent skimming with respect to that property, or a law enforcement agency, may request the court for an order declaring that the reacquired interest is not encumbered by any lien that is or has the effect of a judgment lien against the person who engaged in rent skimming if the lien is not related to any improvement of the property and does not represent security for loan proceeds made by a bona fide lien holder without knowledge of facts constituting a violation of this title. The motion or application shall be made with at least 30 days' advance written notice to all persons who may be affected by the order, including lienholders, and shall be granted unless the interests of justice would not be served by such an order. (c) A mortgagee or beneficiary under a deed of trust encumbering residential real property may bring an action against a person who has engaged in rent skimming with respect to that property as one of multiple acts of rent skimming, whether or not the person has become contractually bound by an obligation secured by the mortgage or deed of trust. The mortgagee or beneficiary who prevails in the action shall recover actual damages to the extent of the amount of the rent collected on the encumbered property and attorney's fees and costs. The court also may order any appropriate equitable relief and may award exemplary damages. (d) A tenant of residential real property may bring an action against a person who has engaged in rent skimming with respect to that property for the recovery of actual damages, including any security, as defined in Section 1950.5, and moving expenses if the property is sold at a foreclosure sale and the tenant was required to move. A prevailing plaintiff in such an action shall be awarded reasonable attorney's fees and costs. The court also may award exemplary damages; it shall award exemplary damages of at least three times the amount of actual damages if the payments due under any deed of trust or mortgage were two or more months delinquent at the time the tenant rented the premises or if the defendant has engaged in multiple acts of rent skimming. (e) The rights and remedies provided in this section are in addition to any other rights and remedies provided by law. (f) Rent skimming is unlawful, and any waiver of the provisions of this section are void and unenforceable as contrary to public policy. (g) Sections 580a, 580b, 580d, and 726 of the Code of Civil Procedure do not apply to any action brought under this title.")

See also California Civil Code 892 -- Criminal penalties; prior convictions; limitations; other remedies or penalties. ("(a) Any person who engages in multiple acts of rent skimming is subject to criminal prosecution. Each act of rent skimming comprising the multiple acts of rent skimming shall be separately alleged. A person found guilty of five acts shall be punished by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment. A person found guilty of additional acts shall be separately punished for each additional act by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment. (b) If a defendant has been once previously convicted of a violation of subdivision (a), any subsequent knowing and willful act of rent skimming shall be punishable by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, or by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment. (c) A prosecution for a violation of this section shall be commenced within three years after the date of the acquisition of the last parcel of property that was the subject of the conduct for which the defendant is prosecuted. (d) The penalties under this section are in addition to any other remedies or penalties provided by law for the conduct proscribed by this section.")

⁷California Penal Code 487 -- Grand theft defined. ("Grand theft is theft committed in any of the following cases: (a) When the money, labor, or real or personal property taken is of a value exceeding nine hundred and fifty dollars ($950) except as provided in subdivision (b). (b) Notwithstanding subdivision (a), grand theft is committed in any of the following cases: (1)(A) When domestic fowls, avocados, olives, citrus or deciduous fruits, other fruits, vegetables, nuts, artichokes, or other farm crops are taken of a value exceeding two hundred fifty dollars ($250). (B) For the purposes of establishing that the value of avocados or citrus fruit under this paragraph exceeds two hundred fifty dollars ($250), that value may be shown by the presentation of credible evidence which establishes that on the day of the theft avocados or citrus fruit of the same variety and weight exceeded two hundred fifty dollars ($250) in wholesale value. (2) When fish, shellfish, mollusks, crustaceans, kelp, algae, or other aquacultural products are taken from a commercial or research operation which is producing that product, of a value exceeding two hundred fifty dollars ($250). (3) Where the money, labor, or real or personal property is taken by a servant, agent, or employee from his or her principal or employer and aggregates nine hundred fifty dollars ($950) or more in any 12 consecutive month period. (c) When the property is taken from the person of another. (d) When the property taken is any of the following: (1) An automobile, horse, mare, gelding, any bovine animal, any caprine animal, mule, jack, jenny, sheep, lamb, hog, sow, boar, gilt, barrow, or pig. (2) A firearm. (e) This section shall become operative on January 1, 1997.")

⁸The types of real estate fraud addressed in this section are examples taken from district attorney offices who have real estate fraud special units. Examples were primarily obtained through the San Diego District Attorneys’ Office, the Los Angeles District Attorneys’ Office and the Sacramento District Attorneys’ Office.

⁹California Civil Code 893 -- Affirmative defense; burden of producing evidence, burden of proof. ("(a) It is an affirmative defense for a natural person who is a defendant in a civil action brought under Section 891, or a criminal action brought under Section 892, if all of the following occurred: (1) The defendant used the rental revenue due but not paid to holders of mortgages or deeds of trust to make payments to any of the following: (A) Health care providers, as defined in paragraph (2) of subdivision (c) of Section 6146 of the Business and Professions Code, for the unforeseen and necessary medical treatment of the defendant or his or her spouse, parents, or children. (B) Licensed contractors or material suppliers to correct the violation of any statute, ordinance, or regulation relating to the habitability of the premises. (2) The defendant made the payments within 30 days of receiving the rental revenue. (3) The defendant had no other source of funds from which to make the payments. (b) The defendant has the burden of producing evidence of each element of the defense specified in subdivision (a) in a criminal action under Section 892 and the burden of proof of each element of the defense in a civil action under Section 891.")

¹⁰Rancho Cucamonga criminal defense attorney Michael Scafiddi uses his former experience as an Ontario Police Officer to represent clients throughout the Inland Empire including San Bernardino, Riverside, Rancho Cucamonga, Hemet, Banning, Fontana, Joshua Tree, Barstow, Palm Springs and Victorville.

¹¹California Civil Code 2945.7 -- Violations; punishment; cumulative remedies. ("Any person who commits any violation described in Section 2945.4 shall be punished by a fine of not more than ten thousand dollars ($10,000), by imprisonment in the county jail for not more than one year, or in the state prison, or by both that fine and imprisonment for each violation. These penalties are cumulative to any other remedies or penalties provided by law.")

See also Penal Code 18 PC -- Punishment for felony not otherwise prescribed; alternate sentence to county jail. ("Except in cases where a different punishment is prescribed by any law of this state, every offense declared to be a felony, or to be punishable by imprisonment in a state prison, is punishable by imprisonment in any of the state prisons for 16 months, or two or three years; provided, however, every offense which is prescribed by any law of the state to be a felony punishable by imprisonment in any of the state prisons or by a fine, but without an alternate sentence to the county jail, may be punishable by imprisonment in the county jail not exceeding one year or by a fine, or by both.")

See also Penal Code 672 PC -- Offenses for which no fine prescribed; fine authorized in addition to imprisonment. ("Upon a conviction for any crime punishable by imprisonment in any jail or prison, in relation to which no fine is herein prescribed, the court may impose a fine on the offender not exceeding one thousand dollars ($1,000) in cases of misdemeanors or ten thousand dollars ($10,000) in cases of felonies, in addition to the imprisonment prescribed.")

¹²See Civil Code 2945.7, endnote 12, above.

¹³California Civil Code 891 -- Civil rights and remedies. ("(a) A seller of an interest in residential real property who received a promissory note or other evidence of indebtedness for all or a portion of its purchase price secured by a lien on the property may bring an action against any person who has engaged in rent skimming with respect to that property. A seller who prevails in the action shall recover all actual damages and reasonable attorney's fees and costs. The court may award any appropriate equitable relief. The court shall award exemplary damages of not less than three times the actual damages if the defendant has engaged in multiple acts of rent skimming and may award exemplary damages in other cases. (b) A seller of an interest in residential real property who reacquires the interest from a person who has engaged in rent skimming with respect to that property, or a law enforcement agency, may request the court for an order declaring that the reacquired interest is not encumbered by any lien that is or has the effect of a judgment lien against the person who engaged in rent skimming if the lien is not related to any improvement of the property and does not represent security for loan proceeds made by a bona fide lien holder without knowledge of facts constituting a violation of this title. The motion or application shall be made with at least 30 days' advance written notice to all persons who may be affected by the order, including lienholders, and shall be granted unless the interests of justice would not be served by such an order. (c) A mortgagee or beneficiary under a deed of trust encumbering residential real property may bring an action against a person who has engaged in rent skimming with respect to that property as one of multiple acts of rent skimming, whether or not the person has become contractually bound by an obligation secured by the mortgage or deed of trust. The mortgagee or beneficiary who prevails in the action shall recover actual damages to the extent of the amount of the rent collected on the encumbered property and attorney's fees and costs. The court also may order any appropriate equitable relief and may award exemplary damages. (d) A tenant of residential real property may bring an action against a person who has engaged in rent skimming with respect to that property for the recovery of actual damages, including any security, as defined in Section 1950.5, and moving expenses if the property is sold at a foreclosure sale and the tenant was required to move. A prevailing plaintiff in such an action shall be awarded reasonable attorney's fees and costs. The court also may award exemplary damages; it shall award exemplary damages of at least three times the amount of actual damages if the payments due under any deed of trust or mortgage were two or more months delinquent at the time the tenant rented the premises or if the defendant has engaged in multiple acts of rent skimming. (e) The rights and remedies provided in this section are in addition to any other rights and remedies provided by law. (f) Rent skimming is unlawful, and any waiver of the provisions of this section are void and unenforceable as contrary to public policy. (g) Sections 580a, 580b, 580d, and 726 of the Code of Civil Procedure do not apply to any action brought under this title.")

¹⁴See same.

See also California Civil Code 892 -- Criminal penalties; prior convictions; limitations; other remedies or penalties. ("(a) Any person who engages in multiple acts of rent skimming is subject to criminal prosecution. Each act of rent skimming comprising the multiple acts of rent skimming shall be separately alleged. A person found guilty of five acts shall be punished by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment. A person found guilty of additional acts shall be separately punished for each additional act by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment. (b) If a defendant has been once previously convicted of a violation of subdivision (a), any subsequent knowing and willful act of rent skimming shall be punishable by imprisonment in the state prison or by imprisonment in the county jail for not more than one year, or by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment. (c) A prosecution for a violation of this section shall be commenced within three years after the date of the acquisition of the last parcel of property that was the subject of the conduct for which the defendant is prosecuted. (d) The penalties under this section are in addition to any other remedies or penalties provided by law for the conduct proscribed by this section.")

¹⁵See California Civil Code 891, endnote 14, above.

¹⁶All criminal sentencing information for rent skimming is found in Civil Code 892, endnote 15, above, and in Penal Code sections 18 and 672, endnote 12 above.

¹⁷California Penal Code 489 PC -- Grand theft, punishment. ("Grand theft is punishable as follows: (a) When the grand theft involves the theft of a firearm, by imprisonment in the state prison for 16 months, 2, or 3 years. (b) In all other cases, by imprisonment in a county jail not exceeding one year or in the state prison.")

See also Penal Codes 18 and 672 PC, endnote 12, above.

¹⁸California Penal Code 12022.6 -- Taking, damaging or destruction of property; commission of felony; additional punishment. ("(a) When any person takes, damages, or destroys any property in the commission or attempted commission of a felony, with the intent to cause that taking, damage, or destruction, the court shall impose an additional term as follows: (1) If the loss exceeds sixty-five thousand dollars ($65,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of one year. (2) If the loss exceeds two hundred thousand dollars ($200,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of two years. (3) If the loss exceeds one million three hundred thousand dollars ($1,300,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of three years. (4) If the loss exceeds three million two hundred thousand dollars ($3,200,000), the court, in addition and consecutive to the punishment prescribed for the felony or attempted felony of which the defendant has been convicted, shall impose an additional term of four years. (b) In any accusatory pleading involving multiple charges of taking, damage, or destruction, the additional terms provided in this section may be imposed if the aggregate losses to the victims from all felonies exceed the amounts specified in this section and arise from a common scheme or plan. All pleadings under this section shall remain subject to the rules of joinder and severance stated in Section 954. (c) The additional terms provided in this section shall not be imposed unless the facts of the taking, damage, or destruction in excess of the amounts provided in this section are charged in the accusatory pleading and admitted or found to be true by the trier of fact. (d) This section applies to, but is not limited to, property taken, damaged, or destroyed in violation of Section 502 or subdivision (b) of Section 502.7. This section shall also apply to applicable prosecutions for a violation of Section 350, 653h, 653s, or 653w. (e) For the purposes of this section, the term "loss" has the following meanings: (1) When counterfeit items of computer software are manufactured or possessed for sale, the "loss" from the counterfeiting of those items shall be equivalent to the retail price or fair market value of the true items that are counterfeited. (2) When counterfeited but unassembled components of computer software packages are recovered, including, but not limited to, counterfeited computer diskettes, instruction manuals, or licensing envelopes, the "loss" from the counterfeiting of those components of computer software packages shall be equivalent to the retail price or fair market value of the number of completed computer software packages that could have been made from those components. (f) It is the intent of the Legislature that the provisions of this section be reviewed within 10 years to consider the effects of inflation on the additional terms imposed. For that reason this section shall remain in effect only until January 1, 2018, and as of that date is repealed unless a later enacted statute, which is enacted before January 1, 2018, deletes or extends that date.")

¹⁹California Penal Code 186.11 PC – Aggravated white collar crime enhancement.

²⁰California Penal Code 1203.1 -- Probation conditions. ("(j) The court may impose…other reasonable conditions, as it may determine are fitting and proper to the end that justice may be done, that amends may be made to society for the breach of the law, for any injury done to any person resulting from that breach, and generally and specifically for the reformation and rehabilitation of the probationer…")

See also People v. Lent (1975) 15 Cal.3d 481, 486. ("The Legislature has placed in trial judges a broad discretion in the sentencing process, including the determination as to whether probation is appropriate and, if so, the conditions thereof. (Pen. Code, § 1203 et seq.) A condition of probation will not be held invalid unless it "(1) has no relationship to the crime of which the offender was convicted, (2) relates to conduct which is not in itself criminal, and (3) requires or forbids conduct which is not reasonably related to future criminality ...." ( People v. Dominguez (1967) 256 Cal.App.2d 623, 627 [64 Cal.Rptr. 290].) Conversely, a condition of probation which requires or forbids conduct which is not itself criminal is valid if that conduct is reasonably related to the crime of which the defendant was convicted or to future criminality.")

²¹To learn more about how criminal convictions can affect professional licenses, please visit our pages on professional license issues (which are organized by individual professions).

²²California Penal Code 667 -- Habitual criminals; enhancement of sentence; amendment of section -- California Three Strikes law . ("(e) For purposes of subdivisions (b) to (i), inclusive, and in addition to any other enhancement or punishment provisions which may apply, the following shall apply where a defendant has a prior felony conviction: (1) If a defendant has one prior felony conviction that has been pled and proved, the determinate term or minimum term for an indeterminate term shall be twice the term otherwise provided as punishment for the current felony conviction. (2)(A) If a defendant has two or more prior felony convictions as defined in subdivision (d) that have been pled and proved, the term for the current felony conviction shall be an indeterminate term of life imprisonment with a minimum term of the indeterminate sentence calculated as the greater of: (i) Three times the term otherwise provided as punishment for each current felony conviction subsequent to the two or more prior felony convictions. (ii) Imprisonment in the [California] state prison for 25 years…")

²³People v. Timothy Barnett (discussed in Los Angeles Times article Man accused of fraud may get life in prison under California's three-strikes law)

²⁴Please feel free to contact our Nevada criminal defense attorneys Michael Becker and Mike Castillo for any questions relating to Nevada’s mortgage fraud laws. Our Nevada law offices are located in Reno and Las Vegas.

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