Real estate fraud is a category of California criminal fraud. California real estate fraud laws cover fraud that occurs in connection with
- Mortgages on real estate (“mortgage fraud”),
- Foreclosures on homes or other real estate (“foreclosure fraud”),
- Rental property (through the crime of “rent skimming”),
- Deeds to real estate, and
- Certain forms of property “flipping.”
Many kinds of real estate fraud in California can be prosecuted under Penal Code 487 PC, California's grand theft law.1
However, certain specific forms of real estate fraud—such as foreclosure fraud,rent skimming, and forging real estate deeds—are prosecuted under specific California real estate fraud statutes, including
- Civil Code 2945.4 (foreclosure fraud),2
- Civil Code 890 (rent skimming),3 and
- Penal Code 115 PC (recording forged deeds).4
Scenarios that could give rise to California real estate and mortgage fraud criminal charges include:
- A self-described foreclosure consultant advertises his services helping struggling homeowners avoid foreclosure. He takes $1,000 from a homeowner and promises to negotiate with the bank on her behalf—but then does not do so.
- A niece forges her uncle's signature on a deed to his house, which hands over title to her. The niece then records the forged deed and uses the house as collateral to borrow money in her own name.
- A group of individuals gets together to buy a run-down house, make some cosmetic changes to it, and then put it on the market for resale. They convince a friend who is a licensed appraiser to appraise the house at an inflated value—and then successfully market and sell the house at the inflated price.
When it is charged under Penal Code 487 PC, California's grand theft law, California real estate fraud is a wobbler in California law. This means that it may be prosecuted as either a misdemeanor or a felony, depending on
- The facts of the case, and
- The defendant's criminal history.5
For misdemeanor real estate fraud, the maximum sentence is one (1) year in county jail and a fine of up to one thousand dollars ($1,000).6
But if it is prosecuted as a felony, the maximum term increases to sixteen (16) months or two (2) or three (3) years.7
In addition, if you are convicted of a felony under this or other California real estate fraud statutes, you may face an additional sentence of one (1) to five (5) years in prison if you defrauded someone else out of more than sixty-five thousand dollars ($65,000).8
In this article, our California criminal and real estate fraud defense attorneys9 explain the following:
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 Criminal Fraud Laws; Penal Code 487 PC California's Grand Theft Law; California Foreclosure Fraud Civil Code 2945 & 2945.4; California Rent Skimming Laws Civil Code 890; Forging Real Estate Deeds Penal Code 115 & 115.5 PC; Legal Definition of a Wobbler in California Law; Legal Definition of a Felony in California Law; Penal Code 488 PC Petty Theft; Penal Code 470 PC California's Forgery Law; “White Collar” Crime in California; California Phantom Help Scams; Straw Buyer Schemes & California Mortgage Fraud; When is Property “Flipping” Illegal in California?; When is Predatory Lending Illegal in California?; Legal Definition of a California Misdemeanor; Misdemeanor (Summary) Probation in California; Felony (Formal) Probation in California; Criminal Convictions & Real Estate Broker Discipline in California; Common Legal Defenses to California Crimes; California Elder Abuse Charges Penal Code 368 PC; and California Identity Theft Penal Code 530.5 PC.
Real estate and mortgage fraud is not a single offense that can be easily defined. Instead, it refers to a variety of different behaviors that can be prosecuted under a number of different California laws.
The basic legal definition of “fraud” is
- Knowingly misrepresenting or concealing certain facts,
- To induce someone else to act in a way that is harmful to his/her interests.10
“Real estate fraud” is, of course, just fraud that is committed in connection with a real estate transaction.
In California, the basic criminal statute that may be used to prosecute various forms of real estate fraud or mortgage fraud is Penal Code 487 PC, California's “grand theft” law.11
Real estate fraud can be considered a form of “theft by false pretenses”—which is a similar concept to fraud.12
To convict you of real estate fraud as a form of grand theft by false pretenses, a prosecutor must prove the following “elements of the crime” (these make up the legal definition of real estate fraud):
- You knowingly and intentionally deceived a real estate owner or mortgage lender by making a false or fraudulent representation;
- You did so intending to persuade him/her to let you take possession and ownership of the property or loan proceeds; and
- The victim let you take possession and ownership of the property or loan proceeds because s/he relied on your false representation.13
For an instance of real estate or mortgage fraud to be grand theft—as opposed to Penal Code 488 PC petty theft—you must defraud the real estate owner or mortgage lender out of property worth more than nine hundred fifty dollars ($950).14 But with real estate it is very easy to reach that threshold!
Example: Pamela, who has about fifty thousand dollars of equity in her home, has fallen behind on her mortgage payments and is facing foreclosure. She hears a radio ad for a “foreclosure consulting” company run by Warren, and calls their number.
Warren explains that he can stop the foreclosure by negotiating with the bank—but only if Pamela signs certain documents giving him the power to act on her behalf. Warren provides her with the documents to sign. Pamela doesn't realize that in fact Warren is having her sign a deed transferring title to her house to him.
Warren now owns the equity to Pamela's house—and he acquired it by misleading her about the documents she was signing. Therefore, he has committed grand theft real estate fraud (as well as foreclosure fraud).
Many cases of real estate fraud don't quite fit into the legal definition of grand theft by false pretenses and instead are prosecuted under different statutes. Or, in some cases, they may be prosecuted under both Penal Code 487 PC and a more specialized real estate fraud statute.
Foreclosure fraud under Civil Code 2945.4
California Civil Code 2945.4 prohibits “foreclosure fraud”—a very common type of real estate fraud given the current housing crisis.15 A key factor is that pending foreclosures are public record—which means that anyone can use this information to target homeowners in distress.
Foreclosure fraud under Civil Code 2945.4 is committed by “foreclosure consultants” or other similar professionals who offer their services to homeowners facing foreclosure. Prosecutors can convict you of violating California's foreclosure fraud law if you:
- collect or charge compensation for a service you agreed to perform on behalf of the homeowner before you have provided that service,
- 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 s/he can rent it back),
- 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 homeowner into signing an illegal contract (that is, one that doesn't comply with all statutory rules and regulations).16
Example: Let's return to Warren and Pamela from our previous example.
California's foreclosure fraud law specifically makes it a crime to do what Warren did—take an interest in Pamela's property in connection with foreclosure prevention services. Therefore, Warren may be charged both under Penal Code 487 PC and under Civil Code 2945.4.
Foreclosure fraud activities are often very wide-ranging. There are companies that systematically engage in activities that may be classified as a crime under Civil Code 2945.4.
For example, in 2014, the California Attorney General filed charges against the owners of a company that was accused of defrauding more than 1500 homeowners facing foreclosure.
Rent skimming under Civil Code 890
California Civil Code 890 specifically prohibits a form of real estate fraud known as “rent skimming.” You can violate this law by either:
- During the first year after acquiring a residential rental property, failing to apply the rent proceeds to the mortgage, OR
- Pretending to own a property that you do not really own, fraudulently renting that property out without the right to do so, and keeping those proceeds for yourself.17
But there is an exception to this law. You are not guilty of rent skimming if you used the rent proceeds within 30 days of receiving them to either:
1) Pay healthcare providers for necessary and unforeseen medical expenses for yourself or your family, or
2) Pay licensed contractors or materials suppliers to correct violations of law relating to the habitability of the rental property, if you have no other source of income to pay those expenses.18
Engaging in one act of rent skimming only means that you can be the target of a civil lawsuit—but you face criminal penalties if you engage in more than one act of rent skimming.19
Example: Melissa is a real estate investor and also owns several donut shops. One year, when her donut shops are struggling, she takes out mortgages to buy several rental properties.
Melissa then takes the rent that the tenants of those properties pay her and uses it to pay off debts related to her donut shops. She fails to make the required mortgage payments on the properties.
Melissa is betting that the banks will take their time before putting the rental properties into foreclosure and thus that she is just being a shrewd businessperson. She finds out too late that this is considered a form of real estate fraud (rent skimming) and might lead to criminal penalties in California.
Forged deeds or documents
Another statute under which real estate fraud in California may be prosecuted is Penal Code 115 PC. This law makes it a crime to record a forged real estate deed (or any other forged document) in public records, such as the county clerk's office.20
If you are investigated or prosecuted for this form of real estate fraud, you may also find yourself facing charges under Penal Code 470 PC, California's forgery law.21
Like other kinds of “white collar” crime, real estate fraud often involves highly complicated schemes hatched by very creative individuals—who may not even realize that what they are doing is illegal.
Thus, it is impossible for us to list all the kinds of activity that could be classified and prosecuted as real estate fraud. Local district attorneys' offices are always on the lookout for money-making schemes that might be considered fraud.
And they are helped in this effort by the California Bureau of Real Estate, which both receives public complaints and also initiates its own complaints about “red flags” involved in pending real estate transactions.
Nonetheless, some of the most common and well-known forms of real estate fraud are:22
Foreclosure fraud can occur when someone is unable to make mortgage payments on their home or other property and is facing foreclosure.
Some of the common examples of this kind of real estate fraud include:
One form of California foreclosure fraud occurs when a “foreclosure consultant” persuades the homeowner to sign over the title to his/her house. The consultant assures the homeowner that s/he will be able to remain in the home by renting it back, and/or will ultimately be able to repurchase it.
The new owner then acquires any existing equity that remains in the property and eventually evicts the renter.
A “bait and switch” foreclosure fraud scheme is like a title transfer—except that in this case the homeowner often doesn't realize s/he is signing over title to his/her home.
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 “foreclosure consultant” perpetrating the fraud presents blank documents and assures the homeowner that s/he will fill it in later according to the terms agreed upon.
Other times the writing on the documents is so small, illegible, or confusing that the owner simply doesn't understand what s/he is signing.
With California phantom help scams, the “foreclosure assistance company” promises to take action to help the homeowner prevent the pending foreclosure in exchange for an upfront fee—but then does nothing.
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.
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 numerous ways that straw buyer schemes come into play with California real estate and mortgage fraud.
Example: Matilda is an elderly woman who has excellent credit. Ralph, a man whom she has met through her church, tells her that he wants to buy a house but his credit is not good enough. He offers her two thousand dollars if she will “lend” him her good credit by applying for a mortgage loan for him, and she agrees.
Matilda signs the documents Ralph gives her. She ends up applying for a mortgage and buying a house, which she promptly transfers to Ralph. But then Ralph fails to make the mortgage payments and leaves town—leaving Matlida on the hook for the mortgage.
Matilda has been used as a “straw buyer.” Both Ralph—and possibly Matilda too—may be guilty of mortgage fraud in connection with the transaction.
Illegal property “flipping” is a type of real estate fraud that is usually perpetrated by real estate professionals, such as
- Mortgage brokers, and/or
- Property appraisers.
“Flipping” takes place when the value of a property is wrongly inflated based on a fraudulent appraisal—and EITHER
- an unsuspecting buyer purchases the property for more than it is worth, or
- a bank lends money on the property for more than its actual value.
Example: Rachel, who is a realtor, teams up with Brock, who is a mortgage broker, and Andrea, who is an appraiser. Rachel purchases a home that is in poor repair and makes some cosmetic changes to it. Then she puts it on the market for twice its original price.
Ursula, an unsuspecting buyer, makes an offer on the house. Andrea produces a fraudulent appraisal estimating that the house is worth the asking price, and Brock helps Ursula obtain a mortgage for that amount, relying on Andrea's dishonest appraisal.
Ursula ends up getting a mortgage and purchasing the house—but both she and the bank that lent her money have been defrauded by the transaction.
But note that most so-called property flipping that goes on is not illegal. It is not real estate fraud to buy a property, fix it up, and re-sell it at a higher price—as long as the new, higher price is legitimate and is not the result of fraud.
Predatory lending is another form of real estate fraud.
It takes place when a mortgage broker creates a loan (typically a refinance loan) that is loaded with excessive or unnecessary fees that provide no benefit to the borrower—in an effort to pad his/her commission.
The penalties, punishment and sentencing for California real estate fraud depend on the statute under which you are prosecuted.
The penalties for Penal Code 487 PC California grand theft—which may be used to prosecute cases of real estate fraud—are so-called “wobbler” penalties. This means that the crime may be prosecuted as either a California misdemeanor or a felony, depending on
- The facts of the case, and
- The defendant's criminal history.23
If you are convicted of real estate fraud under Penal Code 487 PC as a misdemeanor, potential penalties are:
- Misdemeanor (summary) probation ,
- Up to one (1) year in county jail, and/or
- A fine of up to one thousand dollars ($1,000).24
If you are convicted of grand theft real estate fraud as a felony, the penalties may include:
- Felony (formal) probation ,
- Sixteen (16) months or two (2) or three (3) years in jail, and/or
- A fine of up to ten thousand dollars ($10,000).25
Foreclosure fraud is also a wobbler. The potential penalties are the same as those for real estate fraud prosecuted as grand theft—and also depend on whether the crime is prosecuted as a misdemeanor or a felony.26
In addition, the California foreclosure fraud law has a special provision that allows the punishment to be added to any penalties imposed in connection with other related charges.27
The penalties for Civil Code 890 rent skimming depend on whether you are charged with
- A single act of rent skimming, or
- Multiple acts of rent skimming.
If you are not charged with multiple acts of rent skimming, then you face only civil penalties. This means that you may be sued by anyone who was harmed by you committing of this form of real estate fraud (such as your tenant or mortgage lender)—and could have to pay
- That person's actual damages (the amount they lost),
- That person's reasonable attorney's fees and legal costs, and
- In some circumstances, additional fines.28
But if you are charged with multiple acts of rent skimming, you can be prosecuted and face criminal penalties. This form of real estate fraud is also a wobbler—and is punishable by the same penalties listed above under foreclosure fraud.29
Filing a forged deed is a form of real estate fraud taken especially seriously in California law—it is always prosecuted as a felony.30
Potential penalties include:
- Felony probation,
- Sixteen (16) months, two (2) years or (3) years in prison, and
- A fine of up to ten thousand dollars ($10,000).31
California real estate and mortgage fraud cases also carry additional penalties if they are charged as felonies and if the loss to the victim was large enough. Specifically:
- If you are alleged to have deprived your victim of more than sixty-five thousand dollars ($65,000), you could receive an additional year in prison;
- If you are alleged to have deprived your victim of more than two hundred thousand dollars ($200,000), you could receive an additional two (2) years in prison;
- If the alleged loss to the victim is more than one million three hundred thousand dollars ($1,300,000), you could face an additional three (3) years in prison; and
- If the alleged loss is more than three million two hundred thousand dollars ($3,200,000), you could face an additional four (4) years in prison.32
- you are convicted of two (2) or more related acts of real estate fraud, each charged as a felony, and
- the victim was deprived of more than one hundred thousand dollars ($100,000),
you could face another one (1) to five (5) years in prison—on top of the additional penalties just described.33 In this case, you may also face a much higher fine.34
Finally, if you hold a California real estate broker's license, a real estate or mortgage fraud conviction could lead to real estate broker discipline—possibly including a loss of your license.
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):
You didn't have fraudulent intent
Intent to commit a fraud is one of the most basic elements of the crime of real estate fraud. If you lacked intent, you can't be convicted.35
You may have had good intentions in committing the actions that led to the charges against you. Or you may have simply been confused about the meaning and effect of those actions. In such a case, the legal defense of lack of intent would be an important one.
You entered into a transaction with the consent of a property owner
A common scenario is for someone to be accused of real estate fraud in connection with their dealings with someone else's property. Frequently the property owner involved is an elderly person—and the real estate fraud charges are accompanied by elder abuse charges as well.
But in many of these cases, the elderly property owner actually gave the defendant consent to represent him/her in the transaction—and then may have forgotten or gotten confused about the fact that s/he did so.
As Rancho Cucamonga criminal defense attorney Michael Scafiddi36 explains:
“If you had a good faith belief that you were legitimately helping another person, with his or her consent, that's likely to serve as an effective legal defense. This goes back to the fundamental point that you can't be convicted of real estate fraud without fraudulent intent.”
False accusations/mistaken identity
There are a number of reasons why an innocent person could be falsely accused of real estate or mortgage fraud.
For example, the real culprits may be trying to escape their own liability by accusing you of wrongdoing. Real estate fraud often occurs in complex business situations that involve multiple people—and it is all too easy for this to occur in such situations.
Or perhaps you were the victim of identity theft and, as a result, someone else used your name and information to secure a fraudulent mortgage loan.
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 charge lowered to a misdemeanor—or to work out a deal that involves victim restitution but no actual jail time.
Call us for help…
If you or loved one is charged with real estate fraud and you are looking to hire an attorney for representation, we invite you to contact us at Shouse Law Group. We can provide a free consultation in office or by phone. We have local offices in Los Angeles, the San Fernando Valley, Pasadena, Long Beach, Orange County, Ventura, San Bernardino, Rancho Cucamonga, Riverside, San Diego, Sacramento, Oakland, San Francisco, San Jose and throughout California.
For more information on Nevada “mortgage fraud” laws, please visit our page on Nevada “mortgage fraud” laws.
1 Penal Code 487 PC – California's grand theft law / [real estate fraud law]. (“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 fifty dollars ($950), except as provided in subdivision (b).”)
2 Civil Code 2945.4 – Prohibited practices [Foreclosure fraud; form of California real estate 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 and2945.3. (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.”)
3 Civil Code 890 – Definitions [Rent skimming; form of real estate fraud]. (“(a)(1) “Rent skimming” [form of real estate fraud] 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. . . . (f) Rent skimming is unlawful, and any waiver of the provisions of this section are void and unenforceable as contrary to public policy.”)
4 Penal Code 115 PC – Procuring or offering false or forged instrument for record [forged real estate deed; form of real estate fraud]; violations; punishment. (“(a) Every person who knowingly procures or offers any false or forged instrument to be filed, registered, or recorded in any public office within this state, which instrument, if genuine, might be filed, registered, or recorded under any law of this state or of the United States, is guilty of a felony.”)
5 Penal Code 489 PC – Grand theft [real estate fraud]; punishment. (“Grand theft is punishable as follows: . . . (c) In all other cases, by imprisonment in a county jail not exceeding one year or pursuant to subdivision (h) of Section 1170.”)
See also Penal Code 1170(h). (“(h)(1) Except as provided in paragraph (3), a felony punishable pursuant to this subdivision where the term is not specified in the underlying offense shall be punishable by a term of imprisonment in a county jail for 16 months, or two or three years.”)
6 See same.
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 [including real estate fraud], 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.”)
7 See same.
8 Penal Code 487 PC – California's grand theft law / [real estate fraud law], endnote 1, above.
9 Our 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.
10 Black's Law Dictionary (9th ed. 2009), fraud. (“1. A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment. • Fraud is usu. a tort, but in some cases (esp. when the conduct is willful) it may be a crime.”)
11 Penal Code 487 PC – California's grand theft law / [real estate fraud law], endnote 1, above.
12 Penal Code 484 PC – “Theft” defined. (“(a) Every person who shall feloniously steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property [commit real estate fraud], or who causes or procures others to report falsely of his or her wealth or mercantile character and by thus imposing upon any person, obtains credit and thereby fraudulently gets or obtains possession of money, or property or obtains the labor or service of another, is guilty of theft.”)
13 California Criminal Jury Instructions (“CALCRIM”) 1804 – Theft by False Pretense [including real estate fraud]. (“The defendant is charged [in Count ] with [grand/petty] theft by false pretense [in violation of Penal Code section 484]. To prove that the defendant is guilty of this crime, the People must prove that: 1 The defendant knowingly and intentionally deceived a property owner [or the owner's agent] by false or fraudulent representation or pretense; 2 The defendant did so intending to persuade the owner [or the owner's agent] to let the defendant [or another person] take possession and ownership of the property; AND 3 The owner [or the owner's agent] let the defendant [or another person] take possession and ownership of the property because the owner [or the owner's agent] relied on the representation or pretense.”)
14 Penal Code 487 PC – California's grand theft law / [real estate fraud law], endnote 1, above.
15 Civil Code 2945.4 – Prohibited practices [Foreclosure fraud; form of California real estate fraud], endnote 2, above.
16 See same.
17 Civil Code 890 – Definitions [Rent skimming; form of real estate fraud], endnote 3, above.
18 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 [rent skimming/real estate fraud charges], 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.”)
19 Civil Code 892 – Criminal penalties [for rent skimming real estate fraud]; 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 pursuant to subdivision (h) of Section 1170 of the Penal Code or by imprisonment in a 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 pursuant to subdivision (h) of Section 1170 of the Penal Code or by imprisonment in a 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 pursuant to subdivision (h) of Section 1170 of the Penal Code or by imprisonment in a 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.”)
20 Penal Code 115 PC – Procuring or offering false or forged instrument for record [forged real estate deed; form of real estate fraud]; violations; punishment, endnote 4, above.
21 Penal Code 470 PC – Forgery; Signatures or Seals; Corruption of Records [can be charged in connection with real estate fraud]. (“(a) Every person who, with the intent to defraud, knowing that he or she has no authority to do so, signs the name of another person or of a fictitious person to any of the items listed in subdivision (d) is guilty of forgery.”
22 The types of real estate fraud addressed in this section are examples taken from district attorney offices which 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.
23 Penal Code 489 PC – Grand theft [real estate fraud]; punishment. (“Grand theft is punishable as follows: . . . (c) In all other cases, by imprisonment in a county jail not exceeding one year or pursuant to subdivision (h) of Section 1170.”)
See also Penal Code 1170(h). (“(h)(1) Except as provided in paragraph (3), a felony punishable pursuant to this subdivision where the term is not specified in the underlying offense shall be punishable by a term of imprisonment in a county jail for 16 months, or two or three years.”)
24 See same. See also Penal Code 672 PC -- Offenses for which no fine prescribed; fine authorized in addition to imprisonment, endnote 6, above.
25 See same.
26 Civil Code 2945.7 – Violations; punishment; cumulative remedies. (“Any person who commits any violation described in Section 2945.4 [real estate/foreclosure fraud statute] 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 pursuant to subdivision (h) of Section 1170 of the Penal Code, or by both that fine and imprisonment for each violation. These penalties are cumulative to any other remedies or penalties provided by law.”)
27 See same.
28 California Civil Code 891 -- Civil rights and remedies [for rent skimming real estate fraud]. (“(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.”)
29 Civil Code 892 – Criminal penalties [for rent skimming real estate fraud]; prior convictions; limitations; other remedies or penalties, endnote 19, above.
30 Penal Code 115 PC – Procuring or offering false or forged instrument for record [forged real estate deed; form of real estate fraud]; violations; punishment, endnote 4, above.
31 Penal Code 1170(h). (“(h)(1) Except as provided in paragraph (3), a felony punishable pursuant to this subdivision where the term is not specified in the underlying offense shall be punishable by a term of imprisonment in a county jail for 16 months, or two or three years.”)
See also Penal Code 672 PC -- Offenses for which no fine prescribed; fine authorized in addition to imprisonment, endnote 6, above.
32 Penal Code 12022.6 PC – 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 [including real estate or mortgage fraud], 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.”)
33 Multiple felonies involving fraud or embezzlement [including real estate fraud]; sentence enhancement; fines; restitution; preservation and levy of defendant's property. (“(a)(1) Any person who commits two or more related felonies, a material element of which is fraud or embezzlement, which involve a pattern of related felony conduct, and the pattern of related felony conduct involves the taking of, or results in the loss by another person or entity of, more than one hundred thousand dollars ($100,000), shall be punished, upon conviction of two or more felonies in a single criminal proceeding, in addition and consecutive to the punishment prescribed for the felony offenses of which he or she has been convicted, by an additional term of imprisonment in the state prison as specified in paragraph (2) or (3). This enhancement shall be known as the aggravated white collar crime enhancement. The aggravated white collar crime enhancement shall only be imposed once in a single criminal proceeding. For purposes of this section, “pattern of related felony conduct” means engaging in at least two felonies that have the same or similar purpose, result, principals, victims, or methods of commission, or are otherwise interrelated by distinguishing characteristics, and that are not isolated events. For purposes of this section, “two or more related felonies” means felonies committed against two or more separate victims, or against the same victim on two or more separate occasions. (2) If the pattern of related felony conduct involves the taking of, or results in the loss by another person or entity of, more than five hundred thousand dollars ($500,000), the additional term of punishment shall be two, three, or five years in the state prison. (3) If the pattern of related felony conduct involves the taking of, or results in the loss by another person or entity of, more than one hundred thousand dollars ($100,000), but not more than five hundred thousand dollars ($500,000), the additional term of punishment shall be the term specified in paragraph (1) or (2) of subdivision (a) of Section 12022.6. (b)(1) The additional prison term and penalties provided for in subdivisions (a), (c), and (d) shall not be imposed unless the facts set forth in subdivision (a) are charged in the accusatory pleading and admitted or found to be true by the trier of fact. (2) The additional prison term provided in paragraph (2) of subdivision (a) shall be in addition to any other punishment provided by law, including Section 12022.6, and shall not be limited by any other provision of law.”)
34 See same.
35 See, e.g., CALCRIM 1804 – Theft by False Pretense [including real estate fraud], endnote 13, above.
36 Rancho Cucamonga criminal defense attorney Michael Scafiddi uses his former experience as an Ontario Police Officer to represent clients accused of white-collar crimes like real estate fraud throughout the Inland Empire, including at the courthouses in San Bernardino, Riverside, Rancho Cucamonga, Hemet, Banning, Fontana, Joshua Tree, Barstow, Palm Springs and Victorville.