Real Estate Appraisal Execs Tied to Daniel Sadek Charged With Fraud
A couple weeks ago it was an armed invasion of the former sub-prime mortgage king's Newport Coast home.
Today, the owner of an Irvine real estate appraisal firm associated with Sadek--who September's Vanity Fair ranked No. 86 on a list of institutions and people most to blame for the nation's economic problems--was charged with conspiracy to commit fraud by inflating property appraisal values to secure more business with lending institutions.
Laguna Beach police arrested James Merritt Eaton, the 60-year-old owner of Landmark Equities Group, as he was driving near his home on Tuesday. His son and Landmark's president, Brian Chandler Eaton, 28, also of Laguna Beach, turned himself in to police on Friday. An arrest warrant has been issued for the firm's real estate appraisal executive, Michael John Bell, 32, of Corona del Mar.
According to the Orange County District Attorney, Landmark was the principal lender to Sadek's Newport Beach-based Quick Loan Funding subprime mortgage company.
The Eatons are out of custody after posting $100,000 bail each. They are scheduled to be arraigned Dec. 30 in Santa Ana on one felony count each of conspiracy to defraud another of property, 17 felony counts of grand theft by false pretense, two felony counts of identity theft, two felony counts of false personation, and sentencing enhancement allegations for aggravated white collar crime over $100,000 and property damage over $50,000. Bell faces the same charges, and if convicted all three could get 18 years in prison each. According to the Orange County District Attorney:
Between June 2005 and August 2007, James Eaton is accused of owning and operating an Irvine real estate appraisal firm, Landmark Equities Group (Landmark), that performed appraisals on residential properties. He is accused of hiring his son Brian Eaton as president, and Bell as an executive. Landmark worked with Quick Loan Funding, a subprime mortgage company owned by Daniel Sadek as their primary lender. James Eaton, Brian Eaton, and Bell are accused are accused of falsifying appraisals by inflating the prices of properties in order to increase their business by making themselves more appealing to lenders than their appraisal competitors. Lenders make a greater profit when they give higher loans on properties with higher appraisal values.
Between June 17, 2005, and Aug. 31, 2007, James Eaton, Brian Eaton, and Bell are accused of conspiring to fraudulently inflate appraisal values of properties in California, Arizona, and Nevada to make loans on those properties more attractive to lenders and investors. The defendants are accused of opening a branch office in Dublin, CA, Las Vegas, NV, and Scottsdale, AZ, to expedite the appraisal process and handle the high volume of appraisals generated by Quick Loan Funding. James Eaton, Brian Eaton, and Bell, are accused of arranging to have an office space at Quick Loan Funding suites in Costa Mesa to facilitate loan officer input in the appraisal process.
Between Dec. 17, 2005, and August 2007, James Eaton, Brian Eaton, and Bell are accused of accessing appraisals completed by other Landmark employees by requiring the employees to disclose their passwords and electronic signatures. They are accused of unlocking the original appraisals without the knowledge of the Landmark appraiser, making changes by removing negative property comments to increase the appraised value, and submitting the revised appraisal under the original appraiser's name or their own.
Between April 17, 2006, and Dec. 30, 2006, James Eaton, Brian Eaton, and Bell are accused of fraudulently changing and submitting 15 appraisals with increased values ranging from $4,000 to $40,000.
On Dec. 17, 2005, the three defendants are accused of submitting an overstated appraisal on a Sacramento home and falsely representing that a Landmark Office Manager, Vanessa M., had completed the appraisal by using her electronic signature without her permission or knowledge.
On Aug. 9, 2006, James Eaton is accused of flying out to Landmark's office in Dublin, CA. He is accused of firing Vanessa M. after she refused to provide him with her password and the passwords of her employees.
On Aug. 30, 2006, James Eaton, Brian Eaton, and Bell are accused of submitting an overstated appraisal on a Los Banos, CA, property and falsely representing that the appraisal was completed by Sonya M., who was no longer working for Landmark at that time.
Quick Loan Funding wrote $4 billion in mortgages between 2002 and 2007. But the California Department of Corporations revoked Sadek's lending and escrow licenses in December 2008 after investigators concluded he used funds from another one of his companies, Platinum Coast Escrow Inc., to take out markers to cover gambling at various Las Vegas hotels, among other offenses.
A January Orange County Register investigation found Sadek owed $2.3 million for unpaid taxes, mortgages and homeowner association dues. That didn't count $134,467 an Orange County Superior Court judgment filed that same month said Sadek owed the Bellagio Casino and Hotel in Las Vegas. He reportedly declared bankruptcy in Nevada two months ago.
Quick Loan Funding was sued 13 times locally in its last two years, and Sadek lost a house at 65 Briar Lane in Irvine after he defaulted on a loan from Citibank, the Reggie reports. The former Fletcher Jones Motorcars salesman also wrote and produced the movie Redline, which starred his then-girlfriend Nadia Bjorlin, comedian Eddie Griffin and Sadek's fleet of Ferraris, Porsches and Saleen S7 exotic cars. It cost him $31 million to make, distribute and publicize, but only earned a reported $8.2 million in ticket sales worldwide.
Two weeks before the Newport Coast home invasion, at 3 a.m. on Thanksgiving morning, a Mercedes Benz CLK 550 was reported burning in the driveway of Sadek's multi-million-dollar pad on 3 Longboat, off Pelican Ridge. The fire singed the house and garage before firefighters knocked it down. The Mercedes did not belong to Sadek.
Authorities have not said whether the crime or fire are related to debts Sadek owes or his other financial woes.