FROM:
Amy Cornell, Public Information Officer
(408) 792-2997   CONTACT PERSON:
Yen Dang, Deputy District Attorney
(408) 792-2818   For release on May 5, 2009   CROOKED MORTGAGE BROKERS IN SUMMIT MORTGAGE CASE SENTENCED TO DECADES IN STATE PRISON   A Santa Clara County judge sentenced 41-year old Esperanza Valverde and 41-year old Herman Covarrubias yesterday afternoon to 23 years and 8 months and 19 years and 8 months in prison, respectively, for fraud committed in connection with their mortgage business, Summit Mortgage One.  They were also ordered to pay more than $900,000 in restitution, which includes interest, to victims.   The case involved $8 million in fraudulent sub-prime loans, 22 borrowers, and five lenders.  A jury found last October that Valverde and Covarrubias caused losses in excess of $2,500,000.    Valverde and Covarrubias falsified numerous loan applications submitted to lenders.  They misrepresented the borrowers’ abilities to repay the loans by inflating those borrowers’ incomes on the applications.  They submitted false income tax returns, false W-2 statements, false pay stubs, and false employment verification letters to the lenders.    Valverde and Covarrubias also misled the borrowers, predominantly Spanish speakers, into signing up for adjustable rate loans instead of the fixed rate loans they had been promised.  The defendants misrepresented, and in some cases outright concealed, the broker’s fees they collected from the borrowers.      Dolores A. Carr, District Attorney, expressed satisfaction with the result.  “Mortgage fraud has severely damaged our national economy and our community.  This office is committed to holding crooked mortgage brokers accountable, and this case will send the message that these crimes carry stiff penalties.”    Valverde faced a maximum term of 26 years in prison; Covarrubias faced up to 20 years.   ###

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