Stephen P. Gibbons, Assistant District Attorney   CONTACT PERSON:
Yen B. Dang, Deputy District Attorney
Consumer Protection Unit
(408) 792-2818   For release on March 24, 2005   LOAN BROKERS ARRESTED ON THEFT CHARGES   On March 23, 2005, Esperanza Valverde, age 37, and Herman Covarrubias, age 37, both of San Jose, California, were arrested and charged with multiple counts of grand theft involving fraudulent activity in the procurement of loans. Covarrubias and Valverde operated a mortgage brokerage company called Summit Mortgage One in Milpitas, California. The District Attorney’s Consumer Protection Unit received numerous consumer complaints against Valverde, Covarrubias and Summit Mortgage alleging the defendants engaged in a pattern of fraud and predatory lending practices. The victims were predominantly Spanish- speaking and many did not read or write English. The defendants misled borrowers into accepting adjustable rate loans when the borrowers thought that they were getting fixed rate loans. In addition the defendants falsified loan information, misled borrowers into accepting higher loan amounts, concealed their exorbitant broker’s fee and misrepresented the costs of the loan.    Valverde and Covarrubias gained the confidence of their victims by speaking with them in Spanish and falsely representing their relationships with various banks and lenders. Valverde falsely told victims she was paid by the banks or lenders when in fact she actually charged the borrowers a broker’s fee averaging five percent of the loan amount. The investigation revealed that Valverde and Covarrubias failed to provide many required disclosures to borrowers prior to the borrowers being obligated on the loans. These violations included failing to provide loan documents in a timely manner and failing to provide documents required to be in Spanish, including the broker’s statement of costs and expenses. As a result of the charges, Valverde faces up to seventeen years in prison and Covarrubias faces up to fourteen years in prison.   If you believe that you are a victim of Summit Mortgage One, Esperanza Valverde, or Herman Covarrubias, please contact Investigator Tom Wilson at (408) 792-2940 or Investigator Assistant Cristina De La Mora at (408) 792-2657.   # # #

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