STANISLAUS COUNTY — Authorities appear to be taking foreclosure fraud prosecution to a new level in Stanislaus County, with possible implications elsewhere in California.
A Turlock couple face felony charges of trying to stall foreclosure of their property by filing phony documents with the county recorder, similar to cases launched last month against four other homeowners in this county.
But this time, state prosecutors not local will handle the case. And court documents suggest that authorities may go after supposed masterminds accused of running a fraud scheme from Southern California.
"We have not filed anything yet against the so-called kingpins, but we're not going to ignore where this case is leading," said Leslie Westmoreland, deputy California attorney general.
Westmoreland recently filed a felony complaint against Blas and Nancy Arreola of Turlock alleging multiple counts of identity theft, recording false or forged documents, and fraud conspiracy.
Blas Arreola, 37, initially was arrested in June, and he and his 34-year-old wife are scheduled to appear Tuesday at an arraignment. A state prosecutor is expected to ask that they be held with bail set at $412,000 and $201,000, respectively far more than in previous similar cases.
A phone number for the couple has been disconnected, and they could not be reached.
They were tutored by Jacob and Aide Orona of Highland in San Bernardino County, according to an arrest warrant affidavit for the Arreolas filed by investigator Glenn Gulley of the district attorney's office. Calls to a number associated with the Oronas' address and business, Document Recovery Forensic LLC, went unanswered.
Gulley and others with the district attorney's real estate fraud unit also serve with a federal mortgage fraud task force.
A Document Recovery Forensic website offers an audit of loan papers to "establish the fact that the alleged creditor or servicer has no rights to title." Homeowners can escape foreclosure when lenders, which often package and resell loans, don't answer demands for proof of who actually owns the loan, the pitch goes.
Homeowners attending a "mortgage note redemption seminar a life-changing event!" could receive a settlement up to 120 percent of the original mortgage, the website says, because lenders engaged in "fraudulent activities" while processing loans.
The pitch is similar to some that led to criminal charges for others last month.
Federal regulators have negotiated billions of dollars in recent so-called robo-signing settlements with various banks and mortgage lenders that wrongly foreclosed on homeowners. The latest, announced Wednesday, require Goldman Sachs and Morgan Stanley to pay $557 million; last week, 10 major banks settled for $8.5 billion.
Nearly 50,000 homeowners in Stanislaus, San Joaquin and Merced counties might have been eligible for compensation because of foreclosure errors, the Federal Reserve has reported. A review deadline closed Dec. 31.
Authorities have said lending abuse doesn't justify homeowner fraud and those who teach it.
The Arreolas paid the Southern California company more than $6,000 for help with several documents, in hopes of keeping their home and a Turlock rental they own, Gulley's affidavit says.
In some cases, they pretended to sell interest in the houses to people in bankruptcy, which can block home repossessions, the document reads. The people don't know the Arreolas and had no knowledge of the supposed deals, Gulley wrote.
Many of the documents were recorded after Blas Arreola was arrested and warned, the document says.
The Stanislaus County district attorney's office can be reached at (209) 525-5550.
Bee staff writer Garth Stapley can be reached at email@example.com or (209) 578-2390.