Local probe uncovers statewide fraud scheme

An investigation by state and federal authorities that started in Stanislaus County five years ago has led to the arrests of six people charged in a mortgage fraud scheme that sprawled across California.

The alleged masterminds, San Bernardino County residents Jacob and Aide Orona, were arrested last week and face 90-year prison terms if convicted. Both were first named in a 2013 Modesto Bee story after a Turlock couple tutored by the Oronas were arrested by investigators with the Stanislaus County District Attorney Office’s real estate fraud unit.

Also apprehended July 7 were John Contreras, Prakashumar Bhakta, Marcus Robinson and David Boyd, all believed to live in Southern California. The six defendants were indicted by a grand jury on a combined 135 felony charges including grand theft, conspiracy, filing forged documents and identity theft.

District Attorney’s Office investigator Glenn Gulley uncovered the scheme in 2011, after Blas and Nancy Arreola of Turlock tried to stall foreclosure of their home and a rental home they owned by filing false documents with the county recorder, according to court documents and reports from the office of District Attorney Birgit Fladager.

(DA investigator Glenn Gulley) was at the epicenter of the investigation.

Birgit Fladager, Stanislaus County district attorney

Gulley found that an Arreola family member did the same thing with another house in Stanislaus County and another in Half Moon Bay. The probe led to several more counties, and “I discovered the scheme was statewide,” said Gulley, who also serves with state and federal mortgage task forces.

The state attorney general’s office took the lead in prosecuting the Turlock couple and suggested to The Bee that more arrests could follow. Plea bargains in 2014 brought a one-year jail term for Blas Arreola, and Nancy Arreola was sentenced to 60 days in jail.

A 2012 arrest warrant affidavit said the Arreolas paid for coaching from the Oronas on ways to escape foreclosure based on fraudulent theories of lender misconduct.

The conspirators preyed on people desperate to keep their homes from being sold at public auction, says a release from California Attorney General Kamala Harris, who is running for U.S. Senate.

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Victims paid thousands of dollars to the Oronas and their partners, Harris’ office said, to learn how to file bogus court pleadings and to file phony deeds with county recorders, causing more than $4 million in losses without saving a single home.

Gulley and civilian fraud analyst Lynelle Solomon compiled more than 100 reports used by Harris’ Mortgage Fraud Strike Force, the Federal Housing Finance Agency and other state and federal law enforcement units. Gulley made several trips to Southern California to search Orona properties and to interview victims, witnesses and defendants, leading to the recent arrests.

“(Gulley) was at the epicenter of the investigation,” Fladager said Wednesday. “I’m very proud of the hard work and dedication by each member of our real estate fraud unit.”

In her release, Harris said authorities try to protect “Californians struggling to stay in their homes from those who would prey upon them for profit.”

Garth Stapley: 209-578-2390