Judge finds couple guilty of fraud
After a long investigation, the U.S. Attorney General’s office filed charges against Eric Elegado and Charmagne Elegado for perpetrating a $50 million fraud scheme, even targeting Charmagne’s parents who lost over $75,000 to the scheme.
Charmagne masterminded the scam, according to prosecutors, and Eric was the frontman and marketing mind, parking their Bentleys, Rolls Royces, and Ferraris outside of his seminars, teaching others how to get rich like them.
U.S. District Judge Anthony Battaglia sentenced the couple to three years and five months in prison each for their role, and sentencing for others involved will take place later this year.
“You were living the American dream until greed entered into the picture,” Judge Battaglia said at sentencing.
How their scheme worked
The operation falsified loan applications for underqualified buyers’ subprime loans, obtained mortgages higher than the sales price of the homes, and funneled profits through dummy corporations, leading to millions in profits. According to the FBI investigation, Charmagne was a loan officer who directed fellow loan officers, as well as agents at her husband’s brokerage, E Real Estate and Loans, to falsify income and employment on loan applications, sometimes scribbling down names of friends’ companies.
Investigators say the scheme wasn’t directed at the general public, the couple took advantage of friends and family as part of the money making scandal.
The couple says they were just trying to help people get homes, prosecutors said it was a money grab in a tight-knit community where they took advantage of the trust they had earned.
Eric’s real estate company made roughly $3.5 million on 104 fraudulent deals, and the FBI says that the loss to lenders is roughly $10.5 million.
The couple apologized in court
The Elegado’s lawyers said that the couple’s criminal conduct was brief, only between December 2005 and February 2007, and was completely uncharacteristic of the two, and that Charmagne was pressured by the culture at New Century Mortgage, where no-document loans were common, and say Charmagne can’t be singled out for an entire subprime industry which “foster[ed] this type of behavior.”
Prosecutors called this argument a distraction and pointed out that the Elegados went to great lengths to corrupt the system for years.
Both expressed to the judge that they were sorry, and Eric offered to do all of the jail time so his wife could stay at home with their young son. The plea was rejected by the judge for this crime which left many homeowners in a bad credit position, many even having to move out of the state as a result. Dozens of their family and friends present cried when Judge Battaglia sentenced both to prison.
What now for the Elegados?
Eric continues to work as a real estate agent, despite his poor reputation, and Charmagne is earning a living as an independent contractor and a part time child care worker at her church.
They live with family in Escondido and are reportedly broke. There is no word as to their ability to pay the penalties. At a restitution hearing on May 27, prosecutors plan to ask the couple to repay the $10.5 million loss the lenders saw.
Four other employees charged in the case are set to be sentenced today, and others will be sentenced later this year.
Photo courtesy of U.S. Attorney General’s office has been modified.