By City News Service
A former Rancho Santa Fe mortgage broker was behind bars in Northern California July 25 following his arrest for allegedly running a bank fraud scheme for years while operating in San Diego County.
Federal investigators took 56-year-old Donald V. Totten into custody at his Oakland home on July 24 on a warrant out of U.S. District Court in San Diego, according to the FBI.
Totten allegedly obtained $2.2 million in mortgage loans using false information and siphoned off hundreds of thousands of dollars from the sale of properties while operating a brokerage business in his former hometown.
From about 2002 until 2007, Totten operated under the business names Integrated Home Loans, Integrated Lending, Money World, Island Financial and Little Angels Living Trust, among others, soliciting borrowers by advertising on television in and around San Diego and elsewhere, according to the FBI.
In or around early 2006, he arranged a series of real-estate transactions with a Chula Vista property owner who was struggling to make his mortgage payments, according to court papers.
In a complicated set of transactions, Totten first entered into a partnership with an investor from Carlsbad, promising to share the costs of maintenance of properties and then split the proceeds from an eventual resale, according to investigators.
To purchase the real estate, Totten allegedly employed a straw buyer — his investor’s girlfriend — who never intended to live in the properties despite certifications to the contrary on her loan applications, prosecutors allege.
In addition to providing significant down payments from his own funds, Totten allegedly falsified the straw buyer’s loan applications and, among other things, inflated her income and assets in order to induce the financial institutions to grant the mortgages.
Totten and his loan processor, who worked for his brokerage business Money World, then allegedly sent false supporting documents to the mortgage lenders to bolster the bogus claims in the loan applications.
The complaint further charges Totten with purchasing four homes for the same straw buyer simultaneously by intentionally failing to disclose to each lender that the borrower was in the process of buying multiple properties.
Totten earned large commissions from the transactions and secretly arranged for the proceeds to be sent directly to his own bank accounts as kickbacks, according to the charging documents.
He allegedly concealed his receipt of the payments from the lenders by directing them to Island Financial, a company he controlled, taking in almost $192, 000 in kickbacks alone from the four sales.
According to the complaint, after the sales closed, Totten had the straw buyer sign over the deeds to the properties to a trust that he controlled, effectively obtaining ownership. Eventually, however, each of the four mortgages defaulted and the properties were foreclosed.
The lenders and secondary mortgage purchasers, including Fannie Mae and Freddie Mac, suffered losses as a result of the foreclosures, authorities said.
The charges stem from an ongoing criminal investigation conducted by the FBI, Internal Revenue Service and Federal Housing Finance Agency, Office of Inspector General.
The case is being prosecuted by the U.S. Attorney’s Office in San Diego.