Follow the money

Follow the money

Sheriff’s officials claim local men committed $2.3 mortgage fraud using fake bank statements 

By André Coleman 05/28/2014

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The chair of the Northwest Commission told the Pasadena Weekly that there are no plans to call for the removal of a commissioner recently arrested on charges related to a $2.3 million mortgage fraud.    

Meanwhile, a Pasadena City Councilman who has been linked in published reports to the commissioner and an Altadena man also arrested in the case told the Weekly that he had no connection to the crime, saying the publication merely attempted to make the story “sexier.”

The commissioner, 55-year-old Allen Shay, has pleaded not guilty on two counts of grand theft and two counts of procuring and offering a false or forged instrument. 

Eddie Turner, 44, has pleaded not guilty to four counts of grand theft, one count of perjury and five counts of procuring and offering a false or forged instrument.

Shay is a member of the Northwest Commission and the Pasadena City College Pasadena City College Citizens’ Oversight Committee. He is accused of helping Turner forge documents to obtain $2,364,000 worth of loans on a property in Altadena. Both men are due back in court on Tuesday. Shay remains in jail on $100,000 bail. Turner is being held on $300,000 bail. They are being housed at the sheriff’s North County Correctional Facility in Castaic.

“In 2007 Mr. Shay opened the escrow account for the loans, and the fraudulent documents were sent from Mr. Shay’s fax machine,” said Det. Christopher Derry of the Los Angeles County Sheriff’s Department’s Fraud and Cyber Crimes Bureau. 

“The lender required some earnest money on the part of the borrower,” Derry explained. “Mr. Turner deposited that money into the escrow account. The face of the check said Mr. Turner’s name, but the money came from a HELOC [Home Equity Line of Credit] account drawn against Mr. Shay’s home. The lender believed the funds came from Mr. Turner, but they were coming from Mr. Shay.” 

Lenders require buyers and homeowners to account for down payments and consider money that cannot be accounted for as “mattress money,” according to independent Realtor Nora Thomas, who added that banks require bank statements showing the withdraw of funds if a customer claims the money came from their own account. 

Derry said that Shay and Turner used forged bank statements to acquire the loans. If convicted, Shay faces 30 years in prison. Turner faces 55 years in prison. 

Deputies with the Sheriff’s Department arrested Shay and Turner on May 20 at their respective homes in Pasadena and Altadena. The Pasadena Police Department was not part of the investigation or arrest, according to Pasadena Police Deputy Chief Darryl Qualls.

Both men are friends of Pasadena City Councilman John Kennedy. Kennedy told the Weekly that although he knows Shay from his time as NAACP president in the late 1980s and early ’90s, and Turner through a home they bought, fixed and sold 10 years ago, he has no connection to the house on Altadena Drive.
“Eddie was a member of the Lincoln Avenue Baptist Church where my mom attended, and Allen served on the executive committee at the NAACP when I was president, but I was not involved in any way with this deal. I guess involving the City Councilman in the story just makes it a sexier story.” 

Shay ran for the council’s District 4 seat in 2010 after former Councilman Steve Haderlein announced he would not seek reelection. Shay later gave his support to former opponent Gene Masuda in the run-off election between Masuda and Jill Fosselman. Masuda appointed Shay to the Northwest Commission after winning the election. Shay also sits on the Pasadena City College Citizens’ Oversight Committee, which oversees the expenditures on construction projects at the school. 

“He would not be removed from the Northwest Commission unless he is found guilty of a crime,” Northwest Commission Chair Michelle Bailey said. “We will handle it the same way we would handle it with [former member] Dr. [Nicholas] Benson. We will let everything play out.  I don’t have enough information to even decide if Allen has done anything wrong.”

The commission serves as a monitoring board for the Northwest community and works with City Manager Michael Beck on implementation of the Northwest Community Plan. 

 “Until he is found guilty of those charges, as a friend I stand behind him,” Bailey said. “Knowing him and his work in the community and the support he has done in the Northwest Commission, I am hoping the charges are not true and the slate is wiped clean.” 

Last year, Benson, whose real name is Nicholas Mkandla and goes by a number of aliases, was forced to resign after he was arrested during an altercation at the sober living facility he owns on Washington Boulevard in Northwest Pasadena. The arrest came on the heels of several articles published in the Pasadena Weekly detailing Mkandla’s aliases and warrants for his arrest.

In the case involving Shay and Turner, LASD officials claimed that Turner purchased a residential property on East Altadena Drive for $1.12 million in January 2005 with an $896,000 loan from the now-defunct Countrywide Home Loans. 

In August of that year, Turner allegedly borrowed another $250,000 from Countrywide. Prosecutors claim that employment, income and financial records, including a counterfeit bank statement submitted by Turner to obtain the loans, were false. Two years later, Shay allegedly helped Turner refinance the Altadena property and obtained two new loans from Countrywide for $1,000,000 and $218,000. Those loans were used to pay off the earlier loans. 

Prosecutors say that the pair again submitted false employment, income and financial information, including a counterfeit bank statement. The pair allegedly misrepresented the source of a $29,916 down payment deposited into an escrow account to receive the loans, which came from Shay’s account, not Turner’s.

Turner allegedly stopped paying the mortgage on the Altadena residence in 2008. Bank of America foreclosed on the home after acquiring Countrywide Home Loans. Turner transferred the property to a trust, filed bankruptcy and applied for a loan modification which stopped the bankruptcy.

Things began to unravel in 2012 after Turner allegedly filed a false identity theft report with the LASD, claiming someone else used his name to take out the 2007 loans. During the course of the identity theft investigation, detectives also uncovered the alleged fraudulent acts committed by the pair to obtain the $2,364,000 in loans, which resulted in their arrests. 

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Comments

So he's a liar and a thief. Right. Good call. Keep him on the commission. In fact, Ms. Bailey should find some sort of fiduciary responsibility for him to manage. After all, he's a great guy.

posted by Paul G on 5/29/14 @ 04:46 p.m.
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