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Many of Clavizzao's real estate transactions ended in foreclosure

So many Florida housing scams, so few watchdogs

A few weeks ago, I got an e-mail with a familiar name in the subject line: Victor Clavizzao.

The message, too, had a familiar ring.

"My name is Stacy Ortiz and I have read your articles about Victor Clavizzao. My family is now another one of his victims of fraud. …"

This week, it will be exactly a year since I started writing about Clavizzao, a native New Yorker who spent prison time for fraud and grand theft before jumping into Florida's over-heated real estate market as a mortgage loan officer. In that April 29 story and those that followed, I chronicled questionable deals that benefitted Clavizzao but took a heavy toll on others:

• A paralyzed man living on Social Security disability had to declare bankruptcy after taking out more than $1-million in loans — at Clavizzao's urging — on two houses in St. Petersburg.

• An elderly couple said their names were forged on loan documents for a $930,000 waterfront home. The woman died in January, partly as a result of stress, relatives say.

• Young couples like Ortiz and her husband paid thousands of dollars in rent and deposits to Clavizzao, only to discover he had no legal right to the property and that the houses were in foreclosure.

Complaints to law enforcement and regulatory agencies seemed to disappear into a black hole. After every story, I'd hear from readers wondering why Clavizzao was still in business.

The partial answer: He was just one cog in an industry so complex and poorly monitored it was hard to tell who was at fault. He couldn't have operated without the help — sometimes unwitting, sometimes not — of Realtors, title agents, appraisers, builders and lenders, who made risky subprime loans but didn't care because they quickly sold them to huge institutional investors.

And "there's always a question about who are the victims,'' says Robert Roseneau, chief of financial investigations for Florida's Office of Financial Regulation. "Oftentimes the buyer and seller have knowledge of what's going on or turned a blind eye. And the lenders might not want to testify because they don't want to ruin their reputations.''

A fraud surge

Earlier this month, FBI director Robert Mueller described a "tremendous surge"' in mortgage fraud investigations that has diverted agents from other cases.

"I'm not sure at this point we can see the extent of the surge,'' he told a U.S. Senate hearing.

Few places have had more fraudulent activity than Florida, where buyers flooded into a booming real estate market in 2005 and 2006, only to be stuck with properties they couldn't afford or couldn't resell when prices plunged. That led to a torrent of shady transactions aimed at unloading unwanted homes and condos.

By last fall, the problem had grown so bad that Florida Attorney General Bill McCollum created a Mortgage Fraud Task Force with 26 investigators, attorneys, paralegals and an economist. They complemented Roseneau's 51-member investigative team. But spread across a state of 18-million, that's not many, given the prevalence and complexity of what they're dealing with.

"Mortgage fraud cases tend to be extremely document-intensive,'' says Sandi Copes, a spokeswoman for the attorney general's office. "The documents in possession of the complainants do not necessarily match the documents provided by potential defendants, necessitating a time-consuming comparison.''

In a legitimate real estate transaction, all parties are supposed to have identical documents with the same sale price and closing costs. With mortgage fraud, however, the lender may have closing statements showing a sale price of, say, $500,000 while the buyer and seller have statements showing the property actually went for $300,000. The other $200,000 — earmarked for "repairs'' or "renovations'' — ends up in someone's pocket.

"It's not uncommon to have three completely different sets of documents from three different sources,'' says Roseneau, the financial investigations chief. "Then you've got to run the dog to the ground.''

Complicating the process is that closing statements and appraisals, unlike mortgage documents, are not part of the public record. If fraud is suspected, investigators are often forced to subpoena reams of paperwork and bank records. And then they need to link up with a prosecutor who may or may not consider the evidence sufficient.

"Normally, there's more than one home being bought and sold, and one thing we need to do is figure out the magnitude of the crime,'' Roseneau says. "Is the prosecutor okay with 15 or does he want 30?''

All this takes time, as illustrated by one of the few cases that has worked its way through the system.

Acting on a tip from the Secret Service, Roseneau's office zeroed in on Melissa Sabrina Miranda, an unlicensed mortgage broker who defrauded lenders into making inflated loans on five properties in South Florida.

The investigation began in April 2006. It was not until last month — nearly two years later — that Miranda was sentenced to three years in prison and ordered to pay $1.4-million in restitution to lenders.

A frenetic manner

Victor Clavizzao began working in the mortgage loan business in St. Petersburg in 2005. As shown by his felony record, almost anyone can be a loan officer — no background check or license is required to handle applications, replete with personal information, for loans that can run to $1-million or more.

Some real estate agents were turned off by Clavizzao's aggressive style and frenetic manner at closing. Others went ahead with sales even though they later acknowledged being troubled by inflated appraisals and discrepancies in closing statements.

Clavizzao's activities might never have come to light if he hadn't arranged loans for so many of his own relatives — all with his unusual last name. That made it easy to trace transactions on nine houses and condos purchased in Pinellas County at prices far higher than comparable sales despite an already declining market. All were financed at 100 percent, with the often substantial difference between loan amount and actual sale price going to Clavizzao or people he worked with.

Some of the transactions were almost laughable. Last spring, Clavizzao bought two Clearwater condos for a total of $1.6-million acting under power of attorney from his brother Anthony. The power of attorney form was clearly suspect — Anthony had purportedly signed it in Pinellas County on a day when he was in the Duval County jail serving time on cocaine charges.

Those condos, like the other properties, soon went into default. But Clavizzao had already extracted $45,000 from the loans.

The last transaction I was able to trace to him was a house bought in July by an 82-year-old Ocala man named Frank Conard. The seller was an investor who frequently worked with Clavizzao and had fallen into financial straits as the market swooned. And Conard turned out to be the father of a Clavizzao business partner.

The transaction had other curious aspects — Conard bought the house for $630,000, far more than anything else in the St. Petersburg neighborhood had sold for in months. And by that time last summer, the subprime lending business already was in crisis. Why would anyone loan hundreds of thousands of dollars to a retired truck driver?

I called Don Currie, head of High-
TechLending in California, home to many of the now-defunct subprime mortgage companies. Currie said Conard had good credit and planned to live in the house with his sons.

"If for any reason we come out and knock on the door and they are not there, we will call the loan due,'' Currie told me. But he didn't have to bother with that. By the time the house went into foreclosure, he had long since sold the loan to a Pennsylvania company.

• • •

The current residents of the house are Stacy Ortiz, her husband and their two young children. They rented in November from Clavizzao, who charged them $2,500 upfront and $1,500 a month rent. But Ortiz was incensed when Clavizzao came around in early April, just days after she had been served notice of foreclosure.

"I'm not paying you a dime,'' Ortiz told him. "You're a scam artist.''

Clavizzao, 45, declined to comment for this story. As of Friday, he was in the Pinellas County Jail, but what landed him there had nothing to do with his real estate dealings. Instead he was jailed for violating his probation on several old charges, including grand theft.

His most recent alleged offense? Police in Dalton, Ga., say they caught him at 2 a.m. last month driving drunk the wrong way on U.S. 41.

Susan Taylor Martin can be contacted at susan@sptimes.com.

So many Florida housing scams, so few watchdogs 04/26/08 [Last modified: Friday, May 9, 2008 9:03am]

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