Ramona Real Estate Fraudster Gets 15 Months Behind Bars

The judge said Teresa Rose was responsible for about $3.1 million in a fraud that ended with at least nine Ramona properties foreclosed.

San Diego Federal Courthouse
San Diego Federal Courthouse

A Ramona real estate agent who pleaded guilty to being part of a $15 million mortgage fraud scheme that had a negative affect on the Ramona real estate market was sentenced to 15 months behind bars on Friday.

Ramona real estate agent Teresa Rose, an unlicensed mortgage loan broker and her assistant all pleaded guilty to participating in a mortgage fraud scheme that generated almost $15 million in illegal kickbacks. The judge said Rose was responsible for about $3.1 million of the fraud that ended with at least nine Ramona properties foreclosed.

According to Judge John Houston, nine Ramona properties were affected in this case, all of them ultimately ending up in foreclosure and abandoned. He said that Rose was implicated in 12 other similar fraudulent transactions that are not tied to this case.

No victims of the fraud spoke at the hearing, but a group of Ramona real estate agents that felt the scheme had a negative affect on the overall Ramona real estate market were in attendance. 

"Several Ramona real estate agents dismayed by the case fear it makes them and the whole community look bad," the prosecutor said.

In addition to 15 months in custody, she will have to pay restitution in the amount of $532,687, she will be on supervised release for three years afterwards and she is not to engage in any real estate or fiduciary activities. The judge said sentencing guidelines allowed for as much as a 46-month sentence, but that was reduced due to Rose's cooperation and family circumstance. She acts as caretaker for her grandson, who the judge said might face hardships if she was given a longer sentence.

Judge Houston said Rose was the only licensed real estate agent to participate in the fraud, and there was no way it could have worked without her.

Mary Armstrong, the mastermind of the fraud, was sentenced in September to more than eight years in prison, and other co-conspirators have received sentences ranging from a year to 42 months.

The group recruited real-estate "investors" through ads in the Los Angeles Times, Monster.com, and elsewhere, offering them an opportunity to buy homes using their good credit with no money down.

In order to get these people to participate in the loan fraud, Armstrong promised to make mortgage payments on their behalf using rental income from the properties, according to prosecutors.

In reality, these so-called investors were mere straw buyers who were promised $10,000 for each property purchased. Armstrong, who was not a licensed mortgage broker, secured the deals by falsifying loan applications for them.

Armstrong and her co-conspirators used the loan applications to obtain mortgages with 100 percent financing and thus avoided having to make any down payments on the properties.

Rose made more than $200,000 in profits by convincing the sellers of the properties to inflate the purchase prices by $100,000 or more per property. The inflated amounts were allegedly for construction to improve the properties, when in fact no construction work was performed and the funds were diverted to bank accounts controlled by Armstrong's co-conspirators.

"Outside of convincing good people to inflate the value of their homes, which you profited from, she lied about construction, falsified papers, and continued the same fraud after parting ways with Armstrong, for your own greed," said Judge Houston.

He added that this wasn't a case where the defendant made one bad decision, it went on for more than a year.

Armstrong then had Fountain and other accomplices launder the funds back to her in cash payments or official checks, so that the money could not be traced. In this way, Armstrong pocketed nearly $15 million in kickbacks, made few if any mortgage payments and allowed nearly all of the properties to swiftly fall into foreclosure.

-City News Service contributed to this post

COMMENT: Were you a victim of the fraud? How did it affect you?

wbbarraza January 05, 2014 at 11:23 AM
Bye Bye Teressa
Ada Wildberger January 05, 2014 at 12:50 PM
Every single homeowner in Ramona is a victim of this fraud--the number of foreclosures has a direct negative impact on all property values in Ramona.


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