Long Beach Man Sentenced to Federal Prison for Mortgage Fraud Scheme

A Long Beach man found guilty of co-running a mortgage fraud scheme was sentenced to federal prison Monday, according to officials from the Department of Justice.

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John Martynec, 41, helped run a scheme which cost more than $2.4 million when fraudulently purchased homes went into foreclosure. He received a two-year sentence.

Elek Andrade, 32, of Downey was sentenced to one year and one day in prison for his involvement.

Both men previously pleaded guilty to one count of conspiracy each.

Martynec, a licensed real estate broker and co-owner of JTR Real Estate Inc. in Norwalk, would identify residential properties that could be purchased, renovated and then flipped for profit. Andrade worked for Martynec as a real estate agent and would help sell the renovated properties.

However, when the housing market slowed in 2007, the men started a scheme to use “straw buyers” – individuals who purchase homes without the intention of living in them – to buy the renovated properties.

Andrade and Martynec used the straw buyer’s personal information to apply for mortgages without their knowledge.

Loan applications were submitted without the buyer's consent along with fraudulent supporting documents, such as employment verification, supplied by Mireya Espinoza.

Espinoza, 36, of Carson, was sentenced to one year and one day in prison on Monday, February 6 for her involvement.

In total, lending institutions approved and funded more than $5.2 million loans for at least 11 properties.

“Schemes like this can destabilize the financial industry and the real estate market,” United States Attorney Eileen M. Decker said in a statement. “The last economic crisis demonstrates the dangers of such destabilization and the importance of prosecuting crimes like those committed by these defendants.”

The investigation was a joint effort conducted by the Federal Housing Finance Agency (FHFA), the United States Department of Housing and Urban Development’s Office of the Inspector General (HUD-OIG) and IRS Criminal Investigation.

“The housing crisis severely impacted many individuals throughout the country,” Special Agent in Charge of FHFA Office of the Inspector General Leslie DeMarco said in a statement. “Instead of working through the challenges the crisis presented, the defendants, Martynec and Andrade, engaged in a fraudulent scheme that caused additional harm to many individuals. As a result of our work, they are now being held accountable for their actions. The FHFA OIG will continue to work with our law enforcement partners to ensure that these types of frauds are investigated and exposed to ensure the American taxpayer is protected.”

In addition to their prison sentences, U.S. District Judge Dale S. Fischer ordered the men to pay $2,573,092 in restitution. Espinoza was also ordered to pay $1,476,966 in restitution.



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