Former mortgage brokers sentenced to prison in fraud scheme

A federal judge hammered a former mortgage broker and his ex-wife Friday for orchestrating a fraud scheme in Las Vegas that caused banks to lose more than $52 million.

Federal prosecutors said the five-year conspiracy caused lending institutions to make $107 million worth of mortgage loans on 227 properties. Almost all of those properties are in default.

"This is the greatest number of properties and largest loss amount of any mortgage fraud case charged in Nevada," according to a statement released Friday by Daniel Bogden, the U.S. attorney for Nevada.

Banks are the "technical victims" in the case, Assistant U.S. Attorney Brian Pugh argued in court Friday, "but there are so many other victims in this case."

Pugh described the "real victims" as "everyone in Las Vegas who owns a house," because the fraud scheme resulted in artificially inflated housing prices and contributed to the eventual collapse of the community's housing market.

Senior U.S. District Judge Roger Hunt sentenced former mortgage broker Steven Grimm to 25 years in prison and ordered him remanded to custody. Moments later, deputy U.S. marshals met Grimm in the hallway outside the sixth-floor courtroom and led him away in handcuffs.

Assistant U.S. Attorney Daniel Schiess, a deputy chief in the criminal division, said Grimm's penalty represents the longest sentence a mortgage fraud defendant has received in Nevada.

"And I'm not aware of anything longer throughout the country," he said during a news conference outside the Lloyd George U.S. Courthouse.

Earlier Friday, Hunt sentenced Grimm's ex-wife, former real estate broker Eve Mazzarella, to 14 years in prison but gave her until June 29 to surrender.

Schoolteacher Joe Merica, 61, watched in the hallway as Grimm was taken into custody and remarked, "I've been waiting for this day for four years."

A federal grand jury in Las Vegas indicted Grimm and Mazzarella in March 2008.

Merica said he sold the pair a piece of property, in the shadow of the federal courthouse, for $3.3 million in 2006.

"They defaulted on the last $800,000, and they defaulted because their scheme blew up on them," he said.

Merica watched both sentencing hearings Friday and said Hunt imposed appropriate punishments on the defendants, "given the amount of damage they caused to so many people in this community."

From 2003 to 2008, according to the indictment, Grimm and Mazzarella used "straw buyers" to obtain control of property. A straw buyer is a person who pretends to be a legitimate buyer to conceal the identity of the actual buyer.

Once Grimm and Mazzarella obtained control of a property, prosecutors alleged, they resold it to another straw buyer at an inflated price.

Many of the straw buyers in the case were investors who "didn't know that they were being defrauded as well," Pugh told jurors, who convicted Grimm and Mazzarella in December of multiple conspiracy and fraud charges after a nine-week trial.

Prosecutors said the pair engaged in about 450 straw buyer transactions.

Las Vegas resident Norma Hayward, 82, spoke during Grimm's sentencing hearing Friday. Because of Grimm, she said, she has nothing to leave her children as an inheritance.

"I no longer have a home that I can call my own," she said. "This breaks my heart."

Seated in a wheelchair, she urged Hunt to "throw the book at those people when they do these kinds of things."

Pugh noted that Hayward was not a straw buyer. He said she went to Grimm to refinance her home, but instead, Grimm sold it.

Also convicted with Grimm and Mazzarella was former Las Vegas mortgage broker Melissa Beecroft, former owner of Secured Mortgage Services.

Hunt sentenced her on Friday to three years in prison and gave her until June 15 to surrender.

"Ms. Mazzarella, Mr. Grimm and Ms. Beecroft will now join the over 140 other persons who have been convicted of mortgage fraud offenses in Nevada over the last four years and are serving time in federal prison," according to Bogden's statement.

Hunt ordered all three defendant to pay about $2.3 million in restitution.

The federal sentencing guidelines called for Grimm, 49, and Mazzarella, 34, to receive life sentences.

But Hunt said the enormous loss amount in the case had unfairly skewed the calculation, causing the pair to face the same sentence received by one of the Oklahoma City bombers.

Prosecutors sought a 30-year sentence for Grimm and a 25-year term for Mazzarella.

California attorney Mark Allenbaugh, who represents Mazzarella, asked the judge to consider her three young children and impose a sentence of no more than a decade.

The courtroom was packed for Mazzarella's sentencing Friday morning. Allenbaugh presented three character witnesses, including Mazzarella's father and a bookkeeper Mazzarella had fired.

San Diego attorney Mark Mazzarella said his daughter has worked for him for more than three years.

"She's had a challenging life, but she has never whined or moaned or complained," the father said.

He said his daughter became pregnant in high school but later graduated from the University of Nevada, Las Vegas. She began working as a real estate agent in 2003.

During the trial, jurors heard that Eve Mazzarella met the older Grimm, a successful mortgage broker in Las Vegas, at a Halloween party. They fell in love and decided to go into business together. They also had a child together.

Eve Mazzarella started her own company, Distinctive Real Estate & Investments. In 2007, at age 29, she made REALTOR Magazine's "30 Under 30" list.

Chilee Navarro testified that she worked as Eve Mazzarella's bookkeeper from late 2004 until mid-2005, when Mazzarella fired her.

"She didn't feel I was performing to her expectations," the witness said.

Yet Navarro described the defendant as "a very caring, understanding, reliable person" who was involved in several charities.

The witness said Eve Mazzarella paid for her wedding, which was held at Eve Mazzarella's home.

"She was just as excited as I was to plan my wedding," Navarro said.

Pugh said both Mazzarella and Grimm have been living in San Diego.

Mazzarella did not speak at her sentencing hearing, but Grimm briefly apologized to his victims during his afternoon hearing. He also asked the judge to show Beecroft leniency.

Assistant Federal Public Defender William Carrico argued that Grimm should be sentenced to no more than 15 years. The audience in the courtroom had thinned by the time Grimm's hearing began, and his ex-wife was not present.

Hunt called Grimm the architect of the fraud scheme. Although Eve Mazzarella's conduct was egregious, the judge said, she probably would not have been involved in the crimes without Grimm.

The case was investigated by the FBI assisted by members of the Southern Nevada Mortgage Fraud Task Force.

Contact reporter Carri Geer Thevenot at cgeer@reviewjournal.com or 702-384-8710.