In 2006, home buying had reached a tipping point. The price of homes, after soaring for several years, peaked and began to fall. Homeowners, many of whom were given teaser loans based on faked or no documentation, faced sudden balloon payments and found themselves unable to pay.
As mortgage holders fell behind in their payments, David Zepeda set up the first ring, opening a mortgage refinancing office in San Bernardino. According to court documents, Luis Macias, a notary, was selling prepaid cell phones at a storefront down the street. Yunuen Medina, who is described as “a Hispanic female, 5ʹ tall, 110 pounds, with black hair,” came into Macias’s business to buy a phone. A matchmaker of sorts, Medina had already met Zepeda, and she introduced the two men.
At the time, Macias was facing foreclosure on his home. Zepeda, who with his brother John had already defrauded a few underwater homeowners, told Macias that if he quitclaimed his house to Zepeda, the bank would have trouble seizing it. Macias signed the deed, conveying the property to the David Zepeda Trust. Then Zepeda lowered the boom. Macias would have to move out of the house so that Zepeda could rent it. Macias realized he’d been snookered.
Macias got an idea. Call it a reverse golden rule. Why not do unto others what the defrauder Zepeda had done unto him?
Such was the way the scheme gained momentum, said Vance Welch, a deputy district attorney with the real estate fraud unit of San Bernardino County. Welch portrayed the David Zepeda–Luis Macias link as one of “mentor and disciple.” A victim would set up his own dummy loan-modification business in a part of town that Zepeda had not yet colonized. Welch compared the Zepeda contagion to a Ponzi. A victim says, “I’ll try and recoup my losses from the people I’m going to screw in the future.”
Under Macias’s leadership, a company called Home Recovery Trust was born. The Macias-Medina ring set up its business office in Rialto, one town west of the city of San Bernardino. The pair advertised their services in Hispanic communities, principally on TV and radio. Welch said that in Medina’s Spanish-language commercials, she “would tout herself as a successful woman.” At 23, she was young and attractive, a self-made immigrant. Welch noted that she would claim, “‘I used to be beaten by my husband, but I went out and took my own initiative and now I’m working for this great company, Home Recovery Trust, who can save your home.’ Then she outlined the program.”
Home Recovery Trust grew, Welch said, doing especially well in churches, where “Yunuen was very active” and where she’d offer seminars on alternatives to foreclosure. “A lot of our victims,” Welch said, “came from churches.” Soon, desperate homeowners were coming into the Rialto office and signing documents left and right.
The ring’s quitclaim deeds, falsely notarized by a woman named Reina Rogers, were transferred to the Michael Martinez Trust, another dummy entity. In addition, Home Recovery Trust required its clients to pay up-front fees (between $2500 and $3500) and make monthly rent or mortgage payments to the trust as well as sign powers of attorney.
Bank records showed that Macias and Medina took in more than $5 million. Maurice Landrum, senior investigator with the San Bernardino County district attorney’s office, said that Macias “personally withdrew” a little over $1 million “based on bank slips signed by him.”
Macias lived “like a rock star,” Welch said. “He rented a big portion of the Queen Mary to renew his vows with his wife,” bringing in guests via hired limo. He paid “$17,000 to rent a yacht. There were expensive hotels, clothes, the whole bit. If you had a chance then to see the victims — a blind lady, an elderly couple with a 35-year-old daughter in a wheelchair — and Macias was sitting across the table from them, saying, ‘We will save your house. Just keep sending us the money.’ It’s unconscionable. It’s just evil.”
In 2010, the Macias-Medina ring was busted. Ten people were arrested and all of them pled guilty.
Luis Macias was arrested April 20, 2010, in the hallway of the San Bernardino County superior courthouse, where he was facing, according to a district attorney’s press release, “felony charges in another real-estate-related fraud case.” For the felony charges with Home Recovery Trust he got five years and eight months in state prison. The trust was valued at $350,000, a paltry slice of the $5 million it had taken in. Restitution payments for the more than 450 victims have not yet been awarded.
Yunuen Medina served 180 days in county jail. She was then deported.
The original ring involved David Zepeda and his brother John. About the time investigators were closing in on Macias and Medina, they were learning where the pair had gotten their training: from the mastermind David Zepeda.
The story of David Zepeda begins with his end — a day in August 2010 when Maurice Landrum had a crazy bit of luck. That day he happened to be checking crime reports. He found one that a David Zepeda had filed. Landrum knew the name. Sheriff’s deputies had been investigating Zepeda for real estate fraud, although they didn’t have his current address. Someone, Zepeda complained in the report, had thrown a rock through the window of his Bentley.
Zepeda had bought a white Bentley sedan with white leather upholstery from Las Vegas Motor Cars and paid with a cashier’s check for $78,602. He’d parked the car in the driveway of his North Ofelia Drive home, located on a cul-de-sac in a new enclave in San Bernardino, close to the I-15 and I-215 merge. Eyeing window glass strewn through the Bentley’s lush interior, he called to report the crime so that his insurance would pay for the repair.
Though he was surprised, Landrum shouldn’t have been. “Crooks always do something stupid to lead you to them,” he said. He began surveillance and notified James Motz, an investigator for the real estate fraud division in the district attorney’s office in San Diego. Authorities here had gotten many complaints, as had the California Department of Real Estate, about loan-modification companies working in Vista, Fallbrook, Chula Vista, and elsewhere. The San Diego district attorney’s office had put Motz on the case.