Mortgage Fraud and Marijuana Cultivation

Indictments were issued recently as fourteen people have been charged with manufacturing at least 1,000 marijuana plants and conspiring to manufacture nearly 1, 000 more marijuana plants along with a separate indictment for five of those people with 26 counts of mail fraud in connection with mortgage fraud in several houses used in the scheme.

United States Attorney for the Eastern District of California, a DEA Assistant Special Agent, and IRS-Criminal Investigation Special Agent announced that a Sacramento federal grand jury returned the three superseding indictments charging the 14 Bay Area residents of the scams that are said to have arose from a wide-scale, sophisticated indoor marijuana cultivation operation in California’s Central Valley.

This case is the product of an extensive investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigations Division, Elk Grove Police Department, Stockton Police Department, and Lathrop Police Department. Significant assistance was also provided by Bay Area local, state, and federal law enforcement agencies and the U.S. Attorney’s Office for the Northern District of California

“All of the individuals indicted in this case are from the Bay Area. They chose the Central Valley to perpetrate their scheme due to lower housing prices. They chose unwisely. What they failed to factor in were residents proud of their neighborhoods, skilled local police departments, and federal agencies that work seamlessly with their local and state counterparts,” stated U.S. Attorney Brown

“Operation Marvin Gardens is a crackdown on one of the largest, most sophisticated residential indoor marijuana growing organizations in the nation. This Bay area crime ring invaded nice bedroom communities, set up marijuana factories, and ultimately impacted the real estate, mortgage and utility company industries. The success of this investigation would not have been possible without the cooperation of multiple law enforcement agencies.”

According to Assistant United States Attorneys, who are prosecuting the case, the superseding indictments allege that the defendants operated sophisticated, large-scale, commercial marijuana gardens in approximately 50 single-family homes located in Sacramento, Elk Grove, Stockton, Lathrop, Tracy, and Modesto in 2006 and 2007. Approximately 24,500 marijuana plants were recovered by law enforcement officers during the execution of search warrants during the initial stages of the investigation.

The mail fraud indictment alleges that five defendants committed mortgage fraud between March and October 2006 in order to purchase 26 residences in Stockton that were to used to grow marijuana, were being converted or were awaiting conversion for indoor marijuana cultivation.

As a result of the mortgage fraud scheme, various financial institutions and mortgage lenders issued approximately $15,000,000 in residential home loans with a resulting multimillion dollar loss.

The original indictments, returned in 2006 and 2007 charged 17 individuals with conspiracy to manufacture at least 1,000 marijuana plants and manufacturing at least 1,000 marijuana plants. Of the 17 originally charged, 15 have pleaded guilty and two remain at large.

If convicted of conspiracy to manufacture marijuana and manufacturing marijuana counts, the defendants face a maximum possible sentence of life in prison and a mandatory minimum sentence of at least 10 years in prison. If convicted of the mail fraud counts, the defendants face a maximum possible sentence of 20 years in federal prison.

Source: Press Release

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