2 banks drawn into mortgage fraud probe

The Colorado Real Estate Commission has subpoenaed records of two banks as it tries to follow the money that changed hands after a landscaper bought five houses on Balsam Street in 48 hours and all five ended up in foreclosure.

In addition, the state has cleared a Colorado Springs title company of impropriety in connection with the transactions. And no investigation is planned into a real estate agency that previously marketed the houses.

The latest subpoenas were issued to Compass Bank on South Tejon Street and Premier Bank in Denver as the investigation deepens into the Balsam Street foreclosures. The subpoenas were released Monday in response to a Freedom of Information Act request from The Gazette.

In June, investigators subpoenaed the files of Legacy Title Group, which handled the closings. And they requested the files of Morning Star Real Estate, which had marketed the homes, including as part of the 2006 Parade of Homes. Division of Insurance investigator Andy Helm said Monday his agency had investigated Legacy and "has not found any violation" related to the Balsam transactions.

Also Monday, Division of Real Estate investigator John Sackett said a Morning Star broker had represented builder Contour Homes and marketed the Balsam Street properties prior to their sale to Andrew C. Aranda. But Contour had "abruptly ended its contract" with Morning Star immediately prior to the sale. Morning Star was not involved in any of the Aranda contracts, Sackett said.

"We haven't initiated an investigation of Morning Star and we don't have plans to," Sackett said.

Instead, Sackett is focusing on a Nov. 29, 2006, check for $267,792 written to Rich Port Properties.

Investigators want to see all account information and documents related to the check, as well as Rich Port Properties, its owner Zengiro J. "Zengi" Wilson, his defunct First Touch Lending Group, builder Contour Homes, and Aranda, owner of Red Mountain Landscaping Co.

Aranda bought the five houses Nov. 28-29, 2006, using $1.9 million obtained from five lenders with no down payments.

In April, Aranda told The Gazette that he was part of a real estate kickback scheme involving a mortgage broker, real estate agent, appraiser and others. Aranda said he was approached by real estate broker Robert B. Teegardin of Teegardin Realty and Investments to buy the houses. Aranda said he was promised at least 100 landscaping contracts if he signed the loans for the houses, which he said were over-appraised by $100,000 each to generate cash for the deal's participants. In response to the Gazette investigation, El Paso County Assessor Mark Lowderman requested the state investigate Teegardin.

The state's top real estate cop, Erin Toll, director of the Colorado Division of Real Estate, immediately launched an investigation and called it a "high priority" for her staff to determine whether any wrongdoing led to the Balsam foreclosures.

Teegardin has denied any wrongdoing and said he is cooperating with state investigators.

The houses Aranda bought are at 5134, 5144, 5164, 5174 and 5184 Balsam Street, in the northeast Sundown neighborhood near Woodmen Road and Powers Boulevard.

In August, Pete Preston, executive director of Mortgage Solutions of Colorado, reported what he believed to be another example of mortgage fraud. An audit of recent transactions by his office revealed a client who bought a house under circumstances similar to Aranda's case.

This sale was on Fossil Butte Drive near Balsam Street. It involved two sisters - Belinda Gardner and Katina Scott - who told The Gazette they were recruited and each paid $20,000 kickbacks to buy new Contour-built houses at inflated prices that they never intended to live in.

The Colorado Division of Real Estate is investigating the complaint by Preston, who also contacted the FBI.

Preston's complaint asked for an investigation of appraiser Gerri Harvey of Harvey & Associates and Dave Cortez, owner of Ascend Mortgage One/Evergreen Mortgage.

Harvey denied doing anything improper in her appraisals and Cortez said any involvement by his company was through a former office manager. Cortez said he is cooperating with investigators.