When it comes to real estate and mortgage fraud during the boom years in Las Vegas, prosecutors say husband-wife team Steven W. Grimm and Eve E. Mazzarella were involved in a big way – to the tune of $107 million.
Now, as the two await trial, a new lawsuit alleges further wrongdoing by Grimm.
Dubbed "the Bonnie and Clyde of mortgage fraud" by Bloomberg News, prosecutors say the couple was involved in bank fraud, mail fraud and wire fraud as the two engineered deals involving inflated property values and straw purchasers, defrauding lenders along the way.
As alleged by federal prosecutors, Mazzarella was a real estate broker and she and Grimm, a mortgage broker, controlled numerous limited liability companies.
They allegedly recruited straw buyers to buy homes at inflated prices and induced lenders to provide mortgages based on false representations about the income, assets and employment of the buyers.
The straw buyers would then transfer the properties to another entity controlled by the defendants and would receive a fee, prosecutors said. The defendants would then re-sell the property, again at an inflated price, the government alleges.
This alleged scheme involved 432 straw buyer transactions, the government said. Of 227 properties ultimately controlled by the defendants, at least 118 went into foreclosure, causing millions of dollars in losses to lenders, prosecutors said.
Grimm, Mazzarella and a third defendant, Melissa R. Beecroft, a mortgage company manager, have pleaded innocent. A trial set for last month has been rescheduled for August.
Prosecutors are seeking asset forfeitures of $107 million for a conspiracy charge in the case.
And while there have been real estate and lending frauds in Nevada far exceeding $107 million, those involved corporations and, for the most part, sophisticated investors.
Mazzarella, on the other hand, is known as a former housemaid. Grimm was a truck driver. Both entered the real estate industry and then cashed in on the Southern Nevada real estate boom before their indictment in 2008.
Mazzarella, in the meantime, has filed for personal bankruptcy protection and lists her status as "separated." The bankruptcy at least temporarily shields her from lawsuits.
The new lawsuit was filed in Clark County District Court on June 14 by Fidelity Title Insurance Co. against Grimm and two Nevada limited liability companies managed or owned by Grimm: Select Equities LLC and WP Davenport LLC.
The lawsuit describes how in February 2006, a couple arranged to sell their Las Vegas home to an individual and then planned to purchase a new property from WP Davenport.
Lawyers Title Insurance Co., as escrow agent, was told by the sellers to send $100,000 of the sales proceeds to WP Davenport.
Grimm then sent new instructions to Lawyers Title, on WP Davenport letterhead, re-directing the $100,000 to be paid to Select Equities rather than WP Davenport, the lawsuit alleges.
"Shortly thereafter, the sellers advised Lawyers Title that they did not authorize the requested re-direction of said escrow funds made by Grimm," the suit alleges. "The proceeds in question were stolen from the sellers."
Lawyers Title settled with the sellers, paying them their missing $100,000, and Fidelity later purchased Lawyers Title, the suit says.
"Grimm fraudulently misrepresented to Lawyers Title that he had the authority to re-direct the escrow funds," the suit charges.
Noting the larger criminal case against Grimm and Mazzarella, the new suit says: "Grimm and his wife Eve Mazzarella have employed straw buyers to defraud mortgage companies in the past.''
"Grimm, WP Davenport and Select Equities all created straw buyers and were involved in mortgage rescue scams," the suit says.
Grimm and his companies haven’t yet responded to the lawsuit, which seeks the return of $100,000 the title company claims they pocketed. He's represented in the criminal case by a public defender.
An attorney for the title company, Brooke Bohlke of the law firm Callister + Associates in Las Vegas, said Wednesday it’s not known if Mazzarella was involved in the transaction at issue in the lawsuit.
In her bankruptcy filing, Mazzarella listed 58 more lawsuits pending in Clark County District Court – many involving her, Grimm and their company Distinctive Real Estate & Investments.
Grimm and Mazzarella have been free on bond in the San Diego area awaiting trial.
Mazzarella filed for Chapter 7 bankruptcy liquidation on April 13.
In an updated bankruptcy filing this month, she listed $28,542 of assets against liabilities of $113,529. The liabilities could be higher though, as several claims by lenders and entities suing her are listed as unknown amounts.
The filing says she’s been earning $8,500 per month as a paralegal at her father’s law firm, Mazzarella Caldarelli LLP.