Last week, a federal grand jury indicted Raúl A. Morales-Guanill; Rafael Antonio Pina-Nieves, aka “Raphy Pina”; Orlando Javier Sierra-Mercado, aka “Chiquitín,” “Chiqui”; and Wilson Álvarez-Luna as a result of an investigation led by the Internal Revenue Service (IRS), in conjunction with the Federal Bureau of Investigation (FBI).

The individuals are charged in a 19-count indictment with conspiracy to commit bank fraud, conspiracy and aiding and abetting to submit false statements to a financial institution, and money laundering. The government is seeking a criminal forfeiture amount of $4,071,652.19 U.S. dollars.

According to the indictment, the individuals conspired and aided and abetted each other and others to submit false statements to a financial institution with the purpose of illegally obtaining money and funds from Doral Mortgage, a wholly owned subsidiary of Doral Bank of Puerto Rico. The events were initiated when Sierra-Mercado applied for a mortgage loan for residential property in Palmas del Mar, Humacao.

The IRS has devoted a significant amount of resources in the past several years towards investigating fraud involving financial institutions. The property is currently being foreclosed because Sierra-Mercado defaulted on his mortgage payments. The default may have actually prompted the scrutiny of the IRS in this case, since the alleged transactions relating to the fraud occurred in late 2007 and early 2008.

Through a series of transactions, each individual listed above has been connected to the allegations of fraud through a document and/or bank transaction related to the loan for the property Sierra-Mercado purchased. In total, three Puerto Rican banks were involved in addition to Doral Bank, including Western Bank, Banco Popular de Puerto Rico, and Banco Santander de Puerto Rico. Allegedly, the fraud resulted in a loss of over $4 million dollars.

Although the press release goes into detail regarding the transactions that serve as the basis for these allegations, the motivation of these individuals still seems unclear. Their motivation for the alleged scheme will play a significant role at trial because the government must prove that the individuals intended to enter the conspiracy to commit fraud.

The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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