The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), conducted a review to determine whether Indymac Bank followed Federal Housing Administration (FHA) policies and procedures when it originated FHA-insured loans. We identified a set of questionable loans originated by Indymac that had been generated by Beechwood Incorporated, a company that conducted various real estate services. Based on our review of the Beechwood loans, the U.S. Attorney’s Office of the Central District of California, Western Division, filed a civil complaint against Richard Ledezma and others under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. The complaint alleged that Ledezma and others made false statements in support of a loan application and devised a scheme to defraud a financial institution. It further alleged that Ledezma conspired with others to orchestrate a scheme to qualify their otherwise unqualified real estate and loan clients for new home loans. Each client wanted to purchase a new home but owned other property that he or she could neither sell nor afford to keep, and, thus, the client could not qualify for a new FHA loan from Indymac. To qualify their clients for the new FHA loans, the defendants allegedly caused false rental income documents and false rental agreements to be placed into their clients’ home loan applications to influence Indymac’s decisions as to whether to approve the borrowers’ applications for FHA-insured home loans and fund these loans.

On October 4, 2011, Richard Ledezma entered into a $50,000 settlement agreement with the U.S. Department of Justice (DOJ). Ledezma agreed to complete community service in lieu of paying the settlement. If Ledezma does not fully carry out his obligation under the settlement agreement, DOJ will file a $50,000 judgment with the court. The parties agreed that the settlement agreement was not an admission of liability or fault on the part of either party and was entered into for the purpose of compromising on disputed claims arising under or related to the complaint and to avoid the expenses and risks of litigation.