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He's No Angel 

They once called him a savior who helped people in need. Today, Edwin Parada is accused of taking money from Latinos unfamiliar with real estate laws.

Wednesday, Jun 18 2008
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It was evening when the stranger knocked on Carmen Ruiz's door. The young man with ruddy cheeks and gel in his hair said that he had heard from an acquaintance that Ruiz, a 57-year-old grandmother of three, was having a hard time making payments on her home.

Ruiz had indeed gone looking for help in the community, inquiring at a local travel agency about someone who could lend her money or help refinance her mortgage. There, she was told about a real estate agent who was known to help fellow Latinos, "an angel who had done so much for people."

Now this angel stood on Ruiz's front steps and was asking to come in. His name was Edwin Parada and he was a pastor at a local church, he said. Ruiz welcomed him into her tiny home and quickly began pouring out her troubles.

Everything had been fine, she explained, until she fell at her job as a gas station cashier and suffered an injury that required several surgeries. To make matters much worse, she had also been diagnosed with a brain tumor the previous year. On disability and only able to work a few hours a day, Ruiz quickly fell behind on her house payments. Within six months, she began receiving letters from her bank, warning that unless she paid the money owed, her home would be foreclosed on.

Parada told Ruiz to not worry, took her personal information, and then left. A few days later he was back, but he had bad news for Ruiz. Because of her poor credit history, refinancing the house would be impossible, he said. Instead, Parada told her he would change her title to his brother-in-law's name and Ruiz would make smaller payments to him. Parada, in turn, would pay the bank and Ruiz would keep her home until she could afford to "buy it" back from him, she recalls. Ruiz was so grateful that she didn't stop to question the man's motives or even consult with her adult children, who live in the same home.

An immigrant from Bolivia, Ruiz had spent years scraping by in series of low-paying jobs to save enough money to buy a home near San Francisco International Airport, where planes taking off and landing rattled her windows every couple of minutes.

"I was crying from happiness because I thought that the worst was behind me," Ruiz says. "I had sacrificed so much to buy my home ... and was willing to do anything to keep it. I had been praying so hard for God to help me and I felt like my prayers were finally being answered."

But within two months of handing over her title, Ruiz knew something was seriously wrong. First of all, her monthly payments jumped by $1,000, she claims. Then, she arrived home to see a "For Sale" sign on her front lawn. She dialed Parada frantically, but he told her not to worry. Eventually, he stopped taking her calls altogether, Ruiz says.

This spring, the San Francisco Police Department launched an investigation into the allegations against Parada, a 27-year-old former real estate agent. The inquiry will look into allegations that he preyed on immigrants with poor credit who were desperate to stay in their homes or to buy new ones.

Victims — all of them Latino immigrants — estimate that Parada took from them more than $1 million over the course of three years, which if true would make this one of the larger mortgage fraud cases San Francisco police have investigated, according to Marty Dito, a detective in SFPD's fraud unit.

Ruiz's case is getting top priority, not only because of the amount of money allegedly stolen, but also because as her illness progresses, time is running out.

"For a year and a half, Carmen made payments to Parada, thinking they were going towards the house," says Robert Steger, a fraud detective with the SFPD, who is leading the investigation into the former San Francisco real estate agent. "Now, she believes that none of the money went where it was intended and that instead Edwin Parada pocketed all of it." Police say they estimate that Parada may have taken about $165,000 from Ruiz—about $55,000 from the monthly payments and $110,000 from the equity of the house.

Three families have already filed lawsuits, and at least four others say they are considering litigation. But as the allegations mount against Parada — who is not a U.S. citizen, but a permanent resident — Ruiz and others wonder whether he will ever be held accountable because he spends much of his time traveling overseas, including in El Salvador, where he was born, and may be considered a flight risk by police.

As the number of homes facing foreclosure has skyrocketed around the country, so have incidents of mortgage fraud, making it a top-priority white-collar crime for the Federal Bureau of Investigation.

And although immigrants are obviously not the only ones who have been victimized by unscrupulous agents, they are far more susceptible to abuse because they are unfamiliar with U.S. laws and often don't speak English well, say those who work in the immigrant community.

"The big issue is the language barrier," says Ricardo Corona, a home-ownership coordinator at the Mission Economic Development Agency, a nonprofit that offers assistance to people facing foreclosure or looking to refinance their homes. "If you don't speak a language very well, you feel more comfortable with someone who is your own kind, with the thinking being that 'because he is like me, but also speaks English, he will help me, he will protect me.'"

Those who know Parada say that is exactly the kind of rapport the agent created with his clients, some of them workers at the Red Cafe, a popular Mission diner Parada owned until October 2007.

The former clients describe Parada as a smooth-talking charmer with a lengua de oro, or golden tongue, who understood that for immigrants, owning a home was central to creating solid footing in their adopted country.

Working at Casa del Sol and later at California Realty and Investments, two mom-and-pop mortgage brokers in the Mission that have since gone out of business, Parada routinely came in contact with immigrants who had bad credit but wanted to purchase homes. Others contacted him when faced with foreclosure and say they were offered reduced payments in exchange for "temporary" custody of their titles. Still others were approached with real estate investment opportunities that required them to borrow against their equities. A few simply allowed Parada to use their names as a favor to purchase homes, which he made commissions on, but then allegedly walked away from, leaving them with debt and ruined credit. (Parada lost his real estate agent's license in December 2007, not because the Association of Real Estate Brokers became suspicious of his dealings, but for his failure to pay child support.)

But in the three years Parada worked as a real estate sales agent and broker selling homes throughout the Bay Area, he did plenty of damage, says Shirley Hochhausen, who directs the Fair Lending Practice and Referral Service at Community Legal Services of East Palo Alto and is the supervising attorney for one of the plaintiffs.

"He was able to use his language, his credentials, and personal sociopathic charm to gain people's trust," Hochhausen says. "But he couldn't have done it on his own. He was aided and abetted by lenders, title companies, and people who lent their licenses to him. He tapped into their greed with his own."

Many of the alleged victims interviewed by SF Weekly say the true number of people who have lost money is probably much higher than authorities know, but believe some have been dissuaded from coming forward due to fear.

"Many of us have kids and are terrified about what can happen to them if we speak out," says Digna Zamora, a 39-year-old mother of four. Zamora says Parada threatened her after she confronted him about $60,000 she claims he took following the sale of her Hayward home, which had gone into foreclosure. "This person is capable of doing anything, but he has be stopped," she says.

Parada has refused repeated requests for an interview, although not before calling one of the plaintiffs a gold digger and threatening this reporter with a lawsuit. (He also threatened to beat up an SF Weekly photographer who tried to snap his picture during a recent hearing, and then ran from the camera.) Parada's attorney in the civil action suits did not return repeated phone calls.

But attorney Herbert Hayden, who is representing Parada in his federal bankruptcy case, which was filed in February, said that his client got into trouble when the housing market cooled and he became stuck with loans he couldn't repay.

"Edwin's business model was to loan money to people in default or having problems in their homes and to then help those people refinance their home or sell it," Hayden said. "This plan worked fantastically while the markets were up ... so when the market tanked, so did Edwin's business and his ability to pay people back."

During the bankruptcy hearings, Parada has failed to turn over records required of him, saying that most of the transactions were done through verbal agreements.

Parada suddenly changed course in late May, filing a motion to dismiss the bankruptcy proceedings and leaving the country, Hayden said, adding that he himself was frustrated with Parada's lack of cooperation. Parada is now reportedly back in this country and a hearing has been set for July 11 to determine whether he'll be allowed to withdraw his bankruptcy filing.

All the legal back-and-forth has jangled the nerves of Ruiz, Zamora, and other alleged victims not only because of fears Parada may flee the country, but also because all charges against him have been put on hold until his federal bankruptcy proceedings are complete.

"We sit here and wait, not knowing what's going to happen," said Ruiz, who is still living in her San Bruno home despite it now being owned by Parada's brother-in-law. "Does he still have the money? Is he even in the country? Where will I go once the bank forecloses on the home?"

Ricardo Marcelos has hands that always seem busy — working, etching, carving, or painting a craft project, usually figures of peasants in broad-brimmed sombreros or indigenous women carrying baskets. The images are inspired by his work all over Mexico as a onetime journalist and organizer who helped the Zapatistas set up pirate radio stations to broadcast their message to the world.

Sitting in the living room of his two-bedroom home in Bernal Heights, the 45-year-old roofer recounts the story of how he met Parada, a fellow immigrant who seemed to understand the challenges of living in a new land.

"He knocked on my door and said he wanted to talk to me," Marcelos recalls, adding that one of his co-workers had referred Parada to him. "He told me that I needed to buy a bigger house because my kids were getting older and needed separate bedrooms and that he could help me."

Marcelos told Parada that he was happy with his home and couldn't afford a bigger mortgage. But the agent wouldn't listen, repeatedly calling and coming by unannounced at least 15 times, Marcelos says.

Despite his initial protestations, Marcelos was eventually won over by the persuasive Parada. About a month later, Parada called and said that he had found a home in Portola Valley that was perfect for the family, and assured Marcelos that the down payment would be covered through a home equity line of credit, which homeowners often use to do repairs or to consolidate debt. The real estate agent said the mortgage payments would only go up nominally — by $100 at most.

To complete the closing documents on the home, Parada asked Marcelos to meet him at a Starbucks, according to a civil lawsuit Marcelos filed in January. But when Marcelos showed up, Parada was nowhere to be seen. In his place stood Lorenzo Parada, Edwin's brother and a notary public, who put a large stack of documents in front of Marcelos and pointed out places where he should sign, Marcelos recalls. (Despite repeated attempts, SF Weekly was unable to contact Lorenzo Parada for comment.) All of the documents were in English, despite the fact that Marcelos and Edwin Parada had always spoken Spanish to each other.

Marcelos had questions about the 100-plus-page pile of documents, but was told to wait until Edwin was back in town, he recalls. He left that day's appointment without copies of anything he had signed, a violation of basic real estate practices. It would be two years before Marcelos would see any of the documents, and only after incessant calls to Edwin by Marcelos' wife, Jackie.

When the Marceloses finally received the documents, they were shocked at what they saw. Instead of taking out an equity line as promised, Parada had actually refinanced their home, assigning himself a payoff of $200,000, according to the lawsuit.

"Parada put himself on the HUD1 [closing document], and the escrow company didn't make any inquiry whether that was a valid disbursement and gave him a cashier's check for $200,000," said Hochhausen, Marcelos' attorney.

Argent, one of the nation's largest subprime mortgage lenders, which underwrote the loan Marcelos took out to purchase the new home, declined comment pending litigation.

But Simone Katz, attorney for New Century Title Company, which was the escrow holder for the loan, said her client was simply following the instructions given by Mr. Marcelos and the lender, and so is not responsible for the money in question.

"The escrow company is there to process the paperwork and make sure the loan gets funded, not to police the transaction," Katz said, adding that the case has proceeded against all other defendants, including Commonwealth Land Title Company, which is the successor-in-interest to New Century, following New Century's dissolution.

"The escrow documents had written instructions, not from only from the lender, but from the borrower, which Mr. Marcelos had an opportunity to review," Katz says. He reviewed and signed those documents, so there would no reason for New Century to believe that this disbursement should not have been made."

When the Marceloses realized what had happened, they immediately contacted the San Francisco Police Department, the Department of Real Estate, and the San Francisco District Attorney's Office, but say their complaints fell on deaf ears. The Marceloses says the district attorney's office told them that there was such a backlog of cases that it would take three years before an investigation could begin.

"They didn't understand what we were talking about when we told them our real estate agent stole $200,000 from us," said Jackie Marcelos, who became so frustrated with what had happened that she began studying real estate.

Erica Terry Derryck, spokeswoman for San Francisco District Attorney Kamala Harris, said that a staffer met with the Marceloses last year and explained that the district attorney's office couldn't do anything until a criminal investigation had been completed and there was sufficient evidence to file charges against Parada.

In their frustration, the Marceloses also turned to the San Francisco Bar Association and several local nonprofits, who listened to their story, but couldn't do much. "Unless you have at least $40,000 in the bank for an attorney, you really can't do anything," Ricardo Marcelos says.

Mortgage fraud has jumped by 47 percent in the past year, with California considered one of the hot spots for the problem, according to the FBI. That's in part due to its size, but also because it's one of the few states where real estate agents can also work as brokers, eliminating the checks and balances meant to stop unscrupulous players, experts say.

"If you were to sign up for courses that are required to get your license, there is very little in there to discuss ethics or your fiduciary duty as a mortgage broker or agent," says Alameda County Deputy District Attorney David Lim, who prosecutes real estate fraud. "And because brokers are commission-driven, it eliminates a lot of checks that regulate what they do."

Primera Iglesia Bautista is the kind of unassuming Mission neighborhood church you can walk by dozens of times without noticing. A simple billboard near the door announces the Wednesday night Bible study, the Friday night teen ministry, and Saturday's family worship. But it is on Sundays that the Baptist church comes alive.

On a stage adorned with burgundy curtains and large vases filled with flowers, a band leads the worshippers in a song about Jesus Christ, the singer walking back and forth like a rock star. Women in their best heels and dresses cast their eyes toward heaven while simultaneously bouncing babies on their laps. Presiding over the celebration is Pastor Tony Lopez, a charismatic former Univision reporter who watches the undulating congregants, not unlike a king overseeing his subjects. His fingers are bejeweled with rings and his hair is perfectly combed.

It was Lopez who first introduced Edwin Parada to the congregation, after meeting the agent on the Spanish-language Christian radio show Parada had on 1010 AM. The men were both from El Salvador, and struck up an acquaintance. Later, when the church was gathering school supplies to send to El Salvador, Parada wrote three checks to help with the effort, Lopez recalls. "He did a lot of good for the church," said Lopez, who became a regular guest on Parada's radio show. "People would call me from their cars during the program to say that they had pulled over and were praying with me because they had been so moved by the sermon. And Edwin was the one who made it happen."

The El Salvadoran church is where Julia Lopez (no relation to Tony Lopez) first met Parada, whom the pastor presented to his congregation as a paragon of Latino success. Parada, then a mere 25 years old, won the crowd over with an easy smile and a few laughs, and then proceeded to tell them about his business.

"He told everyone that he wanted to help us make money," recalls Julia Lopez, a 52-year-old congregant who works as a housekeeping manager at the St. Francis Hotel. "He said, 'Just because you're Christian doesn't mean you have to be poor.'"

A week later, Lopez and her then-boyfriend paid Parada a visit in his Mission office, where the agent laid out a tempting investment opportunity: The couple would take $190,000 from the equity on their home and give it to Parada to invest in other properties, according to Lopez. In return, Parada would give Lopez $1,700 each month, $500 more than her mortgage payment.

Although Parada did make payments to the couple for a time, the checks soon started bouncing, Lopez alleges. And when she asked him for the money back, as was agreed in the promissory note, Parada said that business was slow and that he didn't have it.

Today Lopez wonders how she could have known that what she considered a sound business opportunity would turn out this way.

"It's true that he didn't force me to give him money at knifepoint," Lopez said. "I was ambitious, but that's what I thought you had to do in the U.S. to make money. I thought you had to take risks."

Although Parada is just a few years over the legal drinking age, he managed to gain a reputation in the local Latino community as an ambitious businessman. He was the owner of Red Cafe in the Mission and Gunter's restaurant in South San Francisco, until transferring the titles of both businesses to his sister last October. The Marceloses and several other alleged victims believe the transfer was done after the first lawsuit against Parada was filed in August 2007, which made him think his assets could be seized. But Hayden, Parada's bankruptcy attorney, said his client gave his sister, Sandra Edwan, the restaurants as a way to repay her for money he owed her.

Another property Parada owned for two years is a home in the Excelsior, before it was foreclosed on in April of this year, according to property history documents. In that time, Parada borrowed nearly $700,000 against the property — which is worth approximately $400,000 — by taking out deeds of trust in other people's names, lenders who were meant to assume responsibility for the debt. Typically, a bank or credit union becomes a lender when people borrow against their property, but because these institutions also have more stringent guidelines, it's easier to make another person a lender, which Parada did with at least seven people, according to documents.

One of the "lenders" Parada approached in November 2007 was Martin Arteaga, whose wife Gloria once worked at Red Cafe. But Parada didn't mention anything about a deed of trust or that Arteaga's name would be listed as one of lenders, simply that he had an emergency and needed money, Gloria Arteaga recalls.

"He wanted $40,000, but we could only write him a check for $20,000," she said. She also said she lent Parada the money because she considered him a friend. Parada said he would repay the debt with $2,000 interest within a couple of months. Seven months later, the Arteagas say they are still waiting.

Mortgage fraud schemes have been uncovered in other parts of the Bay Area, as well as in Sacramento, Stockton, and Los Angeles, leaving behind a trail of people who have not only lost money, but have also ruined their credit.

This past April, two East Bay women were arrested on charges that they ran a fraudulent foreclosure "rescue" business that used grant deeds to con at least 14 families out of thousands of dollars. Their clients, most of them Latino immigrants, were asked to fill out documents that deeded a part of their property to fictitious companies. The suspects then filed bankruptcy petitions using the fake companies' names, which stalled the foreclosures. But homeowners — who were paying up to $2,500 a month to the pair — still lost their homes when banks went to court and overturned the grant deeds.

But even when perpetrators end up behind bars, the money they steal is not always recovered. More often, police find the thieves have burned through the money, leaving few assets to be seized. Nor is there a lot of hope that crooks can earn back the money while incarcerated.

"When you put people in prison, they're not able to make wages, so that creates a tension in the system," says Lim, of the Alameda County DA's office. "Do you hold the person accountable and punish them with prison to deter others from committing the same crime or do you let them out, so they can get a job and repay the victim?"

The alleged victims all say they just want Parada to return the money he owes them, although they wouldn't mind if he also is held accountable by the courts. The police say they're still investigating and making progress in the case.

Anyone convicted of taking money from victims could face up to three years in prison, if tried and convicted of grand theft, forgery, and false recording of documents — charges typically associated with fraud, according to Lim. California also has white-collar enhancement clauses for crimes involving over $100,000, although much also depends on a person's criminal record and whether any of the victims were elderly.

The Marceloses, for one, say they will keep fighting as long as it takes, not only to keep the bank from foreclosing on their home — a process which has temporarily been stalled with their lawsuit — but also to help other immigrants navigate the complex world of real estate law and educate them about their rights.

One little-known one is that in California, any agreement that is negotiated in Spanish — or Chinese, Tagalog, Vietnamese, or Korean, for that matter — requires all accompanying documents such as a lease, a loan, or any other contract to be in the same language. But although the law was passed in 1976, landlords, agents, and brokers frequently ignore it, either because they do not know about it or because there are no repercussions for violations.

Marcelos had no idea about the law when he was handed that thick stack of closing documents he couldn't understand. Today he knows better.

"When, we started, it was just the two of us against the broker, the bank, the whole system," Marcelos says. "Now, it doesn't matter if we win or lose because we've come out stronger having waged the fight, and in the process have helped many people. That's what counts."

Others aren't so optimistic. Sitting in her tiny living room on furniture she's been able to find on the street and holding her wriggling one-year-old grandson Antonio in her lap, Carmen Ruiz says she has contemplated suicide many times. The only thing stopping her is the knowledge that if she dies, there would be no one to look after her grandchildren.

"I am so tired," she says. "Some days I want my cancer to spread all over my brain so I won't know what's going on anymore. I just want to forget. ... It cost me years of work to have my house, and this man came along and took it from me. He took the title, he took my money, he even took some of the furniture that I had. He has left me with nothing."

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Karina Ioffee

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