FELIX DANIEL GUILTY March 20, 2013

UNITED STATES DISTRICT COURT
 

NORTHERN DISTRICT OF ILLINOIS
 

EASTERN DIVISION
 

No 11 CR. 743
 

Violation: Title 18, United States
 

Code, Sections 1341 and 1343
 

FILED Oct 25, 2011
 

UNITED STATES OF AMERICA
               v.
FELIX DANIEL
 

COUNT ONE
 

The SPECIAL FEBRUARY 2011-1 GRAND JURY charges:

        1.         At times material to this indictment: 
 

            a.  Defendant FELIX DANIEL was a founder and principal of RYM Technology

Holdings, LLC, a company organized in the State of Michigan on or about September 12,
 

2003.RYM Technology Holdings, LLC did business as “Rymtech” and had its offices in

Michigan;

b. Fremont Investment & Loan was a financial institution, the deposits of which

were insured by the Federal Deposit Insurance Corporation, which made residential
 

mortgage loans; and

c. Fremont Investment & Loan and other lenders which made residential

mortgage loans required applicants for mortgage loans to provide truthful information,

including the borrower’s contribution to the purchase price and his or her intention
 

regarding the property purchased, which was material to the approval, terms and
 

funding of their loans.

2. Beginning in or about September 2003 and continuing until in or about
 

November 2006, in the Northern District of Illinois, Eastern Division, and elsewhere,

FELIX DANIEL,

defendant herein, along with others known and unknown to the Grand Jury, knowingly

devised, intended to devise, and and participated in a scheme to defraud and to obtain
 

money and property by means of materially false and fraudulent pretenses,
 

representations, promises, and by material omissions, which scheme affected a financial

institution, and which is further describes below.

3. It was part of the scheme that DANIEL obtained the equity that homeowner

(the “Homeowners”) had in their homes by claiming to be able to pay off all mortgages

on the Homeowners’ homes within five years through a secret investment strategy, well

knowing that no such secret strategy existed that could generate income sufficient to
 

make the promised payments.

4. it was further part of the scheme that in 2005 and 2005, DANIEL applied for a

patent on a “Mortgage Financial Intervention System and Method,” in part so that he
 

could claim that there was a patent pending on his alleged secret investment strategy

and justify not disclosing the strategy to the Homeowners and others.

5. It was further part of the scheme that Daniel entered into agreements with

the Homeowners stating that the Homeowners’ homes would be held in a real estate

investment trust controlled by Rymtech, well knowing that Daniel had actually arranged

for nominee buyers, or “A Buyers, to purchase of the Homeowners homes from the
 

Homeowners.
 

6. It  was further part of the scheme that DANIEL recruited the “”A Buyers”
 

nominee Buyers, or “A Buyers,” to obtain financing for the purchases of the
 

Homeowners’ homes from lenders such as Fremont Investment & Loan.

7. It was further part of the scheme that DANIEL knowingly caused to be
 

prepared and submitted loan applications and supporting documentation to lenders that

contained materially false  representations and omissions concerning the A Buyers’
 

contributions towards the purchase price, their intentions to make payments to the
 

lenders, and their receipt of fees from Rymtech to purchase the Homeowners’ homes, as
 

well as claims of rental income derived from properties that some A buyers had
 

previously purchased on behalf of Rymtech, well knowing at the time that this
 

information would be material to lenders’ decisions regarding approval, terms and
 

funding of their loans.

8. It was further part of the scheme that DANIEL knowingly provided funds to
 

the A Buyers that he knew would be falsely represented to lenders as the A Buyers’
 

down payments on the purchases of the Homeowners’ homes.

9. It was further part of the scheme that DANIEL caused the Homeowners to sell

their homes to the A Buyers and to give the equity that the Homeowners had in their
 

homes to Rymtech, well knowing that Rymtech would not be able to fulfill its
 

commitments to the Homeowners.

10. It was further part of the scheme that DANIEL fraudulently obtained
 

financing for the A Buyers’ purchases of the Homeowners’ homes through false
 

representations and omissions including not disclosing to the lenders that the A Buyers
 

were nominee buyers who had no intention of making mortgage payments to the
 

lenders.

The Perry Property

11. It was further part of the scheme that, in or about July 2004, DANIEL told
 

and caused to be told Individuals A and B that putting their home, which was located on

Perry Street in Chicago, Illinois (the “Perry Property”), into the Rymtech program would

enable Individuals A and B to own their home without a mortgage within five years
 

because their home equity would be invested through Rymtech’s secret investment
 

strategy.

12. It was part of the scheme that, in or about July 2004, DANIEL prepared and

signed a “Leased Payment Calculation Sheet,” which informed Individuals A and B that if

they put the Perry Property into the Rymtech program, they would be able to cut their

monthly mortgage payments by half, from $554.10 to $277.05.

13. It was further part of the scheme that DANIEL recruited A Buyer 1 to act as
 

the “A buyer” to purchase the Perry Property from Individuals A and B and to obtain
 

financing for the purchase.

14. It was further part of the scheme that DANIEL caused to be prepared and

submitted loan applications and supporting documentation to a lender that included
 

materially false representations and omissions concerning A Buyer 1’s contribution
 

towards the purchase price, intention regarding the Perry Property, and intention to
 

make payments to the lenders, well knowing at the time that this information would be
 

material to the lender’s decisions regarding approval, terms and funding of its loans.

15. It was further part of the scheme that DANIEL fraudulently provided funds to

A Buyer 1 for her to use as her down payment on the purchase of the Perry Property,

while causing A Buyer 1’s loan application to falsely represent that no part of A Buyer 1’s

down payment had been borrowed.

16. It was further part of the scheme that DANIEL agreed to pay and then pay A

Buyer 1 approximately $1,500 to purchase the Perry Property, well knowing that this

payment would not be disclosed to the lender and that such payment would be material
 

to the lender’s decisions regarding approval, terms and funding of its loans.

17. It was further part of the scheme that, on or about July 30, 2004, DANIEL
 

caused A Buyer 1 to purchase the Perry Property from Individuals A and B, well knowing
 

that the purchase was financed with a fraudulently obtained mortgage loan.

18. It was further part of the scheme that, on or about July 30, 2004, DANIEL

signed the “Residential Lease and Trust Agreement” between Rymtech and Individuals A

and B, causing Individuals A and B to endorse to Rymtech a check for $20,400.82,
 

representing the equity that Individuals A and B had in the Perry Property, well knowing

that Rymtech would not be able to fulfill its promises to Individuals A and B and that
 

Rymtech would not invest their equity in such a way as to satisfy the mortgage on the

Perry Property within five years.

19. It was further part of the scheme that, on or about March 2, 2006, DANIEL

caused to be mailed to Individuals A and B a letter stating that Rymtech “will continue to

make a portion of the monthly payments by sending those moneys directly to you via
 

bank wires,” well knowing that Rymtech would not make such payments and intending

that this mailing would delay discovery of the scheme.

20. It was further part of the scheme that, on or about November 1, 2006,
 

DANIEL caused to be mailed to Individuals A and B another letter stating that Rymtech
 

“will  continue to make a portion of the monthly payments by sending those moneys
 

directly to you via bank wires,” well knowing that Rymtech would not make such
 

payments and  intending that this mailing would delay discovery of the scheme.

The Walnut Property

21. It was further part of the scheme that, in or about September 2004, DANIEL

told and caused to be told Individual C that putting her home, which was located on
 

Walnut Street in Chicago, Illinois (the “Walnut Property”), into the Rymtech program
 

would enable Individual C to own her home without a mortgage within five years
 

because her home equity would be invested through Rymtech’s secret investment
 

strategy.

22. It was part of the scheme that, in or about October 2004, DANIEL prepared
 

and signed a “Leased Payment Calculation Sheet,” which informed Individual C that if

she put her home into the Rymtech program, she would be able to cut their monthly
 

mortgage payments by half, from $1,351.00 to $675.50.

23. It was further part of the scheme that DANIEL recruited A Buyer 1 to act as

the “A Buyer” to purchase the Walnut Property from Individual C and to obtain financing

for the purchase.

24. It was further part of the scheme that DANIEL caused to be prepared and
 

submitted loan applications and supporting documentation to Fremont Investment &

Loan that included materially false representations and omissions concerning A Buyer 1’s

contribution towards the purchase price, intention regarding the Walnut Property,
 

intention to make payments to the lenders, and receipt of rental income on other
 

properties that A Buyer 1 had previously purchased on behalf of DANIEL, well knowing at

the time that this information would be material to Fremont Investment & Loan’s
 

decisions regarding approval, terms and funding of its loans.

25.  It was further part of the scheme that DANIEL fraudulently provided funds to

A Buyer 1 for her to use as her down payment on the purchase of the Walnut Property,

while causing A Buyer 1’s loan application to falsely represent that no part of A Buyer 1’s

down payment had been borrowed.

26. It was further part of the scheme that DANIEL agreed to pay and then pay A

Buyer 1 approximately $1,500 to purchase the Walnut Property, well knowing that this
 

payment would not be disclosed to Fremont Investment & Loan and that such payment
 

would be material to Fremont Investment & Loan’s decisions regarding approval, terms
 

and funding of its loans.

27. It was further part of the scheme that, on or about November 19, 2004,
 

DANIEL caused A Buyer 1 to purchase the Walnut Property from Individual C, well
 

knowing that the purchase was financed with a fraudulently obtained mortgage loan.

28. It was further part of the scheme that DANIEL signed the “Residential Lease

and Trust Agreement” between Rymtech and Individual C, causing Individual C to
 

Rymtech a check for $133,635.15, representing the equity that Individual C had in the
 

Walnut Property, well knowing that Rymtech would not be able to fulfill its promises to
 

Individual C and that Rymtech would not invest her equity in such a way as to satisfy
 

the mortgage on the Walnut Property within five years.

29. It was further part of the scheme that, on or about April 27, 2006, DANIEL

caused to be mailed to Individual C a letter stating that Rymtech “will continue to make

a portion of the monthly payments by sending those moneys directly to you via bank
 

wires,” well knowing that Rymtech would not make such payments and intending that
 

this mailing would delay discovery of the scheme.

30. It was further part of the scheme that, on or about November 1, 2006,

DANIEL caused to be mailed to Individual C another letter stating that Rymtech “will
 

continue to make a portion of the monthly payments by sending those moneys directly
 

to you via bank wires,” well knowing that Rymtech would not make such payments and
 

intending that this mailing would delay discovery of the scheme.

The Rockwell Property

31. It was further part of the scheme that, in or about July 2005, DANIEL told
 

Individual D that putting her home, which was located on Rockwell Street in Chicago,
 

Illinois (the “Rockwell Property”), into the Rymtech program would enable Individual D
 

to own her home without a mortgage within five years because her home equity would

be invested through Rymtech’s secret investment strategy.

32. It was part of the scheme that, in or about July 2005, DANIEL prepared and

signed a “Leased Payment Calculation Sheet,” which informed Individual D that if she
 

put her home into the Rymtech program, she would be able to cut their monthly 

mortgage payments by half, from $767.83 to $383.91.

33. It was further part of the scheme that DANIEL recruited A Buyer 2 to act as
 

the “A Buyer” to purchase the Rockwell Property from Individual D and to obtain
 

financing for the purchase.

34. It was further part of the scheme that DANIEL caused to be prepared and
 

submitted loan applications and supporting documentation to a lender that included
 

materially false representations and omissions concerning A Buyer 2’s contribution
 

towards the  purchase price, intention regarding the property, and intention to make

payments to the lender, well knowing at the time that this information would be material

to the lender’s decisions regarding approval, terms and funding of its loans, including

the following:

35. It was further part of the scheme that DANIEL fraudulently provided funds to

A Buyer 2 for her to use as her down payment on the purchase of the Rockwell Property,

while causing A Buyer 2’s loan application to falsely represent that no part of A Buyer 2’s

down payment had been borrowed.

36. It was further part of the scheme that DANIEL agreed to pay and then pay A

Buyer 2 approximately $1,500 to purchase the Rockwell Property, well knowing that this

payment would not be disclosed to the lender and that such payment would be material

to the lender’s decisions regarding approval, terms and funding of its loans.

37. It was further part of the scheme that, on or about July 14, 2005,, DANIEL
 

caused A Buyer 2 to purchase the Rockwell Property from Individual D, well knowing that

the purchase was financed with a fraudulently obtained mortgage loan.

38. It was further part of the scheme that DANIEL caused Individual D to

endorse to Rymtech a check for $44,156.71, which represented the equity that

Individual D had in the Rockwell Property, well knowing that Rymtech would not be able

to fulfill its promises to Individual D and that Rymtech would not invest the proceeds in
 

such a way as to satisfy the mortgage on the Rockwell Property within five years.

39. It was further part of the scheme that, on or about March 2, 2006, DANIEL
 

caused to be mailed to Individual D a letter stating that Rymtech “will continue to make

a portion of the monthly payments by sending those moneys directly to you via bank
 

wires,” well knowing that Rymtech would not make such payments and intending that
 

this mailing would delay discovery of the scheme.

40. It was further part of the scheme that, on or about November 1, 2006,
 

DANIEL caused to be mailed to Individual D another letter stating that Rymtech “will
 

continue to make a portion of the monthly payments by sending those moneys directly
 

to you via bank wires,” well knowing that Rymtech would not make such payments and
 

intending that this mailing would delay discovery of the scheme.

41. It was further part of the scheme that DANIEL did misrepresent, conceal and

hide, and cause to be misrepresented, concealed and hidden, the purposes and acts
 

done in furtherance of the scheme.

42. On or about November 19, 2004, in the Northern District of Illinois, Eastern
 

Division, and elsewhere,

FELIX DANIEL,

defendant herein, for the purpose of executing the above-described scheme and
 

attempting to do so, knowingly caused to be transmitted by means of wire
 

communication in interstate commerce, certain wirings, signs, and signals, namely, a
 

funds transfer of approximately $307,362.10 from the account of Fremont Investment &
 

Loan at Capitalsource Bank in California to the account of First American Title Insurance
 

Company at Bank One in Illinois, which funds represented the proceeds of a mortgage
 

loan for A Buyer 1’s purchase of the Walnut Property.

In violation of Title 18, United States Code, Section 1343.

COUNT TWO

The SPECIAL FEBRUARY 2011-1 GRAND JURY further charges:

            1. The allegations of paragraphs 1 through 41 of Count One of this indictment
 

are realleged and incorporated as through fully set forth herein.

            2.  On or about November 1, 2006, at Chicago, in the Northern District of
 

Illinois, Eastern Division, and elsewhere,

FELIX DANIEL,

defendant herein, for the purpose of executing the above-described scheme and
 

attempting to do so, knowingly caused to be delivered by United States mail according

to the directions thereon a letter from Rymtech to Individuals A and B at an address in
 

Chicago, Illinois, the purpose of which was to lull Individuals A and B into believing that
 

Rymtech would make mortgage payments on behalf of Individuals A and B;

In violation of Title 18, United States Code, Section 1341.

COUNT THREE

The SPECIAL FEBRUARY 2011-11 GRAND JURY further charges:

1.  The allegations of paragraphs 1 through 41 of Count One of this

indictment are realleged and incorporated as through fully set forth herein.

            2.  On or about November 1, 2006, at Chicago, in the Northern District of
 

Illinois, Eastern Division, and elsewhere,

                                                   FELIX DANIEL, 

defendant herein, for the purpose of executing the above-described scheme and
 

attempting to do so, knowingly caused to be delivered by United States mail according
 

to the directions thereon a letter from Rymtech to Individual C at an address in Chicago,

Illinois, the purpose of which was to lull Individual C into believing that Rymtech would
 

make mortgage payments on behalf of Individual C;

In violation of Title 18, United States Code, Section 1341.

COUNT FOUR

The SPECIAL FEBRUARY 2011-1 GRAND JURY further charges:

            1. The allegations of paragraphs 1 through 41 of Count One of this indictment

are realleged and incorporated as through fully set forth herein.

            2.  On or about November 1, 2006, at Chicago, in the Northern District of
 

Illinois, Eastern Division, and elsewhere,

FELIX DANIEL,

defendant herein, for the purpose of executing the above-described scheme and
 

attempting to do so, knowingly caused to be delivered by United States mail according
 

to the directions thereon a letter from Rymtech to Individual D at an address in Chicago,

Illinois, the purpose of which was to lull Individual D into believing that Rymtech would
 

make mortgage payments on behalf of Individual D;

In violation of Title 18, United States Code, Section 1341.

FORFEITURE ALLEGATION

The SPECIAL FEBRUARY 2011-1 GRAND JURY further alleges:

            1.  The allegations contained in Counts One through Four of this Indictment are

realleged and incorporated herein by reference for the purpose of alleging forfeiture
 

pursuant to Title 18, United States Code, Section 981(a)(1)(C) and Title 28, United
 

States Code, Section 2461(c).

            2.  As a result of his violations of Title 18, United States Code, Sections 1341

and 1343, as alleged in the foregoing indictment,

FELIX DANIEL,

defendant herein, shall forfeit to the United States, pursuant to Title 18, United States

Code, Section, 981(a)(1)(C) and Title 28, United States Code, Section 2461(c), any and
 

all right, title, and interest in property, real and personal, which constitutes and is
 

derived from proceeds traceable to the charged offenses.

             3.  The interests of the defendant subject to forfeiture pursuant to Title 18,
 

United States Code, Section, 981(a)(1)(C) and Title 28, United States Code, Section
 

2461(c), include, but are not limited to funds in the amount of approximately
 

$977,706.97.

            4.  If any of the property subject to forfeiture and described above, as a result
 

of any act or omission of the defendant:

a. Cannot be located upon the exercise of due diligence;

b. Has been transferred or sold to, deposited with, a third party;

c. Has been placed beyond the jurisdiction of the Court;

d. Has been substantially diminished in value; or

e. Has been commingled with other property which cannot be divided
 

without difficulty,

the United States of America Shall be entitled to forfeiture of substitute property under
 

the provisions of Title 21, United States Code, Section 853(p), as incorporated by Title
 

28, United States Code, Section 2461(c).

All pursuant to Title 18, United States Code, Section 981(a)(1)(C) and Title 28,

United States Code, Section 2461(c)