2 men get jail time, ordered to pay restitution for fraud

A federal judge sentenced two men, a former real estate appraiser and his contractor friend, to prison terms Monday for falsifying the appraisal of an unfinished home in Pupukea to qualify it for two mortgages totaling $1.3 million.

Jose K.N. Gaceta is going to prison for 24 months, while Ernesto J. Ramirez will have to spend 27 months behind bars. They pleaded guilty to two counts of mail fraud each.

Gaceta admitted using pictures of the exterior of the home on Pupukea Road and photographs of the interior of another home to justify his $1.55 million appraisal.

The home was just a shell with no drywall or fixtures.

Ramirez said at sentencing that his ex-wife asked him for help in purchasing the home because she didn’t have the down payment. He said he gave her the down payment but put his current’s wife’s name on the property to go along with the name of his ex-wife’s current husband.

He said he started renovation work on the home but stopped when his ex-wife told him she no longer wanted him and his current wife involved in the project. He said his ex-wife realized the potential increased value of the home and didn’t want him to share in it.

Ramirez said he told his ex-wife he would take his current wife’s name off the property if she paid him the $230,000 he had already invested in the home.

According to the indictment against Gaceta and Ramirez, the property had no equity at that time to qualify for another mortgage,so Ramirez persuaded Gaceta to inflate the value of the home so his ex-wife’s husband could get mortgages high enough to pay off the first mortgage with enough left over to pay Ramirez the $230,000 he had already put into the property.

Based on Gaceta’s appraisal, one lender authorized a mortgage for $1 million, while another lender authorized a second mortgage for $300,000.

A few years later, Ramirez said, his ex-wife told him she was having difficulty paying off not only the mortgages on the Pupukea property, but also on another property in Haleiwa. He said she threatened to tell authorities about the inflated appraisal on the Pupukea property if he didn’t give her $40,000.

The ex-wife and her current husband have not been charged with any crimes.

HSBC Bank, the holder of $1 million mortgage, filed for foreclosure of the Pupukea property in 2007 and took possession of it in 2008. By that time the city had appraised the property at $1.023 million.

HSBC sold the property in 2009 for $760,000.

In addition to the jail terms, Gaceta and Ramirez are responsible for paying $275,408 restitution to Goldman Sachs, which holds the second mortgage on the Pupukea property. The restitution amount is the difference between the $1.3 million mortgages and the $1.023 million appraisal.