Two former Copperopolis developers have been indicted by a federal grand jury in connection with an alleged mortgage fraud scheme involving 19 homes, including nine in the southern Calaveras County town.
Volodymyr Dubinsky, 53, and Leonid Doubinski, 47, brothers and developers of the Calypso Bay subdivision on the shores of Lake Tulloch, were indicted Sept. 13 along with seven others on numerous criminal charges related to bank and mail fraud, the United States Attorney's Office Eastern District of California announced Wednesday.
"I'm extremely happy they are being brought to justice," said Ron Cloward, president of the Calypso Bay Homeowners Association.
The developers left homeowners in the Copperopolis subdivision with poorly constructed houses, many built using phony permits, in the mid-2000s.
The brothers and their alleged accomplices are accused by the U.S. Attorney's Office of falsifying the loan applications of "straw buyers" in order to acquire residential mortgage loans for the various properties in Copperopolis, Sacramento and Carmichael.
According to the indictment, Dubinsky and Doubinski, along with licensed mortgage broker Edward Khalfin, devised a scheme where they paid family members, employees and associates with good credit scores to purchase properties.
They also falsified the loan application packages of the so-called "straw buyers" using altered bank statements and other fraudulent documents to misrepresent the buyers' income, assets, employment and intentions for purchasing the properties, the indictment alleges.
"Each time they would jack up the price and get a higher finance on the house, but no one paid anything to the banks," Cloward said. "You just watched it over time and it kept happening and happening."
Between August 2006 and May 2008, the brothers acquired more than $6 million in residential loans, making initial payments on the loans early on to avoid suspicion, according to the indictment.
Thirteen of the properties purchased were foreclosed upon by the lenders, or sold for less than the mortgage debt owed, creating a total loss of more than $3 million to the lenders, the indictment alleges.
The accused "straw buyers" named in four separate indictments include Volodymyr Dubinsky's wife, Svetlana Dubinsky, 48, of Boca Raton; Doubinski's son, Serge Doubinski, 29, of San Francisco; and Svetlana Dubinsky's sister-in-law, Zinayda Chekayda, 49, of Antelope.
Also named are employees of the brothers' various companies: Dianna Woods, 55, of Citrus Heights; Kory Schmidli, 34, of Linden; and Robin Dimiceli, 50, of Brentwood. Dimiceli is also accused of knowingly submitting falsified loan applications to the lenders on behalf of Dubinsky and Doubinski.
If convicted, the defendants each face a maximum penalty of 30 years in prison and a $1 million fine, according to the U.S. Attorney's Office. The indictments state they could also be required to forfeit property or assets obtained through profits from the alleged scheme.
The case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation unit, the U.S. Attorney's Office said.
Cloward, a retired Modesto Police Department lieutenant, said he met with FBI investigators in 2008 to share information about the issues with the developers, but had not heard much until the indictments.
"This is a big win that they were actually able to indict," he said.
Problems with the development surfaced when Calaveras County officials discovered 19 unauthorized water hookups at houses under construction. By 2008, the construction problems at the development had become infamous.
Sagging foundations and sinking pools caused by improperly compacted soil, drainage and grading problems, and homes built across property lines were just some of the identified issues.
Residents ousted the developers from the homeowners association in May 2008 and have since worked to turn things around. According to Cloward, they gather twice a year for designated cleanup days where they comb the community for remnants of aborted construction and other debris left behind by the developers.
Two unfinished homes, and Svetlana Dubinsky's home that has been sitting vacant for years, remain in the subdivision. But they are the few scars still left. Out of 126 homes in the development, only a total of four remain vacant.
"It was a dark time, but people there have really overcome everything they were left with," Cloward said. "Now, it's a beautiful place to live and everything it should have been in the first place."