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Manteca couple arrested for tax evasion after mortgage fraud case dismissed
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A  Manteca couple that had charges dismissed involving an alleged $8 million real estate fraud involving home mortgages are back in jail.

This time prosecutors are going after them for income tax evasion.

And getting out of jail on bail won’t be easy. The judge has imposed bail at $500,000 due to concerns they are a flight risk to Greece. It was stipulated that if bail is paid they must demonstrate it did not come from any of their real estate transactions that have come into question.

Helen and John Sotiriadis appeared in San Joaquin County Superior Court Friday on California state income tax evasion charges. The alleged evasion was discovered during a 2009 FBI real estate fraud case that involved Cambodian nationals who mistakenly trusted Helen Sotiriadis and her daughter Irene.

Irene has reportedly fled to Greece where she married and is expecting a child.  Her mother Helen – having a large home in Greece – is a citizen of that country with it being rumored she was planning a trip there for the Thanksgiving holiday prompting this week’s arrests.   

Her husband John is a native of Canada.  Both are naturalized US citizens.   It was also determined that Greece will not allow extradition of their citizens – especially not for financial crimes.

The high bail of $500,000 was set by the court to ensure that both would remain in the United States to stand trial in Stockton.  Friday’s court session was continued until Monday at 8:30 a.m. in Stockton to consider a request to reduce the bail amount.

Real estate fraud charges – and not tax evasion – were first brought against the two in federal court in 2009. However a decision by the United States Attorney’s Office asked that the case be dismissed and it was never taken to a federal grand jury.  The San Joaquin County District Attorney’s Office is now moving forward on the tax evasion charges and is expected to add fraud, burglary and forgery on an amended complaint.

The two women worked out of a real estate office at 193 Northwoods Avenue. It is where they helped the Cambodians fill out their loan applications. In the process they falsified their income and earnings documentations to make them qualify with lenders.

During a three-year period ending in 2008, Helen Sotiriadis is suspected of funneling more than $972,000 in income through her personal checking account to avoid paying taxes on the money.  Taxes believed to be due the state are in excess of $77,000 plus interest and penalties, court papers indicate.

FBI special agent T. Davis said that in the course of the three years of real estate transactions, Helen and Irene recruited more than 20 Cambodian families into purchasing large new homes – many of buyers spoke little or no English.    

Davis told the court in his brief that Helen chose the immigrants because of their language barrier.  They had good credit scores and they had steady – although not high –paying jobs.  He added that the Cambodians were particularly dependent on her because of the language barrier and their lack of familiarity with normal real estate practices. They took direction on buying homes from her and her workers.

The mother and daughter team selected large houses for their clients with the women collecting commissions from the sales and from the processing of the mortgage loans.  Davis added that in the course of tax years 2006 to 2008 the real estate agents developed a scheme in which they would falsify the client loan documents.
Helen and her daughter would often visit the prospective buyers in their homes and have them sign the loan applications that were in fact written and prepared by Irene, the court document contends.  

Davis wrote further that the loan applications, as a rule, were completely fraudulent grossly overstating the income of the client or the borrowers.  Helen would submit these loan applications as being the stated income, often paying a higher interest rate to avoid a verification check of the income by the lender or by the mortgage company.

As the loans would close Helen Sotiriadis filed joint tax returns with her husband John relating to the collection of commissions from both the sale of the homes and the placement of the mortgages – reflecting less than the some $8 million in the home sales she brokered.

In 2006 their adjusted gross income was reported to be just over $31,000.  In 2007 it was about $21,000 and in the last year, 2008, it was listed at $17,444.  With the addition of a 75 percent false return fraud penalty and interest, the state is asking for a total of $132,458.
San Joaquin County Deputy District Attorney Stephen Taylor said it was those low income numbers – especially the final year of just over $17,000 – that drew suspicion and attention to the couple’s joint returns.

Davis noted that many of the families found themselves with house payments exceeding $4,000 a month – more than they could possibly pay.  The court papers said the families had been told that Helen or Irene would immediately refinance for them to bring the monthly payments down to a level they could afford.  

It was further noted that the refinancing never occurred. The women quit taking phone calls from distraught homeowners with the homes eventually being foreclosed upon.  The families became homeless and lost significant down payments in many cases.  Credit scores were ruined with the women having received three percent broker fees for each transaction as well as for the loan broker’s commission.

Davis added that the lending institutions making the loans on the fraudulent mortgages lost in excess of $8 million.