Web of deception

On June 17, U.S. Attorney General Eric Holder held a press conference in Washington, D.C., to talk about the federal government’s efforts to crack down on widespread mortgage fraud. Included in his speech was the following about what has become the biggest white-collar fraud case in recent Chico history:

“In Chico, Calif., a prominent home builder, caught with a significant amount of unsold new homes as the housing market cooled, allegedly used straw buyers to sell his houses at inflated prices with undisclosed sales rebates. This scheme inflated prices on other homes in the area, creating artificially high comparable sales and affecting the overall new-home market. To date, 38 of the homes have fallen into foreclosure and 10 more have been the subject of short sales—all in one city.”

Chico’s image as a college party town was finally usurped by an image as a hotbed of financial fraud. What made it worse was that the scam wasn’t carried out by slick out-of-towners who’d come to take advantage of the local yokels. No. The main players come from Paradise and Chico and include Tony Symmes, a respected home builder who, as owner of Aspire Homes, has constructed more houses and subdivisions here than anyone.

The story elements are like something out of the movies: $21 million in ill-gotten gains; expensive cars; escapes to foreign countries; body builders with neck tattoos; a puffed-up mixed-martial-arts cage fighter; $20,000 stuffed into a Pringles potato-chip can and sent overseas; and for good measure, a conviction in a federal hate crime perpetrated in a popular Chico bar.

How could this have happened in such a pleasant little city?

The answers seem to be that greed, blind ambition and a lack of conscience can be found anywhere.

Others indicted include the purported ringleader, Garrett Griffith Gililland III, of Paradise, his common-law wife and mother of his three children, Nicole Magpusao, and local builder and real-estate agent William Baker.

But Tony Symmes?

Back in 2005, the Chico housing market was cooling off after a three-year run in which houses sold as soon as they went on the market and prices skyrocketed. Symmes, who specialized in moderately priced subdivision homes aimed at first-time buyers, saw his houses snapped up as fast as they went on the market.

Life was good. After 25 years in business, Symmes, a gregarious man with a shock of white hair who favors bright Hawaiian shirts, had become the biggest builder in town.

A year later the market began to cool and sales dipped, though at first prices held steady and first-time home buyers were getting locked out.

A story written at the time by former CN&R Associate Editor Devanie Angel included an interview with Symmes, who was considered a friend of moderate- and low-income families. But the volatile market was making it difficult for Symmes to help the first-time home buyer.

Here is part of Angel’s article:

Tony Symmes says he is no hero, or even an altruist. “It’s just a different business model,” said Symmes, who is tan with a confident smile. He speaks quickly and efficiently, one hand on his cell phone. “I build affordable, entry-level, value-based housing. It’s personally gratifying to me.”

He can count by memory the 1,068 houses in 16 developments he’s built or is in the process in building in Chico since the city first lent him money.

“The city gave me my start in 1995,” said Symmes, who was granted a $864,000, low-interest loan and paid it back in half the time allowed. Per the agreement, he sold 75 percent of the homes to people who qualified for the Mortgage Subsidy Program.

“I kept doing what they gave me the money for without them giving me the money,” he said.

By the end of 2006, housing values began to drop as sales declined. Two years later, the market had bottomed out, and homes were not being sold or built.

In November 2008, Symmes told Chico Enterprise-Record reporter Jenn Klein: “At this point, people are still scared of their shadow and not sure of what’s going on. And until we get the psychological problem turned around, it will be quite slow. I’m hoping we’ll see it turned around next year.”

What took place between when the two stories were published is spelled out in a federal case against Symmes and eight others who allegedly took part in a scheme that included inflating the prices on 62 houses, defrauding lenders, money laundering and mail fraud.

Last month Symmes pleaded guilty and agreed to cooperate with the feds in bringing the other parties to justice. The 59-year-old Symmes now faces up to 20 years in federal prison, but will likely get a much lighter sentence because of his willingness to come clean. He’s also paid $4 million into a restitution fund to reimburse the victims—in this case the lending companies, though there are probably many more victims who lost their homes to foreclosure in part because of the detrimental effect the scheme had on the local housing market.

Symmes is due for sentencing Sept. 3.

None of the 62 homes were financed by the city’s Mortgage Subsidy Program, which helps first-time buyers purchase homes. All lenders were out of town or out of state.

Efforts to contact Symmes were unsuccessful. Calls to his Sacramento attorney, Christopher Wing, were not returned. This is understandable; talking to the press while cooperating with the federal authorities is probably not a wise idea.

Those who know Symmes are scratching their heads, wondering how a guy who helped families buy their first homes and gave generously to charitable causes like Habitat for Humanity could get caught up in such a twisted plot.

Butte County District Attorney Mike Ramsey seemed to have an answer. On the day Symmes pleaded guilty, Ramsey said, the builder admitted that greed had broken his moral compass.

According to the charges filed by the Department of Justice, sometime in the fall of 2006, as the real-estate market cooled, Symmes had an inventory of 62 newly constructed houses that he couldn’t sell for list price. The story goes that he was approached by Gililland, an unlicensed mortgage broker born and raised in Paradise. Gililland told Symmes he could help relieve his housing glut.

Gililland would use the names of so-called “straw buyers” with or, in some cases, without their consent, falsely inflate their incomes and credit records, and get them qualified for home loans that would cover 100 percent of the purchase price. No money down! To sweeten the deal, the two decided to inflate by $40,000 to $60,000 the actual list price.

U.S. Attorney Ben Wagner, the chief prosecutor in the case, said inflating the value of a home usually involves an appraiser.

“This is hard to pull off without an appraiser at least turning a blind eye and often they are much more involved than that,” he said.

He wouldn’t say if any local appraisers were under legal scrutiny, only that the investigation is ongoing.

The day after the homes sold, the indictment says, Symmes would cut a check to shell corporations operated by Gililland and his associates for $40,000 to $60,000. Gililland would then pocket some of the money and give the rest to the straw buyers.

The houses were then rented, with the rent money going to the lenders to forestall foreclosures. Some of the foreclosed homes were used to house marijuana gardens, a practice that proved to be one of the downfalls for the builder-buyback scheme. Butte County sheriff’s investigators eventually made the connection between the empty pot-garden homes and Gililland.

The indictment reports that between 2006 and 2008 the lenders forked over $21 million for the 62 homes and Symmes wrote $2.5 million in checks to Gililland.

According to a Department of Justice press release, “To date dozens of Symmes’s homes have been foreclosed or short-sold. Losses realized to date total almost $5 million and are expected to climb. Due to the volume of the artificially inflated prices on homes in Chico, Symmes and Gililland were able to create artificially high comparable sales that appraisers relied upon, affecting the overall new-home market in the Chico area.”

Symmes had an account at Tri Counties Bank under the name Mariposa Traditions Inc. In a two-week period, beginning at the end of March 2007, four checks totaling more than $450,000 each were deposited for Symmes-built houses located at 2809 and 2660 Ceanothus Ave., 2841 Vistamont Way and 1379 Wanderer Lane.

Within a day or two of the last deposit, Symmes, who reportedly has a collection of vintage automobiles, wrote a $17,127 check for a monthly payment on a 1955 Aston Martin DB35, which is worth as much as $162,000.

The purchase of a car made famous by James Bond apparently paid off. In August 2007 Symmes took part in something called The Quail event at the Monterey Classic Car Week.

According to classic-car websites, guests of the event were ferried via helicopter to the nearby Laguna Seca Raceway, enjoyed “hand-rolled fine cigars,” a “sumptuous plein air luncheon” and “premium wine and spirits.”

“The Quail is more than an event for automotive enthusiasts,” said event manager Sarah Cruse. “It is a celebration of the luxury lifestyle bringing together fine food and wine, couture jewelry and rare automobiles in a beautiful outdoor setting.”

Symmes’ Aston Martin received the “50 Years of Racing at Laguna Seca Raceway Award.”

DA Ramsey suggested that Symmes’ motivation to commit fraud was not only governed by greed, but also perhaps a fear of losing his grandiose lifestyle.

In another example of the alleged fraud, Gililland’s longtime girlfriend and mother of their three children, Nicole Magpusao, bought a Symmes house on June 20, 2007, for $410,000. The house is located on Rockin M Drive in north Chico off Eaton Road. At just about the same time, Magpusao purchased a house on Ceanothus Avenue for $375,000. Another Symmes home, just up the road, sold about a week later for $361,000. Today the houses along Ceanothus are valued at about $225,000.

Thirty-eight of the Symmes homes went into foreclosure and 10 more ended up in short sales, which means they were sold for less than what was owed on them.

When contacted by a reporter, the people now living in the houses on Ceanothus had different reactions. One man cracked the front door open a bit, eyed the visitor with suspicion, said he knew all about the scam but didn’t want to talk about it and slammed the door shut.

Across the street, a husband and wife said they’d purchased their house about a year ago—it had been foreclosed. They said they still receive mail for the person who acted as the straw buyer. They didn’t want to be identified in this story, and since giving the original buyer’s name here would do just that, it is withheld.

The scam was eventually uncovered by two of Ramsey’s employees—Chief Investigator Kory Honea and Lt. Investigator Mike Wristen. They gathered bits and pieces of the story over a long period of time. The repeated discovery of marijuana gardens in foreclosed homes was but one part of the bigger puzzle, Ramsey said.

“It was one piece at a time,” Ramsey said. “They slowly started putting it together, and once it got beyond our borders, both county and then state, we said we needed to get the feds involved.”

The person at the center of the story, the apparent mastermind of the plot, is 29-year-old Garrett Griffith Gililland III, a Paradise High graduate and dabbler in the real estate market. Sources say he learned his trade in Southern California.

He’s been described as a tall, blond, tattooed body builder with an intimidating attitude and penchant for material goods, including a West Coast Chopper motorcycle and a Breitling wristwatch.

In the span of three years, Gililland went from living in a Sixth Street Chico apartment to buying a house on Lily Way and then, in November 2006, purchasing a house on Whispering Winds Lane in Canyon Oaks Estates. He paid $975,000 for the home, which sits right next to the residence of Congressman Wally Herger.

Gililland bought the house with a loan from a Maryland-based company called Fieldstone Mortgage, a sub-prime lender that handed out $5.5 billion in loans and employed 1,000 people as late as 2006. But in September 2007 it filed for bankruptcy. And in January 2008 the company’s vice president, Walter Buczynski, 59, killed his 37-year-old wife in their Burlington County, N.J., home, drove his blue Acura SUV to the Delaware Memorial Bridge and jumped to his death, leaving behind two young children.

Fieldstone was the lender in a number of the Symmes house sales.

Gililland had another associate, named Eric Clawson, who also lived in Paradise. Clawson, a mixed-martial-arts cage fighter, was the rent collector for those living in the Symmes homes. The rent went to pay the mortgage to stave off eventual foreclosure.

Last March, Clawson, 28, was convicted for a federal hate crime committed in July 2008 at Riley’s Bar at Fifth and Ivy streets in Chico. Witnesses, including the bartender, said that Clawson directed a racial slur toward a black man in the bar. Soon after that he walked up and punched the man, knocking him out for no apparent reason other than his race.

Clawson’s friend, Joe Grivette, 27, also of Paradise, pleaded guilty in March to a related charge in the incident. Grivette’s brother Johnny, 35, was indicted a few weeks ago in connection with the Gililland-related indoor marijuana grows.

Small world.

When the feds began snooping around in June 2008, Gililland initially said he would cooperate, but then apparently changed his mind.

He and Magpusao skipped the country with $250,000 and one of their children in tow. They initially went to the South American country of Colombia, where they opened a nightclub. When it failed, they headed to Barcelona, Spain, where last September they were eventually arrested by Spanish authorities and extradited back to the States.

Gililland fought the extradition right up to the end and reportedly had to be strapped into a wheelchair before he was loaded onto the flight to bring him home.

Assistant U.S. Attorney Russell Carlberg said in a legal memorandum that “Witnesses describe Gililland as more concerned with his Breitling wristwatch, his custom ‘Jesse James’ motorcycle, his house, and his flat screen TVs, than with other people.”

In the forfeiture allegations Carlberg describes Gililland as a violent person and writes that “[w]itnesses have expressed fear of Gililland and some of his associates.”

Ironically, after a globe-trotting, high-living adventure, Gililland found himself housed in the Butte County Jail, as a federal inmate. A year ago, then-Sheriff Perry Reniff struck a deal with the feds to house their prisoners. Gililland has since been moved to Sacramento, where he is awaiting trial.

While he was on the run, his house went into foreclosure and was eventually purchased by local builder William Baker for about $600,000 less than Gililland paid for it. Baker’s been indicted for allegedly selling six of his houses, with the help of Gililland, to straw buyers at prices inflated by as much as $68,000.

Apparently Gililland ran out of money in Barcelona. A friend, Remy Heng, of Elk Grove, whom Gililland referred to as his “unofficial banker,” stuffed $20,000 into a Pringles potato-chip container and sent it to Spain. FBI agents intercepted it, removed the cash and sent it along empty. It is reported the agents considered filling the can with potato chips before sending it on its way, but thought better of it. Heng, 30, has been charged with bulk case smuggling.

Chico resident Jeff Howse, a long-time Sierra Nevada Brewing Co. employee and programmer for KZFR, met Gililland quite by accident, literally, in 2006, just as the Symmes-Gililland mortgage scheme was taking shape.

On Sept. 22, around 11:30 at night, Howse was driving his car out of the brewery’s parking lot, heading west on East 20th Street. He said he remembered seeing headlights heading toward him, in his lane. Witnesses said the car was traveling at 70 mph.

The impact broke Howse’s seatbelt, sent him into the passenger seat and spun his car around. He was taken to Enloe Medical Center, where he was treated for lacerations and bruises. He said he went in and out of consciousness after the collision and suffered a lot of pain for the next few months.

The car that hit him was a three-week-old black Mercedes-Benz owned by Gililland. Witnesses described the driver of the car as a tall blond man who, acting very agitated, pulled out his cell phone immediately after the accident and said something to the effect that he had to get out of there. Within minutes, and before the police arrived, a grey BMW came by and took the man away, leaving behind the passenger in his car and Howse in his crumpled 1987 Subaru wagon.

The man who stayed behind with Gililland’s car is named Brian Bailey. He took responsibility, said he was the driver of the Benz, and was arrested for DUI. The next morning Gililland bailed him out.

Bailey was eventually found guilty of misdemeanor DUI and violation of probation. Howse sued in 2007 and won a settlement.

Depositions from the case are revealing and cast doubt on whether Bailey was really driving that night. Both Gililland and Bailey had been drinking at Tres Hombres restaurant, in downtown Chico, where they were interviewing a potential business partner. Bailey had been working with Gililland in one of his ill-defined businesses for about six months. The accident marked the end of that relationship, Bailey said.

Gililland’s evasiveness is clearly evident from the answers he gave to Howse’s attorney, James McKenna, about his line of work, which he said he’d been doing back and forth between Chico and Southern California for about a year:

Gililland: “I work—I do sales and marketing for a construction company.”

McKenna: “What is that company?”

G: “3G Construction.”

M: “And are you 3G?”

G: “What is that?”

M: “Are you 3G?”

G: “No I’m strictly the president.”

M: “OK. But as 3G?”

G: “3G is a corporation.”

M: “Is a corporation which you have which is Garret Griffith Gililland, III?”

G: “That’s not what I said, no.”

M: “What is—”

G: “I work for a corporation, G3 Construction Inc. They may pay me salary. I do sales and marketing for them.”

M: “Right, I understand that. What does 3G stand for?”

G: “G3 Construction, Inc.”

M: “What does G3 Construction, Inc. do?”

G: “They do residential remodeling. They do tentative mapping. They do construction consulting. They do custom home building. They contract custom pools. They buy and sell projects, sell paper lots.”

Gililland was also associated with 53-year-old Lawrence Loomis and his company, Loomis Wealth Solutions, which was sued for fraud by the Securities and Exchange Commission in February 2010. There he worked with a man named Christopher Jared Warren, 27, who called Gililland his best friend and business partner.

Warren told an FBI agent that he and his “best friend” worked together on fraudulent mortgage loans.

In February 2009 Warren fled the country in a chartered jet, flying from Las Vegas to Ireland to Lebanon and back to North America. He was eventually arrested carrying a fake passport while crossing the Canadian border with $70,000 stuffed into his cowboy boots.

Before he left the country Warren posted what he called a “résumé” online. It began:

“As a 19-, then 20-year-old boy, my managers and handlers taught me the ins and outs of mortgage fraud, drugs, sex, and money, money and more money. Built a fraudster by my trainers in corporate America. Mastered the fraud. Trained others in the fraud. Paid by the fraud. Mastered mortgage banking, escrow, real estate.”

Johnny Grivette, the man indicted on the indoor marijuana gardens, also worked for Loomis Wealth Solutions.

Other locals who’ve been indicted in connection with Gililland are Shane Burreson, 38, of Orland and president of the aptly named NorCal Innovative Investments; Chicoans Christopher Chiavola, 31, and Brandon Resendez, also 31 and owner of a local financial service called Live Debt Free.

Kesha Haynie, 39, a local real-estate agent, who is also the wife of a Chico preacher named Vince Haynie, and her brother, Niche Fortune, 38, have also been indicted.

They are all tied to the William Baker accusations, which are very similar to the Symmes case—arranging straw buyers to purchase houses at inflated prices.

Gililland and Magpusao sit in jail waiting to be tried. Their three daughters are in family law court in a guardianship case. Symmes is awaiting sentencing. The eight or nine others involved, including the 65-year-old Baker, are just at the beginning of their legal adventures.

It’s hard to tell what the lessons are here. Desperate times call for desperate measures? Or maybe, as DA Ramsey suggested, it’s hard to let go of that high-flying lifestyle once it’s been lived.

Christopher Warren ended his online confession with these words: “[I did e]very scam possible: fraud for profit, fraud to fund loans for the under-qualified, fraud of evasion of taxes, reverse flipping, flipping, false liens, software manipulation. And it utterly disgusts me. Looking back at the life I have led, I beg a higher power for forgiveness. For mercy.”