Orson Benn, once a vice president at the nations largest subprime lender, spent three years during the height of the housing boom tutoring Florida mortgage brokers in the art of fraud.
From his office in New York, he taught them how to doctor credit reports, coached them to inflate income on loan applications, and helped them invent phantom jobs for borrowers.
When trouble arose -- one broker got caught, another got cold feet -- Benn called his trusted fixer in Miami to remove the problem and get the loan approved: Yvette Valdez.
The 48-year-old Valdez was a key figure in helping Benn tap into one of the country's most lucrative mortgage markets during his run with Argent Mortgage, The Miami Herald found.
Benn and several associates were convicted of racketeering this year, but Valdez still sells mortgages from a nondescript storefront in Homestead.
While prosecutors looked at roughly $100 million in loans written by Benn and a cadre of co-workers, that represents just a portion of the loans they approved during his aggressive expansion into Florida.
The Miami Herald found that Benn's network approved more than $550 million in home loans from Tampa to West Palm Beach to Miami, according to an analysis of court records.
In Miami-Dade County alone, Benn's office approved more than $349 million in loans on 1,913 homes -- more than one in three have since fallen into foreclosure, the analysis shows.
Valdez brokered at least 100 of those loans worth $22 million -- nearly all based on false and misleading financial information, the newspaper found.
One borrower claimed to work for a company that didn't exist -- and got a $170,000 loan. Another borrower claimed to work a job that didn't exist -- and got enough money to buy four houses.
In a brief interview with The Miami Herald, Valdez blamed the borrowers, refusing to comment further. Her lawyer, Glenn Kritzer, said she has done nothing illegal.
With so many of Benn's loans now in foreclosure, Miami-Dade County is littered with still more empty homes. Squatters inhabit some; crack dens occupy others. At least one has been stripped to the ground, leaving only the foundation.
"It's like a desert, " said Reynaldo Perez, 41, who lives in a Homestead town house financed by Benn three years ago. "Just on my street, there are five or six homes being foreclosed."
Although the Office of Financial Regulation -- the state agency entrusted with policing the mortgage industry -- was alerted to Valdez's role in Benn's network at least three years ago, it never launched an investigation, the newspaper found.
Since 2005, the agency has had copies of some of the same misleading loan applications that The Miami Herald reviewed.
Terry Straub, the OFR's director of finance, acknowledged that his agency had evidence against Valdez. "I don't have any explanation for why we didn't pursue it, " he said.
In fact, state regulators ignored more than a dozen written warnings about brokers in Benn's network, the agency's records show.
Despite a law banning criminals from getting licensed -- created after a Miami Herald series was published this summer -- two brokers in Benn's network who pleaded guilty in May to conspiracy charges in the case remain licensed.THE BEGINNING
The path to Valdez and other brokers began in 2002, when Benn was hired by Argent Mortgage, which would become the nation's largest provider of loans to people with low credit scores.
Known as "Big O, " the six-foot three-inch, 280-pound Benn grew up as the son of a subway mechanic in one of Brooklyn's toughest neighborhoods. Even without a formal banking education, he needed just three years to advance from a low-paid clerical job to vice president.
At first, his job was to trouble-shoot problems that cropped up in loan applications, court records and interviews show.
Argent made money bundling the mortgages and selling them to investors on Wall Street, not by collecting monthly checks and depending on the borrowers' ability to pay. The accuracy of individual loan applications was not a priority, Benn later testified.
With control over hundreds of millions of dollars in loans, Benn launched a subprime empire that would soon cover most of Florida.
After four months on the job, Benn flew to Tampa to meet with mortgage brokers, who courted him with a luxury box at a Tampa Bay Lightning hockey game, football tickets and strip-club outings, court records show.
He taught one of those brokers, Scott Almeida, a convicted cocaine trafficker, to prepare phony income statements and doctor credit reports.
A few months later, Almeida introduced Benn to Tampa brokers David Tuggle and Eric Steinhauser.
Soon after Benn taught them to prepare phony documents, they began to write millions of dollars in loans.
Along the way, the brokers showed their gratitiude. Air-express envelopes stuffed with cash -- a total of hundreds of thousands of dollars -- routinely arrived at Benn's million-dollar house in the New York suburbs. In slightly more than two years, Tuggle and Steinhauser alone paid Benn between $70,000 and $100,000, they told police.SOUTH FLORIDA LINK
As the scheme grew riskier, it extended south, almost 300 miles, to the door of Yvette Valdez in Homestead.
Benn told Steinhauser to create a phony backdated deed to help a borrower get a loan. But Steinhauser said he had trouble finding someone in Tampa willing to help him because the deed would be filed in court.
So, Benn referred him to Valdez at Sandkick Mortgage.
For 16 months, Valdez and her co-workers were a mainstay of Benn's lucrative Miami-Dade operations, writing more than $1 million worth of loans in a typical month.
The Miami Herald obtained every loan application that Sandkick sent to Argent between May 2004 and September 2005, for mortgages totaling $22 million.
The documents include all of the personal and financial information about the borrower supplied by the broker.
Out of 129 applications, 103 contained red flags: non-existent employers, grossly inflated salaries and sudden, drastic increases in the borrower's net worth.
The simplest way for a bank to confirm someone's income is to call the employer. But in at least two dozen cases, the applications show bogus telephone numbers for work references, the newspaper found.
On three applications, Valdez provided her own private cellphone number, even though the borrowers did not work for her.
Another application included a June 2004 letter from "Community Bank, " saying the borrower had $63,000 in his account. The phone number on the letter does not belong to a financial institution, however. It belongs to Bill Rieck, a Key West city employee, who told The Miami Herald that he was surprised his number was used.
"I ain't no community bank, " he said, adding that the cell number has been his for at least six years.INCOME AT ISSUE
When Kendall Lakes couple Monica Gaviria and Stacy Duthely applied for a loan through Sandkick in January 2004, they declared a combined income of $68,000 a year. She was a hair stylist; he, an "interpreter."
When the loan went through a few months later, the documents showed more than a fivefold increase, to $384,000.
Gaviria said that figure is grossly inflated, but said she knew nothing about the change on her mortgage application until years later when she fell behind on her payments and the bank called her.
She said the bank representative demanded, "What's the problem? You make $17,000 a month."
As the months went by, Valdez began to write more loans for Benn. She started small with an $87,000 loan in May 2004, records show. The next month, her numbers rose to $750,650. By that September, she hit $1 million.
The following year, she went on a tear, breaking the $1 million mark seven times.
Along the way, some borrowers came back for more.
One Sandkick customer, Erica Wright, bought her first house in July 2004, when she was 21. Her loan application said she had been the office manager at Weldon Industries, a Tampa fence manufacturer, for four years. The job paid $40,000 a year.
But when reached by The Miami Herald last month, the company's general manager, Scott Franzen, said, "We've never had anyone here by that name."
In September 2004, Wright bought three more houses using Weldon as the employer, even claiming a big raise to $78,840.
Wright could not be reached for comment. All four properties have fallen into foreclosure, leaving $501,677 in unpaid debt.
While Valdez was flooding Miami-Dade with risky loans, Benn's network drew the attention of state regulators several times.
One of the brokerages doing business with Benn -- Total Mortgage of Tampa -- incurred 10 complaints in just two years.
In four of those cases, state regulators confirmed that the company provided false and misleading information to get loans. The company owner put false data in her own mortgage application in 2004, regulators found.
Instead of pressing for disciplinary action, including suspending or revoking the license, the state closed the cases.
The company kept going, brokering two more loans -- later investigated by police -- that went directly to Benn's chief co-conspirator, Argent banker Sam Green.
Green managed to get two mortgages to buy one home. He used one loan to pay for the property, and illegally pocketed the other, which was worth $79,000, he later admitted to police.SCHEME UNRAVELS
While Benn and Green approved more than half a billion dollars' worth of mortgages during their run at Argent, it was a complaint filed by an elderly Tampa borrower over a disputed loan that drew the attention of police in 2004.
As other borrowers stepped forward with similar complaints, Benn's network slowly unraveled.
Investigators from the humble Hillsborough County Consumer Protection Agency began to review Argent loan applications and discovered irregularities in the tens of millions of dollars.
One by one, Tampa area brokers pointed the finger at Orson Benn.
Last year, statewide prosecutors charged Benn in Polk County with racketeering. At least seven others have been arrested in the same scheme, including the other Tampa area brokers.
Argent succumbed to the troubles of the subprime market and was bought by Citibank last year.
Despite a crackdown on Benn's Tampa brokers, nothing happened to the Miami network where most of the loans were written, The Miami Herald found.
Benn, who has begun an 18-year prison sentence, did not respond to a request for comment. Neither did Tuggle or and Steinhauser, both of whom pleaded guilty in the mortgage scheme and await sentencing.
Both are still listed with "approved" licenses on the OFR website, the only place consumers can check the status of brokers.
Although state regulators have known about Valdez's involvement for three years, they never took action against her or Sandkick Mortgage.
The agency identified her as an associated target in a 2005 fraud investigation of another broker in the Benn network, records show.
In addition, the file contains two Sandkick loan applications with bogus claims: One borrower, a 7-Eleven clerk, showed a $50,000 jump in her net worth in just 20 days. Another borrower never worked for the company listed on the application.
But the regulators never pursued the leads.
Terry Straub, director of finance for the OFR, said he can't explain the lack of action. "It certainly sounds like you have some tangible evidence, " Straub said.
Valdez and her co-workers wrote their last loan with Benn in September 2005. Since then, 40 percent of the properties have slipped into foreclosure, the newspaper found.
Some have fallen into disrepair, dragging property values down around them. Others are abandoned. One, in Liberty City, has been razed, leaving nothing but a weed-strewn lot.
Last week, Miami Herald reporters visited Valdez at her Homestead office, now known as Best Mortgage Choice. She refused to discuss the newspaper's findings.
When asked about the misleading information in her customers' loan applications, Valdez said, "That's their problem."