TAMPA—U.S. Attorney Robert E. O’Neill
announces today that a federal jury found George Cavallo, his wife Paula
Hornberger, and Joel Streinz, a former police officer, guilty of conspiracy to
commit wire fraud and of making false statements on loan applications submitted
to FDIC-insured financial institutions and mortgage lenders. The jury also
found Cavallo and Hornberger guilty of separate counts of making false
statements on loan applications submitted to an FDIC-insured bank. Cavallo,
Hornberger, and Streinz each face a maximum penalty of five years in federal
prison on the conspiracy count. Cavallo and Hornberger each also face an
additional term of up to 30 years in federal prison on the false statement
counts. All three individuals are scheduled to be sentenced on October 5, 2012
before the Honorable Elizabeth A. Kovachevich.
Evidence presented during the
three-month trial revealed that Cavallo, Hornberger, and Streinz conspired with
each other and with numerous other individuals to purchase residential properties
in the Sarasota area by making false statements on loan applications that were
submitted to various FDIC-insured banks and mortgage lenders. The false
statements made and caused to be made by all three individuals and their
co-conspirators pertained to, among other things, the actual purchase/sale
price of the property; the purchaser/borrower’s intended use of the property;
the purchaser/borrower’s employment, income, assets, and liabilities; and the
amount and source of the equity contributed to the purchase by the
purchaser/borrower. The idea behind the scam perpetrated was to fraudulently
obtain the maximum loan possible on each property and then to sell that
property within a few years after it had appreciated without risking much, if
any, of their own money. The conspiracy began in the late 1990s and then grew
slowly until 2004. In 2004, with the drastic increase in real estate prices in
Sarasota, it grew exponentially. The conspiracy ended when the real estate
market collapsed in 2008.
This case was investigated by the
Federal Bureau of Investigation, the FDIC’s Office of Inspector General, and
the Sarasota County Sheriff’s Office. It was prosecuted by Assistant United
States Attorneys Christopher Tuite and Cherie Krigsman.
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