Yorba Linda Men Accused of Defrauding HUD

Federal agents arrested two brothers from Yorba Linda on Tuesday, accusing them of fraudulently obtaining $30 million in government-backed housing loans.

Danilo Torres Guinto, 40, and Edgardo Torres Guinto, 39, will face mail-fraud charges, FBI officials in Los Angeles said.

The Guintos’ arrests constitute the latest phase in the FBI’s two-year “Mortgage Mill” operation, aimed at dismantling the largest fraud scheme ever perpetrated against the U.S. Department of Housing and Urban Development.

Seven other Southland residents have already pleaded guilty in a related scheme, which involved more than $60 million in loans. They await sentencing.

“This is kind of the second wave,” said Thom Mrozek, spokesman for the U.S. attorney’s office in Los Angeles.

The Guintos bought 127 residential properties for $80,000 to $150,000 apiece, then “flipped” them to straw buyers who purported to buy them at much higher prices, an investigator’s affidavit said.

Allstate Mortgage Co. of Norwalk supplied loans at the inflated values, insured by HUD’s Federal Housing Administration, according to the affidavit. Then the Guintos allegedly allowed the properties to go into default, leaving HUD to cover the loans.

About two-thirds of the properties’ insured value was lost, FBI spokeswoman Laura Bosley said. The remainder was recovered when HUD repossessed and resold the properties.

Allstate owner Douglas Alfonso Estrada of Whittier, as well as several of his employees, have pleaded guilty for their roles in the related $60-million scheme.

The Guintos operated businesses under the names Premier Mortgage, Western Services Group and Dynamic Group, investigators said.