Diane Cobb, Paul Sloane Davis, $2.4 Million Mortgage Fraud, California 2013

Two Marin County mortgage brokers, Diane Cobb and Paul Sloane Davis, have been indicted for allegedly running a $2.4 million fraud scheme, officials announced.

According to the indictment, Cobb and Davis operated a financial services company in Marin County known as DM Financial. Through DM Financial, Cobb and Davis offered investors the opportunity to fund purported short-term ‘bridge loans’ to borrowers who, according to Cobb and Davis, needed short-term financing for residential real estate transactions.

The indictment alleges that Cobb and Davis fraudulently provided to these investors, among other things, the identity of the purported borrower, a promissory note reflecting the amount and terms of the loan, and a deed of trust securing the loan to the borrower’s real property. Based upon these documents and other representations made by Cobb and Davis, the investors believed that Cobb and Davis were directing their funds into secured loans with borrowers.

However, the indictment further alleges that, in fact, the purported borrowers received none of the investors’ money, and did not even know that their identities were being used to solicit investments. Instead, Cobb and Davis allegedly diverted substantially all the money—approximately $2.4 million—for their own personal use or to make interest payments to prior investors to keep them from discovering the true nature of the scheme.

Cobb and Davis were arrested on November 13, 2013, in Las Vegas, Nevada. They both made their initial appearances in federal court in Las Vegas on that day, when they were released on bond. Bail was set at $100,000.

The maximum statutory penalty for each count of mail fraud, wire fraud, and conspiracy is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. The statutory penalty for each count of aggravated identity theft is two years’ imprisonment.

The case is being prosecuted by Assistant United States Attorneys Thomas Stevens and Benjamin Kingsley, with the assistance of Phillip Villanueva and Rayneisha Booth. The investigation was conducted by the Federal Bureau of Investigation.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Diane Cobb and Paul Davis must be presumed innocent unless and until proven guilty.

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