General Crime

* Donna Demello former escrow officer at Stewart Title in Milpitas pleads guilty in fraud scheme

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A former escrow officer at a Milpitas title company pleaded guilty in federal court in Oakland Friday to conspiring in a multimillion-dollar mortgage fraud scheme.Donna Demello, 44, of San Jose, pleaded guilty before U.S. Magistrate Donna Ryu to one count of conspiracy to commit wire and mail fraud. She will be sentenced Dec. 8 by U.S. District Judge Phyllis Hamilton in Oakland.Demello, a former escrow officer at Stewart Title in Milpitas, was indicted by a federal grand jury in May along with five other people, including James Delbert McConville, the alleged leader of the scheme.The indictment alleged that McConville used the names of phony buyers, known as straw buyers, to obtain mortgages on condominiums in Southern California. The straw buyers were promised $5,000 to $10,000 for the use of their names.Prosecutors alleged that McConville would then take from the mortgage proceeds a so-called “marketing fee” averaging $150,000, which sometime amounted to half of the amount of the mortgage.U.S. Attorney Melinda Haag said Demello admitted in her guilty plea to aiding the scheme by concealing the marketing fees on settlement documents given to the mortgage lending institutions. Haag said Demello admitted to participating in the fraudulent approval of approximately 80 loans for condominiums in Escondido and San Marcos in the San Diego area. Prosecutors said in court filings that the loans for those 80 condominiums amounted to $20 million and about $11 million of that amount was paid directly out of escrow in fees to McConville or companies he controlled. McConville was arrested near Bakersfield on June 18 and is awaiting trial. Three other associates have pleaded guilty to various charges.The conspiracy count to which Demello pleaded guilty carries a possible maximum sentence of 30 years in prison, but the actual sentence will be determined after consideration of federal sentencing guidelines.

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