LOS ANGELES (CNS) — A Van Nuys man with a long criminal history was sentenced to 20 years in federal prison for orchestrating a $17 million real estate fraud scheme that preyed on distressed homeowners, many of whom were elderly or spoke little English.
Michael “Mickey” Henschel, 70, pleaded guilty in May to one count of mail fraud. Federal prosecutors urged the judge to impose the 20-year maximum sentence, while the defense unsuccessfully argued for a period of home detention.
As part of his plea agreement, Henschel agreed to forfeit money and property collected through the fraud scheme, including more than $100,000 in cash seized from a bank account and various residential properties in the San Fernando Valley, Glendale and Pasadena.
US District Judge Virginia A. Phillips set a Dec. 2 restitution hearing.
“The scheme was very complex — one of the most complex I’ve ever seen,” Phillips said from the bench.
The fraud generated more than $17 million in profits and caused homeowners — mostly elderly and many lacking proficiency in English — to suffer about $10 million in losses when they lost title to their homes and were tricked into giving Henschel and his co-conspirators money as part of the scam.
Henschel also caused losses to mortgage lenders and purchasers of foreclosed properties, according to Assistant US Attorney Kerry Quinn.
Phillips said Henschel wrote a letter to the court in which he blamed the scheme on co-workers and denied defrauding homeowners, instead claiming he was only “trying to help people.”
About a half-dozen victims made emotional statements to the judge, some speaking through Armenian or Spanish translators, describing losing their homes or rental properties to the defendant. Prosecutors said Henschel sometimes impersonated attorneys and sent threatening letters to victims, using forged signatures and marked with a stolen notary stamp.
A Latino woman in her 80s told the judge through a translator that Henschel “took my houses while I was going through a divorce. Right now, I don’t have any money as a consequence.”
Prosecutors said Henschel orchestrated the scheme with co-defendants to trick homeowners into signing fraudulent deeds on their properties, then used the bogus deeds to extort money, charge illegal fees to delay foreclosure and eviction actions, and steal some homes outright.
Phillips said the defendant often used “confusing terms and language” to con victims into signing documents.
As part of the operation, Henschel created “a bewildering morass of litigation” that amounted to a “fraudulent use of the civil court system,” Quinn told the court.
The judge said Henschel’s history of theft convictions stretches back to the 1970s. When arrested in the current case in March 2018, he was already under indictment in a previous foreclosure-avoidance and bankruptcy fraud scam.
Four co-conspirators — Camerino “Mino” Islas, 42, of North Hollywood; Claudia “Jessica” Islas, 43, of Reseda; Juan Carlos Velasquez, 44, of Sylmar; and Eugene “Gene” Fulmer, 84, of Encino — pleaded guilty and are scheduled to be sentenced before the end of the year.