Medical issues postpone mortgage fraud case against Grass Valley man | TheUnion.com

Medical issues postpone mortgage fraud case against Grass Valley man

Medical issues have forced another postponement in a federal case against a Grass Valley man accused of participating in a complex mortgage fraud scheme.

John Michael DiChiara, who was arrested in September 2015, allegedly called himself the Archbishop of Shon-te-East-a, Walks With Spirit, the mission of which was to help individuals spiritually through a "mortgage elimination program."

DiChiara also was the self-named archbishop of the Pillow Foundation, a Utah corporation with a business address in Reno; both groups claimed to be tax-exempt religious organizations, according to the federal indictment filed against DiChiara.

DiChiara and six co-defendants allegedly recruited homeowners whose homes were worth less than the mortgage, with the promise of relief from foreclosure. They allegedly often required homeowners to assign or convey their homes to Shon-te-East-a or the Pillow Foundation as a charitable donation, leading them to believe they could take those donations as tax deductions and that they had transferred legal responsibility over their mortgages.

The fraud often led to foreclosure proceedings, and short sales initiated by DiChiara and his codefendants resulted in unsuspecting buyers of properties with false deeds of trust, according to the indictment.

Federal prosecutors allege that DiChiara and his codefendants sold 37 properties, netting more than $8 million. An additional 97 properties reportedly went through some phase of the fraudulent "mortgage elimination program," affecting more than $60 million in legitimate loans.

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DiChiara remains set for trial and was to appear in U.S. District Court in Sacramento for a status conference Friday.

But DiChiara, who until recently was the Exalted Ruler of the Grass Valley Elks Lodge, late last year had a triple cardiac bypass, according to court documents. According to his attorney, DiChiara currently is also suffering from kidney disease and his medical issues preclude him from participating in any trial work for at least six months.

His status conference has been postponed to July 20, according to court records.

Contact reporter Liz Kellar at 530-477-4236 or by email at lizk@theunion.com.