Dec. 1, 2016

South Florida Real Estate Fraud

By Richard L. Petrovich

Real estate fraud can happen to anyone.  Institutional lenders are victims.  Private mortgage lenders are victims. Small businesses and individuals are victims. Through this blog, we attempt to locate articles and press releases and identify the various mechanics and schemes fraudsters use to commit mortgage fraud. 

This November, several individual defendants pled guilty to mortgage fraud in Federal District Court in Miami, stemming from fraud committed against institutional lenders back in 2008.  See Case 1:16-cr-20730-FAM; 1:16-cr-20729-KMW. Specifically, the Defendants were charged with violations of 18 U.S.C. 1344 (Bank and Wire Fraud).  In these cases, it appears as though bad actors recruited straw purchasers and passed these purchasers off to institutional lenders as qualified mortgage loan applicants, and in so doing, induced the purchasers to aid in falsifying mortgage loan applications, falsifying related supporting documentation, and misleading institutional lenders regarding earnest money deposits being held by defendants on the straw purchasers’ behalf.  According to the factual proffers, the straw purchasers were not qualified to obtain the loans and many if not all of the income verification documents were falsified by the closing agencies.  Apparently, these straw purchasers were induced to apply to purchase condominium units by the promise that the units came with paying tenants and were income producing.  Based on the false mortgage applications, various institutional lenders lent money to these otherwise unqualified purchasers and the loans closed.  According to court records, substantial portions of the loans were used to pay various “marketing fees,” which were as nothing more than “kick- backs” which the straw purchasers received.  The remaining proceeds were distributed for the benefit of other defendants who controlled the closing agencies and for the benefit of unnamed co-conspirators.  Nothing seems to have been remitted to the unit’s sellers.  All told, the amount of monies lent by the various institutions via this fraudulent scheme exceeded 1.9 million dollars.  Sentencing for the defendants is currently set for January 19, 2017 and March 28, 2017 respectively. 

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As Published in the Daily Business Review

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