Convictions in Real Estate Loan Scheme Case

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Education & Training with 123 ConEd LLC -- Michigan real estate continuing education School Sponsor 373

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Here is another example of a recent legal case involving fraudulent real estate loan schemes and bank fraud, all related real estate transactions involving real estate professionals. I try to post case summaries in order to provide timely updates to real estate professionals on important issues.

On Monday (May 4, 2009), three people (Todd Gongwer, Lance Parker, and Joel Lee) plead guilty to conspiracy to commit bank fraud. Mr. Gongwer, a licensed real estate agent, also plead guilty to tax evasion. Mr. Parker also plead guilty to illegally structuring cash transactions.

According to the plea agreements and evidence presented during the plea hearings, from 2005 through 2007, the defendants and others negotiated and participated in real estate deals in which each of them purchased a luxury home for a falsely inflated purchase price from real estate builder Thomas Parenteau in exchange for an undisclosed or disguised kickback. Mr. Gongwer admitted to using nominees to purchase at least two other luxury homes for inflated prices with kickbacks.

In each transaction, the buyers misrepresented their income and assets in order to obtain approximately 90% financing of the inflated purchase price. The buyers, seller Mr. Parenteau and Mr. Parenteau’s real estate agent, Bonnie Helt, attempted to justify the inflated purchase prices by creating and signing false work change orders and addendums that created the appearance that the inflated price represented additional substantial work to be completed on the homes. However, no such agreement was actually intended by any party, and the documents were not disclosed to the lenders. The object of each transaction was to use the loan proceeds in excess of the actual purchase price to fund hundreds of thousands of dollars in kickback payments to the buyers. The loans associated with the real estate purchases of Mr. Gongwer, Mr. Parker and Mr. Lee have all gone into default.

Mr. Gongwer and Mr. Parker also admitted to conducting a similar transaction involving Mr. Parker’s purchase of 15 condominium units in three buildings located in Columbus, Ohio, from Mr. Parenteu’s associate and architect, William Tarcy. Mr. Tarcy plead guilty to conspiracy to commit bank fraud and agreed to forfeit assets related to the offense in March 2009. Mr. Tarcy’s sale of the condominiums also involved inflated purchase prices, fraudulently obtained financing by Mr. Parker, and substantial kickback payments to Mr. Parker as the buyer.

www.123ConEd.comMr. Gongwer accepted responsibility for causing a fraud loss between $2.5 million and $7 million. Additionally, Mr. Gongwer plead guilty to tax evasion for failure to report income he received. According to his plea agreement, Mr. Gongwer worked for RE/MAX Affiliates Inc. in 2004, and was paid approximately $158,333.32 in gross income. Mr. Gongwer deposited that income into nominee accounts in order to conceal his receipt of that income from the IRS. Mr. Gongwer also failed to file income tax returns for tax years 2000 through 2005. The tax loss caused by his conduct is between $200,000 and $400,000.  

Mr. Parker and Mr. Lee each accepted responsibility for causing a fraud loss between $400,000 and $1 million. Mr. Parker also plead guilty to structuring transactions to avoid federal reporting requirements. During 2007, Mr. Parker engaged in cash transactions in amounts less than $10,000 for the purposes of withdrawing cash from his bank accounts in order to finance gambling vacations in Las Vegas and to avoid federal currency transaction reporting requirements.

Sentencing of all three defendants for a date after the July 2009 trial of Tom Parenteau, his accountant Dennis Sartain and his realtor Bonnie Helt, who were charged in April 2009 in a tax fraud and money laundering scheme. Mr. Gongwer faces a maximum sentence of 10 years in prison and a maximum fine of $500,000. Mr. Parker faces a maximum sentence of 10 years in prison and a maximum fine of $500,000. Mr. Lee faces a maximum sentence of five years in prison and a maximum fine of $250,000.

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Rainmaker
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Karen Singbeil
Royal LePage Access Real Estate | Associate Broker | Personal Real Estate Corporation - Sicamous, BC
Living In & Selling Shuswap : Sicamous | Mara Lake

crying shame this is...all for greed! I am still always amazed by these stories.

May 07, 2009 02:33 AM #1
Ambassador
940,157
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

I keep hoping that more people will be convicted for the crimes that got us in this real estate mess.

May 07, 2009 03:16 AM #2
Rainmaker
3,018,004
Richard Weeks
Dallas, TX
REALTORĀ®, Broker

When will they learn?  I hope the governments prosecutes and many of these criminals as possible.

May 07, 2009 05:37 AM #3
Rainmaker
179,901
Jason Rose
123 ConEd LLC -- Michigan real estate continuing education - Farmington Hills, MI
www.123ConEd.com

Karen:  Thanks for your comment.  It's amazing how greedy some people are and what lengths they'll go to to make a few dollars.  It sure doesn't seem worth it to me, especially since they're each facing ten years in prison.

Mike:  I think you'll start seeing more and more of these types of cases in the future because the government (state and federal) is spending more time and resources to go after mortgage and real estate loan fraud.

Richard:  I don't think thee types of people will ever learn, since they think they're smarter than everyone else and can grab some easy money.  They had better watch out, though, as law enforcement is focusing in more and more on these types of crimes.

May 07, 2009 06:17 AM #4
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Rainmaker
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Jason Rose

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