Mortgage Fraud Appraiser to pay $46 Million in restitution after federal prison time!

By
Mortgage and Lending with First Colorado Lending

During the trial last summer a real estate appraiser was shown as a part of a wide-ranging and sophisticated scheme that obtained inflated mortgage loans on homes in some of California's most expensive neighborhoods, including Beverly Hills, Bel Air, Malibu, and more. The fraudsters created and submitted false documents, including fake purchase contracts and appraisals, to the victim banks to swindle them into funding mortgage loans that were hundreds of thousands of dollars more than the homes actual value. Lehman Brothers Bank is just one deceived into funding more than 80 such inflated loans that resulted in tens of millions of dollars in losses.

The evidence showed that the appraiser profited by collecting hundreds of thousands of dollars in fees for providing inflated appraisals in the fraud scheme. Her appraisals typically valued the homes three times higher than what the homes really cost. In order to supposedly justify these inflated values, she used comparable homes, that were far bigger, more luxurious, and in better neighborhoods than the homes she appraised. Once she had inflated a few dozen homes, she then used those homes to supposedly justify inflated prices for homes later in the scheme.

The appraiser, from California, and a former state-licensed real estate appraiser, was sentenced to three years in federal prison and ordered to pay more than $46 million in restitution for her role in a large mortgage fraud scheme that caused tens of millions of dollars in losses. She received the three-year prison term after her conviction last summer on conspiracy, bank fraud and numerous loan fraud charges.

United States District Judge Dean D. Pregerson, who warned that other professional real estate appraisers should know that if they inflate appraisals and lie about the value of homes, "there is an overwhelming likelihood that they will be caught and go to prison."

Ten other real estate professionals have been convicted of federal charges related to the scheme. They are a scheme leader, who was a developer, a mortgage broker who helped orchestrated the scheme, a loan processor, someone who found the houses for the scheme, an escrow officer, two other mortgage bankers, another appraiser and two real estate agents have already been sentenced or are awaiting sentencing soon.

We should all congratulate the Federal Bureau of Investigation and IRS-Criminal Investigation teams as this his case is the result of their investigation.

We must be vigilant against fraud, recognizing its signs and taking proactive, definite, and realistic steps to not only prevent it but also punish it.

It starts with me.

It starts with you.

It starts with us...

 

Michael S. Richardson

Director/Mortgage Fraud Services
Author of "An American Epidemic, Mortgage Fraud a Serious Business"

www.mortgagefraudsolutions.com

Follow me!

Twitter: FocusonFraud 

The Examine:  http://tinyurl.com/y8muvlw

 

Comments (3)

David Salvato
David Home Inspection Service Home Inspector San Bernardino - Los Angeles, CA

Michael more of these guys need to do some Jail time. So much fraud went on that we should hear more stories like this...

Feb 03, 2010 12:49 AM
Mary Jo Quay
EXP Realty - Minneapolis, MN
I Move You Home

Unfortunatley, Minnesota was #7 in the nation in 2007 for mortgage fraud.  There were fake credit reports, straw buyers, flipping schemes, and huge kick backs.  I was extremely disappointed that after having written several letters to the Dept. of Commerce on behalf of a client they wrote back that we should get a lawyer.

My client was cook, and one of the waiters where he worked transformed into a loan officer. The loan officer friend convinced  him to purchase a 2nd home as investment so his brother could pay him rent.   That gave the l/o access to his banking account, credit report, and personal id.  After selling him a 2nd home the l/o refinanced the first home using my client's id, took out cash and commission.  Then he refinanced the 2nd home, repeating the process, and purchased a 3rd property in his name.  All mail was directed to the 3rd property.

It was several months before the client had any idea what was happening.  The police couldn't help because they aren't trained in white collar crime.  Neither the DOC nor the Attorney General would take action against the broker.  We wound up in mediation after a full year of litigation with 5 attorneys, a judge, my client and myself.  The offending broker did not show up, called in to his attorney that he wasn't coming.  Everyone in the room lost except the loan broker who declared bankruptcy and was still driving an Escalade.

Feb 03, 2010 12:51 AM
Jackie Dufault
Calgary First Real Estate Inc. - Calgary, AB

Wow, that was quite the fraud scheme.  Unfortunately the appraiser only  had to serve 3 years in prison.  I personally feel that the courts have to increase the penalties handed out to "white collar" criminals.  The people involved in this crime, had to have banked hundreds on thousands of dollars, probably offshore, and now after spending short stint in prison, will be living a lavish lifestyle.  Unfortunately it seems that "crime does pay".

Feb 03, 2010 12:54 AM