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