It is important to note that institutions don't commit fraud, lenders don't commit fraud, companies don't commit fraud - people commit fraud.
The president and owner of Homes for Sale by Owner, Inc., in Florida was sentenced to six years in prison after pleading guilty to a criminal racketeering scheme that involved mortgage fraud in home purchasing. Upon his release from prison, he must also pay full restitution, including $200,000 to an investing couple in one transaction and compensation to the lending institutions he defrauded in other transactions.
He orchestrated for several years a series of bogus mortgage transactions in Lake and Seminole Counties, Florida. Acting with co-conspirators they recruited straw buyers to purchase homes, taking advantage of their high credit scores to obtain "no-document" loans. The sellers and buyers were shown one set of documents with the actual sale price of the home, but the fraudster arranged to have a different set of documents sent to the mortgage lending institutions indicating a much higher sale price and then the fraudsters pocketed the difference.
During these scams the fraudster promised to make all of the payments for the homes and assured the buyers that they would see a profit when the homes increased in value. The buyers were not aware that the homes had much larger mortgages in excess of their value and the paper work they had signed. There were 12 sales transactions that were part of the prosecution's case, which the fraudster was able to divert hundreds of thousands of dollars to him, leaving the buyers stuck with the overpriced mortgage payments.
The fraudster's prison sentence was handed down by Lake County, Florida, Circuit Judge Mark J. Hill and two others involved were convicted, one of conspiracy to commit racketeering and one of grand theft, whom are both serving probationary sentences for their involvement in the scheme.
We should all congratulate the Office of Financial Regulation. The Lake County Sheriff's Office and the Department of Financial Services Divisions of Insurance Fraud and Agents and Agency Services who assisted in the 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"