Entries Tagged 'Real Estate Fraud' ↓

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

A Connecticut Housing Official and her husband is now charged with stealing Section 8 housing money from the East Haven housing authority. The amount of 173 thousand dollars was taken through a debit card that Cassandra Ashe illegally obtained.

I do hope she gets what she and her husband deserve stealing our tax money that was designated for low income housing families.

The executive director of East Haven’s housing authority was arrested with her husband Tuesday and charged with stealing $173,000 of federal housing money that was supposed to help low-income town residents pay their rent.

Cassandra Ashe, 36, and her husband, Jonathan, 43, are accused of conspiracy and theft from a program receiving federal money. Cassandra Ashe earns $57,000 a year as executive director of the authority. Her husband, who works in the New London Housing Authority’s maintenance department, earns $12.20 an hour. They live in North Haven.

According to the arrest warrant affidavit, Cassandra Ashe, without approval from the East Haven Housing Authority, obtained a debit card in May 2007 that gave her access to the authority’s bank account containing low-income rental subsidies.  via the Courant.com.

It is amazing what some of our elected officials think they can get away with. Fortunately, this time the politician got caught. For 36 years Sharpe James was a power broker in Newark, New Jersey politics. He watched the city deteriorate and essentially fall apart. Now we know why, he was using the city as his own piggy bank.

A federal jury today convicted the former longtime mayor of Newark, Sharpe James, of fraud for conspiring to sell city-owned properties to a former girlfriend, who quickly flipped them and earned hundreds of thousands of dollars in profits.

On the sixth day of deliberations, the jury found Mr. James, 72, guilty on all five counts he faced. His former girlfriend, Tamika Riley, 39, was convicted on the same fraud and conspiracy charges as well as eight others for numerous tax violations in connection with what the authorities said was her failure to file income tax returns for her public relations firm. via the New York Times.

So here is the real question, do you think that the girlfriend, age 39, was in the relationship for love or the chance to make some serious money.

It looks like the big fish has rolled over in the Penland land scam. Neil O’Rourke, ringleader of the  100 million dollar land scam has plead guilty in US District Court on the condition that he will testify against others charged in the probe.

This is one of the largest frauds committed in the United States and has the potential to bring many of the participants down. The only thing that I dislike is the leniency that O’Rourke has received. Come on, he is the leader of a 100 million dollar theft ring and only has  to pay a 250,000 fine and a maximum of 5 years in jail?

I do hope the hurt parties leave him and his cohorts penniless through the civil courts after their scamming and destroying the name of Penland.

Neil O’Rourke, 40, pleaded guilty in U.S. District Court in Charlotte to a single count of conspiracy involving charges of securities, mail, wire and bank fraud.
O’Rourke is a former president of Peerless Real Estate Group, which oversaw a development in Mitchell County called The Village of Penland, located about an hour northeast of Asheville.
When the project was halted in May, it left dozens of individual investors from the Triangle and throughout the country owing banks more than $100 million and it triggered three lawsuits.
O’Rourke, an attorney in private practice before he joined Peerless, agreed to cooperate with federal investigators as they seek additional indictments against others in the company.
No date was set for his sentencing. He faces a maximum of five years in prison, three years of supervised release and a $250,000 fine.
“In a case like this, the government is trying to get information that is credible and useful in nailing somebody higher up the line,” said James Cox, a securities law expert at Duke University. “So you try to reach a plea with someone as high up as you can. It sounds like they hit the target squarely here,” Cox said. via Charlotte Observer

With the decline in most housing markets, previous housing scams are coming to the surface just as new ones are being concocted taking advantage of those who are in financial trouble. According to the FBI housing and foreclosure scams have doubled in 2007 and they expect the trend to continue.

The FBI expects more foreclosure scams as criminals prey on growing numbers of people desperate to keep their homes while interest rates balloon on adjustable rate mortgages, Ormsby says. She also expects increasing fraud in “reverse mortgages,” in which homeowners 62 or older can take out a loan against the equity in their home. Unlike a traditional home-equity loan, the borrower doesn’t pay back a reverse mortgage until they sell the home.
Ormsby says the FBI’s mortgage fraud cases have focused for years on fraudulent documentation of assets and property flipping crimes, in which buyers purchase cheap homes, have them falsely appraised at a higher value, then sell them at the inflated price.
Housing advocates and public-interest lawyers say federal law enforcement and regulators have focused too sharply on property flipping, and not on companies that defraud consumers by steering them to high-interest loans or by issuing deceptive contracts. via USATODAY.com.

We have talked about the huge amounts of money coming into the real estate world and the lenders who lent this money to people obviously unqualified to borrow it. But this impassioned paragraph from John McWilliams, a Florida real estate broker, does hit the nail on the head on the worst of the lending abuses.

This brings us to the infamous no-money-down home purchase, which plays a bigger role in this mess than you can believe. What kind of results do you believe will be the case when an inarticulate, uneducated buyer with no money and bad credit enters “Slippery Sam’s Mortgage Company” and signs up for a fraudulent, toxic, liar loan? From 2002 to 2005 it obviously was the way far too many loans were written. When financial institutions see potentially criminal activity in customer transactions, they are required to send a suspicious activity report (SAR) to the Treasury’s Financial Crimes Enforcement Network. From 2000 to 2006, SARs related to mortgage fraud increased by almost 700 percent. Thankfully, most of those mortgage companies and the foolish Realtors who supported their fraudulent activities are no longer associates with the real estate industry. Hopefully, a valuable lesson was learned by all, and the Southwest Florida market can be revived for all the right reasons. via The News-Press

It is amazing the hubris that some of the scamsters have engaged in. A Kenneth Germain, 64, of Colorado is facing 62 counts of security fraud and theft in a wide ranging mortgage fraud case. Germain is accused of stealing millions of dollars by selling homes that were already foreclosed upon and then setting himself up as the property manager.

What caught my eye is what Germain reportedly did with the money. According to the Denver Post he “pocketed the money to pay for taxes and his personal mortgage payments and to spend at liquor stores.”

So we have a drunk who scammed millions of dollars to pay his bills and liquor costs yet was seen as a reliable agent for people to invest their life savings with? The audacity of the crime is only second to the gullibility of the victims in my eyes.

Prosecutors say Germain scammed dozens of people into buying foreclosed properties from the U.S. Department of Housing and Urban Development and then kept the money. An arrest warrant has been issued for Germain, and the Denver district attorney’s office says he has made arrangements to turn himself in to authorities in the next few days.
The indictment lists 60 victims with 167 properties involved in the alleged scam. Among the victims is Lisa Downing, owner of Vision Quest Entertainment, a local talent agency. Downing says her life savings and her son’s college savings are now gone, while her credit is ruined.  via The Denver Post

Booms attract crooks, they always have and always will. When a boom deflates though, the vermin usually are exposed for what they are and their scams unravel. Such is the case of Aleem Hussain, a Guyana native who ran the real estate scam Main Street USA that defrauded investors out of 9 million dollars in Florida.

Now Hussain is facing 7 years in jail and deportation back to his native Guyana. When booms happen people get greedy. And it is not only the scam artists who get greedy but the investors. When someone is promising 30 percent returns odds are you need to do a great deal of due diligence on the investment. But the scam artist will recognize the greed in the eye of the novice investor and strip them clean.

What is amazing in this case is Hussain stayed around. Usually guys who run the Ponzi schemes get the money and when the scam unravels are long gone. But then greed is a dangerous drug and odds are Hussain started to believe he was an investment guru even as his scam was unraveling.

Well, the good thing is that he will have time to understand what he did to his investors while sitting in jail.

But to the government, Hussain hatched a Ponzi scheme and was a fraud from the beginning, gunning for investors’ money as a way to fund his other projects. “This is no mistake by an honest man,” Assistant U.S. Attorney Cynthia Hawkins said.
Hussain, 43, was sentenced to seven years in prison for swindling nearly $9 million from investors, including retirees, state court workers and sheriff’s employees. When he’s done serving his time, Hussain — a Guyana native — is expected to be deported. “I’m pretty happy with that,” said Mark Pilkington, who lost $300,000 when he invested with Hussain’s Main Street USA Inc. “Now we’re all just waiting to see what kind of assets will be recovered.” via OrlandoSentinel.com

And I am glad for it. No money down on an asset as large as a home is and was pure madness in my mind. Sure, a few ended up making a nice profit at the end either through appreciation or speculation, but many others were burdened with the threat of a fluid housing market potentially destroying their financial future.

Investors look to multiply the effectiveness of their investments. If they can get into an investment with no money down then the risk level many will assume will be much greater than the market can handle. We are seeing the affects of this now. If I can speculate on 5 homes with no money down and no appreciable assets as collateral and the investment goes south, I have not really been hurt. Even if I lied on the applications and committed mortgage fraud the chances of being prosecuted are very slim.

So I walk away from the investments and look for something new. But now the market has 5 homes that probably do not have the proper maintenance performed on them hitting the market putting pressure on inventory and price and that affects all those in the surrounding community. When and if these houses do sell, average pricing will be impacted potentially putting others upside down in their homes.

So closing the no money down loophole is great for the housing market as it will make those buying a home forced to have a stake in the transaction. Their will be the immediate pain of working through the false inventory out there, but once there is some appreciation the market will be much stronger and less volatile in the long run.

“If someone walks in today with an A-plus credit history and a $200,000 salary but no money for a down payment, I can’t help them anymore,” said Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn.
The company was notified by its lender earlier this month that the lender no longer will cover no-money-down loans.
In recent years, no-money-down mortgage loans have helped buyers, especially those new to the market, stretch their budgets and get into homes they might not otherwise have been able to afford. Four out of 10 first-time buyers used no-down-payment mortgages in 2005 and 2006, according to surveys by the National Association of Realtors. via the ContraCostaTimes.com (subscription required)

Connecticut Attorney General Richard Blumenthal is leading the charge in attempt to prosecute the real estate and mortgage professionals in the state who actively preyed on those less qualified to buy a home and pay for it. There is an underworld in real estate one can not deny. The recent cheap credit and lack of oversight has brought these low lifes to the surface as their greed was allowed to get the better of them.

Now, at least in Connecticut, these folks are getting flushed out. The real estate industry has it’s own crosses to bear as does most industries. The real shysters and hucksters that are out only to make a buck and could care less what the results the buyers and sellers experience are the ones that give the industry a bad name.

The RE.net, led of course by Bloodhound Blog, is talking about a super level organization to represent the best and most ethical of agents. That is all well and good, but if the National Association of Realtors enforced their own guidelines and ethical policies and investigated ethical lapses with the vigor they deserve to be, the organization would not be facing an uprising by their best and brightest.

Blumenthal said the prospective home buyers were lured to buy properties listed at inflated values, using mortgages with concealed costs they could not afford due to falsified incomes and assets. Many of the borrowers failed to find or keep renters and could not afford monthly mortgage or tax payments, Blumenthal said.

The state knows of three dozen or so borrowers in the alleged scam, which may have involved hundreds of thousands of dollars, he said. “These practices preyed on the most vulnerable citizens — many of them first-time unsophisticated low-income home buyers who spoke little or no English,” Blumenthal said. via the Courant.com

For the grand scale of the crime, Michael Schneider gets the notoriety. For the execution of 173 felony counts of real estate fraud he failed miserably. The real estate broker from Hillsborough, California committed the typical real estate fraud scams of selling homes to multiple buyers as investments, failing to pay mortgages on the properties, and played a ponzi scheme with the money. These days I could report someone facing serious jail time every day for these crimes.

What the interesting twist is that he committed these crimes to such a scale while working out of the most community in the country with the highest household income, Hillsborough. There is a symmetry to the scam though. If he had aimed to low these big earners would never have fallen for it, but instead using the cache of the Hillsborough address he reeled in nearly 43 million in investments while the scam was intact.

Michael Schneider, 44, pleaded no contest Tuesday to 173 felony counts, including elder financial abuse, embezzlement, grand theft, forgery and residential burglary, in a case that involved charges filed jointly by the district attorney’s offices of Santa Clara and Santa Cruz counties.
More than 60 people fell victim to Schneider, some of whom lost their life savings, Santa Clara County prosecutors said. Deputy District Attorney Dale Lohman called it one of the most prolific fraud cases she had ever seen. “I haven’t researched it by dollar amount, but it’s got to be way up there,” Lohman said.  via The San Francisco Gate