Florida Prosecution of Mortgage Frauds by Criminal Lawyer Ralph Behr: Part 5

Further exposition of Attorney Behr’s mortgage fraud prosecutions series:

18 U.S.C. § 1341 Frauds and swindles
&
18 U.S.C. § 1343 Fraud by wire, radio, or television
Also know as the mail and wire fraud statutes. These statutes explain any person “…having devised or intending to devise any scheme or…” ploy while making material misrepresentations in conjunction with the use of the United States Postal Service or the use of any electronic media format may be exposed to prosecution under these statutes.36
An example of both these statutes in action is outlined in the Seventh Federal Circuit case of United States v. Owens, 301 F.3d 521 (7th Cir. 2002). “A jury convicted real estate appraiser Reginald Owens of mail fraud and wire fraud for his part in a multi-million dollar real estate and mortgage fraud scheme.”37 The alleged “…scheme was a land “flip” scheme, which basically involved having people purchase distressed properties for cash and then immediately resell that same property at artificially-inflated prices.”38 One of the co-defendants, Brian Parr’s “…role in the scheme was to first identify the property he wanted to buy through realtors and by searching the Multiple Listing Services (“MLS”), a real estate computer database that showed properties for sale and the seller’s listing price.”39 While arranging for the proper contracts for purchase of these properties, “…Parr would prepare to sell the property at an artificially-inflated price to a second buyer.”40 These sales mostly happened at the same time; however there were instances when the subsequent sale was performed prior to the property being contracted with the first purchaser.41
Second possible buyers were lured in with offers of “…no money down and cash back at closing.”42 “The second buyers, however, typically did not have jobs or bank accounts and thus could not have normally qualified for a mortgage.”43 In avoidance of this potential problem, “…several other co-schemers, including loan officer Tamira Smyth, created false documents to submit to the lender institutions.”44
Besides false documents, the mortgage brokers additionally worked with individual appraisers to make certain the appraisals synched up with the contract price of the subsequent sale to exploit Parr’s profits.45 The appraisers utilized inflated the value of the properties by leaving out critical pieces of information from their appraisal reports and the MLS and “…by comparing the sale house involved in the flip transaction to houses that were far superior.”46 “Parr then used the profits from each transaction to pay his co-schemers.”47
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