South Florida Criminal Defense Lawyer Blog is proud to present the next installment of Attorney Behr’s mortgage fraud prosecutions series:
18 U.S.C. §1344 Bank Fraud
Persons who knowingly executes or makes an attempt to execute a scheme or ploy to “…defraud a financial institution; or to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution by means of false or fraudulent pretenses, representations, or promises…” may be convicted under this statute.65
In United States v. Walsh, 75 F.3d 1 (1st Cir. 1996), the defendant was under indictment for a scheme allegedly carried out “…by directing his employees to obtain 29 specific loans through the use of deceptions so that customers could purchase condominiums from Walsh and his associates.”66 The defendant along with other investors “…purchased apartment buildings or complexes, converted the property into condominiums, and sold the condominiums to customers, using the unit sales to pay off the acquisition financing.67 The defendant also usually served as a trustee representative and legal counsel for a trust set up to acquire the buildings.68 “During 1986, sales of units in one of the projects started to fall behind schedule and the trust began to have difficulty repaying its acquisition loan.”69 The defendant subsequently discovered a bank “…made mortgage loans available rapidly-with no verification of income, assets or down payments-but the loans required a twenty percent down payment and secondary financing was prohibited.”70
Along with the first failing projects, others followed suit and the defendant instructed his employees to arrange loans “…for unit purchasers and to falsify documents submitted to…” the bank “…to conceal the existence of secondary financing (and in some cases third mortgages as well).”71 Loans were eventually defaulted on and the bank “…incurred substantial losses.”72
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