Condo Fraud – An amazing case study
I was reading an article in the May/June 2015 edition of Fraud Magazine that I have to share with you. According to court documents with the United States Department of Justice there was a scheme that was orchestrated by several individuals in Nevada.
The scheme went like this. The group of criminals (most have been convicted but some are still alleged criminals) would identify condo buildings that had defects, then use straw borrowers with down payments provided by the group to purchase a unit in the building. Next, they would get that unit owner onto the board, often through deceitful tactics, some of which went through the U.S. mail (mail fraud).
The new board member(s) would then manipulate the board to award contracts to the ringleader’s construction company as well as a co-conspirator’s law firm. This was done with a total of 37 different units, of which 33 went into foreclosure. It was a complicated scheme over 6 years, but one that resulted in millions of dollars in fraud being committed.
And millions of dollars in restitution was ordered. One defendant, found guilty in the scheme, was ordered to pay over $240,000 in restitution to clients and victims, $28,000 in restitution to the IRS and $19 million in restitution to the Home Owner’s Association victims (similar to our Condo Corp). In addition he received over 6 years in prison.
In all, there have been over 9 convictions, with potentially more to come.
I researched this some more and read the court docket. You can view the actual court docket of this mortgage fraud here at the Department of Justice’s website. Just when you thought you’d heard of every type of real estate and mortgage related fraud, up pops another one. Simply amazing (in a bad way)…
In the industry’s mortgage brokering sector he is a licensed mortgage broker and has been a partner at a successful mortgage brokerage, manager at two national brokerages, principal broker at a commercial brokerage, founder of a mortgage investment corporation, and is owner and principal broker of his own boutique brokerage.
As an educator, Mr. White has been educating the mortgage industry since 1996.During his 14 years at Seneca College he was a professor and program coordinator and is currently President of the Real Estate and Mortgage Institute of Canada Inc. (REMIC).Mr. White has developed several courses for Seneca College, including the first mortgage broker education program in Ontario,as well as the mortgage agent course.He has written two textbooks used in the mortgage industry and by over 20 Ontario colleges with over twenty thousand copies in print, in addition to several business focused books and e-books. He has instructed over fifteen thousand students and in 2003 won the Excellence Award for teaching and leadership excellence at Seneca College.He can be contacted at firstname.lastname@example.org