Tag Archives: fraud


Florida AG Accuses Clearwater Firms of Fraud in Property Deals

Fraud

Attorney General Pam Bondi filed a complaint against two Clearwater businesses and their president, alleging the companies defrauded consumers out of thousands of dollars in a land buying scheme.

According to the complaint, Property Solutions International Corp., Premier 1 Property Inc. and Marvin Scott promised consumers they could sell their property for many times the value of the land.

The defendants, who also conducted business using the names Coast to Coast Land and FSBO Property Solutions, charged upfront fees on average of $2,250 for brokering the deals, sometimes promising to refund most of the money, but rarely following through on those promises, a statement said.

State records list Scott as president of Property Solutions International in Clearwater. He’s also listed as president of Premier 1 at the same Clearwater address, although Premier 1 was administratively dissolved in 2013 after not filing an annual report, the Division of Corporations said.

The complaint seeks restitution for 34 complainants who paid more than $70,000 to Scott and the two businesses.

Source: www.bizjournals.com


Freddie Mac Lists Steps To Help Distressed Borrowers Avoid Foreclosure Relief Scams

Scam

Freddie Mac issued a list of “red flags” in a blog entry Monday for distressed borrowers seeking help with their mortgage to watch out for in order to avoid fraud.

Citing a Detroit Free Press story from April about Anthony Carta, who was sentenced to 30 to 99 years in prison for perpetrating a “faith-based” foreclosure relief scam in which he promised to help distressed borrowers avoid foreclosure in exchange for an up-front fee. Carta marketed the alleged foreclosure relief services of his company, Freedom by Faith Ministries, through various unwitting Christian channels from 2009 and 2013 and collected money but did not provide any of the promised services. For his part in the scam, Carta was ordered to pay $400,000 in restitution to more than 300 victims.

On the blog, Freddie Mac points out the number of recent mortgage relief or foreclosure relief scams that were perpetrated by exploiting the members of a particular community.

“The idea behind ‘affinity fraud’ is to exploit the baseline trust that generally exists within an ‘affinity group’ – i.e. a group defined by a common heritage, language, ethnicity, workplace, or circle of friends,” Freddie Mac wrote. “What happened in Detroit is a sad reminder that no group is inherently safe from fraudsters, including devout and religious people.”

One of the steps Freddie Mac lists for borrowers to take in order to avoid being the victim of a scam is, first and foremost, calling your servicer. The borrower’s servicer is the only one who can modify the mortgage or finalize a loss mitigation plan – anyone other than the servicer who professes the ability to do so is a scammer, especially if they require the payment of an upfront fee.

Second, outside of your servicer, borrowers can receive reliable advice by seeking free assistance from a HUD-approved housing counselor. Freddie Mac also says on the blog post that anyone who promises to pay the mortgage and rent the house back to the borrower in exchange for the title to the house should raise an immediate red flag. The GSE also warns borrowers against signing documents with errors or blank spaces, documents they don’t understand, or documents that transfer the title of the home – since genuine mortgage workouts or home retention solutions will never require the title of a home to be transferred.

Freddie Mac encourages anyone who suspects fraud to report it by calling (800) 4FRAUD8 or emailing mortgage_fraud_reporting@freddiemac.com.

Source: www.dsnews.com


Jury convicts exec in $3 billion mortgage fraud case One of the most significant prosecutions to arise from U.S. financial crisis

ALEXANDRIA, Virginia — A jury on Tuesday convicted the majority owner of what had been one of America’s largest mortgage companies on all 14 counts in a $2.9 billion fraud trial that officials have said is one of the most significant prosecutions to arise from the U.S. financial crisis.

Prosecutors said Lee Farkas led a fraud scheme of staggering proportions for roughly eight years as chairman of Florida-based Taylor Bean & Whitaker. The fraud not only caused the company’s 2009 collapse and put its 2,000 employees out of work, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in U.S. history.

The jury returned its verdict late Tuesday after more than a full day of deliberations.

Colonial and two other major banks — Deutsche Bank and BNP Paribas — were collectively cheated out of nearly $3 billion, prosecutors estimated. Farkas and his cohorts — six of whom entered guilty pleas to related charges and testified against him at the two-week trial in U.S. District Court — also tried to fraudulently obtain more than $500 million in taxpayer-funded relief from the government’s bank bailout program, the Troubled Asset Relief Program (TARP).

While TARP at one point gave conditional approval to a payment of roughly $550 million, ultimately neither Taylor Bean nor Colonial received any TARP money, and investigators from that office, along with the FBI and other agencies, helped uncover the fraud.

Neil Barofsky, who recently resigned as TARP’s special inspector general, has called the Farkas case “the most significant criminal prosecution to date rising out of the financial crisis.”

In a conference call Tuesday evening with reporters, the Justice Department’s criminal division chief, Lanny Breuer, said Farkas was “one of the masterminds in one of the largest bank frauds in history” and that his misconduct “poured fuel on the fire of the financial crisis.”

“TBW was a major, major player in this industry,” perhaps the second largest in the country depending on how it is measured, Breuer said.

Farkas testified in his own defense at the trial and claimed he did nothing wrong. He claimed he was unfamiliar with details or knowledge of many aspects of the various fraud schemes, testimony prosecutors derided as incredible in their closing arguments.

Farkas’ lawyer, Bruce Rogow, said the six executives at Colonial and Taylor Bean who struck plea deals skewed their testimony to bolster the government’s case in the hope of receiving lighter prison sentences for their cooperation. Rogow said Farkas and everyone else at Taylor Bean was working honestly and ethically to get control of its finances and perhaps could have done the job if the government hadn’t essentially shut the company down when it raided company headquarters in 2009.

Rogow said late Tuesday he was disappointed in the verdict and plans to appeal.

“I had hoped the jury would have accepted our argument that the six people who pled guilty did so not because they felt they were guilty but because they wanted to minimize the sentences that the government threatened them with,” Rogow said.

U.S. District Judge Leonie Brinkema ordered marshals to take Farkas into custody immediately following the verdict, a relatively unusual step since most defendants are allowed to remain free until they are formally sentenced. Farkas will be sentenced July 1 and potentially could spend the rest of his life in prison.

According to prosecutors, the fraud began in 2002, when Taylor Bean overdrew its main account with Colonial by several million dollars. Mid-level executives at Colonial agreed to transfer money into Taylor Bean’s accounts at the end of each day to avoid generating overdraft notices, a process known as “sweeping.

As the hole grew to well over $100 million, Taylor Bean and a handful of Colonial executives concocted a scheme in which Taylor Bean sold hundreds of millions in worthless mortgages to Colonial, mortgages that had already been sold to other investors. More than $1 billion in such phony mortgages were eventually sold to Colonial, which listed them on its books and on its quarterly reports as legitimate assets, prosecutors alleged.

In a related scheme, Taylor Bean created a subsidiary called Ocala Funding that sold commercial paper — essentially glorified IOUs — to banks including Deutsche Bank and BNP Paribas. But prosecutors said the collateral that supposedly backed that commercial paper was worthless, and when Taylor Bean collapsed in 2009, the two banks lost roughly $1.5 billion.

Prosecutors said Farkas was motivated by greed and a lavish lifestyle that included a private jet, a seaplane, numerous houses including a home on Key West that he paid servants to hand wash with a sponge to prevent salt damage, a collection of several dozen classic cars and an executive dining room at company headquarters that served pheasant and caviar.

Farkas, 58, was charged with 14 counts of bank fraud, wire fraud, securities fraud and conspiracy.

Trial testimony revealed that the bankers at Colonial who worked with Farkas felt trapped as the hole in Taylor Bean’s accounts grew exponentially. Cathie Kissick, a vice president at Colonial who did not tell her superiors about the vast majority of Taylor Bean’s problems, testified that she had little leverage over Farkas because of the trouble she would be in if the size of the hole in Taylor Bean’s accounts was discovered.

Farkas exploited that leverage, telling a colleague: “If I owe you $100, I have a problem. If I owe you $1 million, you have a problem.”

This article is from Real Estate on MSNBC.COM