Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

Al Lewis of the Wall Street Journal's MarketWatch reports that mortgage fraud is surprisingly on the rise despite the current weakness in the housing market. Mr. Lewis cites the FBI's report on mortgage fraud for 2010, which reports that mortgage brokers, appraisers, underwriters, accountants, real-estate agents, settlement attorneys, land developers, investors, builders, lenders, and bank and trust account representatives continue to utilize fraudulent schemes to defraud lenders, from inflating appraisals and fabricating income statements to recruiting straw buyers. As a result of the depressed housing market, inventive would-be felons have also apparently developed scams involving short sales, loan modifications, and firms offering relief from foreclosures.

The report states that mortgage fraud cases increased 12% in 2010 and that the majority of cases arose in California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Maryland, New Jersey and, of course, Georgia. The Bureau claims that at least $10 billion in loans were advanced on fraudulent mortgage applications in 2010.

Image source: travelpod.com

For exceptional representation in Federal or State, criminal or civil matters, call Gillen Withers & Lake LLC (912) 447-8400 Savannah, or (404) 842-9700 Atlanta. Please visit our new website gwllaw.com.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

As reported in the Charlotte Observer, Michael Rand, former Chief Accounting Officer for Beazer Homes USA and a resident of Alpharetta, Georgia, has been indicted in the U.S. District Court for the Western District of North Carolina on 11 counts, including securities fraud, witness tampering and making false statements. Rand is alleged to have directed a conspiracy to manipulate Beazer's books, achieve earnings targets, and deceive the company's auditors.

Specifically, the indictment alleges that, from 2005 to 2007, Rand entered into an agreement with another company to allow Beazer to get revenue from purported sales of model homes, and that he and others created a false set of books to understate income when business was doing well, and "smoothing" income when business became tighter. Beazer terminated Rand in June of 2007 for allegedly destroying documents during an internal investigation.

Federal authorities began investigating Beazer in 2007 after the Charlotte Observer ran a series that claimed that Beazer arranged larger loans than some customers could afford and violated federal lending rules, leading to high foreclosure rates in certain communities. Prosecutors filed mortgage fraud and accounting fraud charges against Beazer in July of 2009, and the company entered into a deferred prosecution agreement in which it agreed to pay up to $50 million. Beazer was also the defendant in a class action lawsuit over lending practices, which it settled in 2009 for $30.5 million. The company stopped mortgage lending in 2008. Beazer has reported 1,643 home closing in the third quarter of this year, as well as losses of $27.6 million.

A detention hearing for Rand is scheduled for Friday. Rand is also the subject of a lawsuit filed in July of 2009 by the Securities and Exchange Commission in the Northern District of Georgia.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

     The decline in the housing market has been accompanied by a huge increase in the area of “foreclosure rescue” fraud, as reported by the Atlanta Business Chronicle. Given the slowdown in the mortgage market and the rise in foreclosures, unscrupulous types have found new areas for fraud. Although foreclosure rescue fraud may take many forms, in its simplest manifestation, companies or consultants seek out homeowners facing foreclosure and offer to help them save their homes for a fee. According to Bill Brennan, Director of the Atlanta Legal Aid Society’s Home Defense Project, homeowners send $800 or $900 to the out-of-state companies which take the money and do nothing. Another form of the scheme involves consultants who convince homeowners voluntarily surrender the titles to their homes to them, and then walk away with all the equity in the home. The companies and consultants review court foreclosure lists and then target their victims through telemarketing and other means.

     States are responding to the rise of foreclosure rescue fraud by passing laws prohibiting foreclosure rescue fraud and giving victims recourse. California and Florida, which have the highest numbers of foreclosures in the nation, have already enacted laws. 19 other states, including Georgia, have introduced bills this year regarding the practice. Georgia’s bill, sponsored by State Senator Gail Davenport of Jonesboro, contains a series of restrictions on foreclosure rescue fraud, including requiring any rescuer obtaining a home through foreclosure to pay the owner at least 82% of the fair market value of the home, and allowing homeowners to obtain treble damages.

     Foreclosures in the metropolitan Atlanta area are up 23% from spring of 2007. Fulton, DeKalb and Gwinnett lead the area in the number of monthly foreclosures.

• Email This
• Print
• Comments
• Trackbacks
• Share Link