Friday, March 16, 2007

Ten Defendants Convicted in Mortgage Fraud Scheme

A jury in the Northern District of Georgia returned guilty verdicts against ten defendants accused of a mortgage fraud scheme that involved 50 houses and 250 condominiums in the Atlanta area.  The lead defendant, Phillip Hill, operated through his company, Pinnacle Development Property, in a series of transactions involving inflated appraisals and straw borrowers that led to charges of conspiracy, mail and wire fraud, and money laundering.  According to a press release issued by the U.S. Attorney's Office (here):

Each property was sold at an inflated price to a “straw purchaser” who applied for a mortgage loan based upon the inflated price. Such a fraudulent transaction is called a mortgage “flip.” The straw purchasers who participated in these mortgage flips were paid a kick-back out of the excess loan proceeds for the use of their name and credit. The victim-lenders granted the loans based upon numerous false representations and documents regarding the credit qualifications of the straw purchaser, as well as false representations that the straw purchaser had paid a down payment, would reside in the home, and would be responsible for the loan payment. In addition, the lenders were induced to make the loans based on fraudulently inflated appraisals. Some of the properties were “flipped” more than one time.

The nine other defendants were released on bail while they await sentencing, but the court ordered Hill to be held because he posed a flight risk due to the lengthy sentence he faces from a scheme that caused $41 million in losses.  Two co-defendants were acquitted at the close of the evidence, and two more await trial.  An Atlanta Journal-Constitution article (here) discusses the convictions. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2007/03/ten_defendants_.html

Fraud, Prosecutions, Verdict | Permalink

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