Miami Criminal Attorney Blog

A trio of defendants have pleaded guilty to federal criminal fraud charges in Miami in connection with a mortgage fraud scheme that resulted in the issue of more than $2.5 million in fraudulent loans, according to the U.S. Attorney's Office for the Southern District of Florida.

Our federal criminal defense lawyers in Miami provide experienced representation to clients facing fraud charges or other criminal allegations in federal court. As we continue to report on our Miami Criminal Attorney Blog, these cases are more frequently being prosecuted under federal mail fraud and wire fraud laws.

In this case, a mortgage broker, two loan processors and a straw buyer were implicated. The defendants lived in Pembroke Pines, Jupiter, Hollywood and North Lauderdale. Charges included making false statements on HUD documents and conspiracy to commit mail and wire fraud.

In other news, two hotel developers have pleaded not guilty to federal fraud charges in Fort Lauderdale after being accused of hiding more than $150 million from the Internal Revenue Services, according to Businessweek.

In this case, Mauricio Cohen Assor, 77 and his 46-year-old son, Leon Cohen Levy, face more than a decade in prison if convicted.

Both are set for trial on Sept. 7.

The men are accused of using shell companies to conceal ownership of $55 million in Miami Beach commercial properties, a $45 million investment portfolio, homes in New York and Florida and a fleet of luxury cars. They are also accused of failing to pay taxes on the earnings and assets.

Authorities allege the two men used numerous shell corporations to hid proceeds from the $33 million sale of the New York Flatotel in 2000. Lawyers for the men say they were employed by the companies and had no ownership stake.

The case is set for trial in the U.S. District Court for the Southern District of Florida.

Continue reading "Federal criminal wire fraud and mail fraud charges continue to be filed in Miami fraud schemes" »

A Hialeah jeweler and two Miami-Dade residents are facing additional charges in a $40 million Ponzi scheme, The Miami Herald reported.

The trio is accused of bank fraud and investment fraud in South Florida. Our Miami defense lawyers continue to report numerous cases in which business owners, real estate agents and investment managers are accused of fraud in the wake of the economic downturn. In some instances, they may be guilty of nothing more than making bad investments or sustaining heavy losses as the market collapsed.

In this case the 38-year-old jeweler, his 61-year-old accountant and a 29-year-old loan officer have been charged with conspiracy to commit bank fraud in a $12 million scheme, according to an indictment filed this week by the U.S. Attorney for the Southern District of Florida. As we reported last month on our Miami Criminal Attorney Blog, the jeweler has previously pleaded not guilty to charges accusing him of operating an investment scam that victimized 35 people.

Investigators now allege the three defendants also submitted false loan applications to Wachovia Bank, in order to obtain $12 million in commercial lines of credit. The bank suffered a $10 million loss.

The indictment alleges that the accounted submitted an application with false information about business income, assets and accounts receivable. The loan officer for the bank allegedly participated in the scam and assisted the accountant in winning approval. The jeweler also assisted in recruiting borrowers, according to the indictment.

The jeweler already faces fraud charges brought by the Securities and Exchange Commission. In exchange for investing in his jewelry business, he is accused of offering clients dividends of 18 percent to 36 percent, payable in monthly installments. Instead, investigators say he spent the money lavishly on luxury cars, clothes and fancy diners.

All three men face up to 30 years in prison if convicted. All three are also facing a civil lawsuit. The plaintiffs in that case allege they were duped into committing securities fraud; one victim reportedly lost $2 million.

Continue reading "Trio facing charges of bank fraud, investment fraud in Miami" »

A U.S. Supreme Court opinion could impact a number of real estate fraud convictions in South Florida, including a high-profile case out of Fort Myers that captivated Southwest Floridians for most of the last year.

As our Miami real estate fraud attorneys continue to report on our Miami Criminal Attorney Blog, authorities are in zealous pursuit of mortgage brokers, politicians, police officers and others accused of mortgage or real estate fraud in South Florida. The "honest services" law has been one of the primary vehicles of prosecution.

The News-Press reports that the court decision narrows the scope of the "honest services" law and criticized it as vague and ripe for abuse, saying that it subjected defendants to prosecution for minor transgressions and mistakes in the business and political world. The law has been used to convict a number of Florida mortgage brokers, politicians and others accused of fraud, including Samir Cabrera, who worked as a real estate broker in Fort Myers and Miami until being convicted of money laundering and wire fraud. He is currently serving a 10-year prison sentence. Enron CEO Jeffrey Skilling was also convicted based on honest services law.

There has been no bigger news in the Fort Myers/Naples area than the case of Cabrera, who managed a bar before hooking up with commercial real estate tycoon Frank D'Alessandro. Cabrera's wife, Jessica Stilwell, was the NBC-2 anchor. Her father, was manager of Lee County. Both were forced to resign their positions after Cabrera was charged of selling two tracts of land without disclosing he was part owner. He made $2.8 million on the deal. County Manager Don Stilwell denied any knowledge of wrongdoing. He had invested hundreds of thousands of dollars with his son-in-law. A county investigation cleared him of wrongdoing for failure to disclose his ownership to county commissioners. The longest-serving manager in county history, Stilwell, 70, was ultimately forced to resign for sending racy e-mails on his work computer.

This picture, taken by the Marco News, shows Cabrera and wife Jessica Stilwell leaving the Fort Myers courthouse during the lengthy trial.

Meanwhile, D'Alessandro, whose company was also being sued for marketing rental homes as investments for the wealthy, disappeared while kayaking off the New Jersey coast. Speculation was rampant that he was on the run until authorities found his body several days later.

Cabrera was convicted in October and is currently serving time in a Pensacola prison. His case is pending before the 11th District Court of Appeals. "We believe this is a very favorable ruling for Mr. Cabrera, and we intent to argue that in the appeal," said Federal Public Defender Russell Rosenthal.

The opinion, authored by Justice Ruth Bader Ginsburg, said prosecutors may still continue to seek honest services fraud convictions in cases where the defendant accepts bribes or kickbacks.

Continue reading "Honest Services decision could impact cases involving Miami mortgage fraud, investment fraud, political wrongdoing" »

A Miami exporter has pleaded guilty to federal charges of bank fraud, according to the South Florida Business Journal.

The 47-year-old owner of a Miami-based exporting company was convicted of defrauding the Export-Import bank of the United States out of more than $24 million. Federal prosecutors alleged that he was part of a ring that submitted false information to the bank to obtain loans between April 2003 and May 2009. These cases have become even more common since the economic downturn as authorities aggressively pursue those accused of falsifying loan documents to obtain credit during the boom years. Hiring a federal defense lawyer in Miami is critical to defending yourself against allegations of bank or investment fraud.

The Export-Import bank is the official export credit agency of the United States and issues loan insurance to U.S. banks on behalf of foreign companies for the purpose of purchasing U.S. goods. The defendant and co-conspirators apparently used a smaller amount of loan proceeds to purchase U.S. goods for foreign buyers than the amount they represented to the bank. He gave some of the remaining proceeds to borrowers in cash, commingled loan proceeds with personal money and transferred loan proceeds to other bank accounts controlled by co-conspirators, according to the plea agreement. In all, his company kept about $2.5 million of the borrowed money and he took about $170,000 for his own personal use.

He faces up to 15 years in prison and a $500,000 fine at his Sept. 13 sentencing. He has agreed to pay more than $2.7 million in forfeiture and to pay more than $12.5 million in restitution.

In April, a 55-year-old man pleaded guilty to charges that he conspired to defraud the bank out of $854,000 after receiving a loan based on false representations.

Continue reading "Miami defendant accused of federal bank fraud charges in import-export scam" »

Bail has been set at $1 million for a Hialeah jeweler accused of federal criminal charges in Miami in connection with a $40 million ponzi scheme. The 39-year-old man surrendered to authorities and appeared before a U.S. magistrate, where he pleaded not guilty to the charges. Authorities allege he operated an investment scam that victimized 35 individuals, the Miami Herald reported.

As we continue to report on our Miami Criminal Attorney Blog,ponzi scams and investment schemes are surfacing throughout South Florida and across the nation. In many cases, the downturn in the economy helped uncover the scams as plummeting property values and stock portfolios resulted in exposure. But, as authorities have grown more aggressive in prosecuting alleged investment scams, an increasing number of defendants are being unfairly targeted for making bad real estate or stock investments.

In this case, the U.S. Securities and Exchange Commission alleges that the defendant offered investors "no risk" loan agreements that promised annual returns to 18 to 120 percent. Investors thought the money was being used in his jewelry business or going to provide financing for pawnshops. Investigators allege he used fake diamonds to convince some investors that their money was safe.

In addition to six counts of securities fraud, the SEC has filed a lawsuit accusing him of breaking federal security laws. Authorities say he used the money on a $3.2 million home, $1 million of jewelry and lavish vacations.

As our Miami criminal defense lawyers have reported, a number of recent high-profile fraud cases have led to criminal charges in South Florida:

-The owner of a Miami computer company has been implicated in an investment fraud ring out of New York City. Click here for details.
-A man was sentenced to 50 years in prison in connection with a South Florida investment fraud scheme.
-Two Miami-area residents were sentenced to prison in connection with a $10 million South Florida real estate fraud scheme.
-A man was arrested on Florida computer fraud charges in connection with a mystery shopper scam.

Continue reading "South Florida investment fraud scams abound; jeweler accused of $40 million Ponzi scheme" »

The owner of a Miami Internet broadcasting company has been charged in an investment fraud scam that led to 13 arrests in Manhattan Wednesday, Business Week reported.

Those facing criminal charges in connection with investment fraud in Miami, or those victimized by investment scams, should contact an experienced law firm to discuss their rights. As we continue to report on our Miami Criminal Attorney Blog, more fraud cases are being exposed as a result of the economic downturn. And authorities are becoming more aggressive in accusing business executives of committing investment crimes.

The arrests, including an alleged member of the Bonanno organized crime family, followed a garment district raid on West 36th Street in Midtown Manhattan, where authorities say an illegal "boiler room" operation had been in operation for a decade. The operation, alternately called Powercom Energy Services Corp and Empire Energy Services Corp., solicited more than $12 million from investors. Money was solicited to purchase stock in Realcast Corp., a Miami-based computer broadcasting company, according to Business Week.

Boiler rooms typically involve high-pressure sales tactics, usually by telephone, to would-be investors. In this case, the owner of Realcast was arrested in Miami and also indicted on federal criminal charges, according to the Wall Street Journal.

Federal prosecutors contend many of the investors were elderly and were not able to check on the claims made by solicitors. Despite false claims made to investors during the last decade, the company has generated "minimal" revenue, most of which went to pay commissions to the Manhattan sales operation, according to authorities. The government alleges the Miami company paid a 50 percent commission on a $700,000 investment as recently as March.

The defendants are charged with conspiracy, securities fraud and wire and mail fraud. The charges carry up to 20 years in prison if convicted. The Miami man was scheduled to appear in federal court in Miami. The Wall Street Journal reported that the Miami defendant described himself in some company filings as a former employee of the Securities and Exchange Commission. The SEC declined to comment.

Realcast Corporation's website was not operational on Thursday.

Continue reading "Miami computer company implicated in federal investment fraud case" »

Scott Rothstein, the admitted mastermind of a $1.2 billion South Florida Ponzi scheme, has been sentenced to 50 years in federal prison after being convicted of fraud charges in Miami.

The deteriorating economy has forced many of these schemes to come to light, as plummeting stock values and real estate losses stemmed the flow of cash available to continue the scams. As we reported recently on our Miami Criminal Attorney Blog, more than $1.2 billion in claims have been filed against Rothstein's estate, which is valued at less than $500 million. Hiring an experienced Miami attorney is critical for South Florida victims seeking to recover losses in the wake of an investment scam. Additionally, as the government continues to aggressively pursue such cases, more and more defendants are finding themselves in legal trouble as a result of bad investments or soured real estate deals; in those cases, hiring an experienced Miami defense lawyer is vital to protecting your rights.

Known as the "Bernie Madoff of South Florida," Rothstein pleaded guilty in January to fraud and racketeering charges in connection with a scheme that duped investors into buying shares in the settlements of non-existent court cases, according to CNN.

Rothstein, 47, told potential investors they could buy the settlements of court cases at steep discounts in exchange for payment of a lump sum to clients who did not want to wait for their money. Sophisticated investors, including hedge fund managers and trust directors, were victimized as well as friends and other less sophisticated acquaintances of Rothstein's. The scheme collapsed in October when he ran out of money to pay investors. Authorities say he wired $16 million to an offshore bank account and fled to Morocco by private jet. He returned several weeks later to face the charges.

The Miami Herald reported that the judge slapped Rothstein with 10 more years than prosecutors had sought and two decades longer than the 30 years defense attorneys had requested.

He has surrendered millions of dollars in property, including cars, yachts and houses. But the sale of assets has fallen far short of the money owed to investors. CNN reports that more arrests are expects as the IRS and FBI investigation into the scam continues.

The Herald reported that Rothstein has cooperated with authorities in identifying members of organized crime and will enter the witness protection program. The chief operating officer at his former firm is scheduled to plead guilty this week to money-laundering conspiracy.

Continue reading "South Florida Ponzi scheme leads to 50-year prison sentence on fraud in racketeering charges" »

Former NFL player Warren Sapp is among those laying claim to the assets of Scott Rothstein, who has pleaded guilty to operating a $1.2 billion South Florida investment fraud scheme, the Associated Press reported.

Banks and tax collectors from Florida to Rhode Island are also among those seeking assets through a bankruptcy trustee in U.S. District Court. Rothstein's estate is valued at more than $469 million. Hiring a Miami investment fraud attorney is critical to protecting your rights in the wake of a financial scam. As this case illustrates, there are frequently more claims than assets and an experienced attorney can help fight for your rights. Hiring a Miami defense attorney experienced in representing clients facing financial fraud charges is equally critical to protecting your rights in the wake of a fraud allegation.

Thus far, 46 separate claims have been filed in this case, a list that is expected to grow larger by the end of August. Rothstein's assets include dozens of pieces of real estate, homes, business interests, luxury vehicles, yachts, jewelry and bank accounts.

But other entities are quickly filing claims that could prevent victims from liquidating the assets in an attempt to recover damages. Wachovia claims it owns a $2.75 million piece of commercial property in Pompano Beach and Rothstein's former business partner says he owns a New York condominium.

Tax collectors in Miami-Dade, Palm Beach and Narragansett, Rhode Island, are also demanding taxes owed on numerous Rothstein properties. And NFL great Warren Sapp claims he is owed $102,000. An Assistant U.S. Attorney said the federal government will seek to have most of the claims dismissed.

Assets will be forfeited and sold to the U.S. government. An auction is scheduled to sell 10 luxury vehicles, including a Bugatti Veyron, worth nearly $2 million, and an 87-foot yacht.

As this case illustrates, seeking a recovery as the victim of financial fraud in South Florida requires an advocate to fight on your behalf. Despite a $500 million estate, it appears few victims will recoup their losses. Conversely, those accused of financial fraud need aggressive representation to protect assets that should not rightfully be considered part of a fraud claim.

Rothstein fled to Morocco after the fraud charges surfaced in October. He pleaded guilty in January to five felony charges in connection with a Ponzi scheme that offered bogus investments with the promise of double-digit returns. He faces 100 years in prison at his sentencing on June 9.

Continue reading "Aggressive representation needed to recover losses, protect assets, in the wake of Miami financial fraud charges" »

The U.S. Department of Justice is concerned about the strain mandatory minimum sentences have put on the federal penitentiary system, according to Congressional testimony last week, Main Justice reported.

Mandatory minimum sentences are just one difference between state and federal crimes. A Miami criminal defense lawyer experienced in handling federal charges should always be called to represent anyone facing criminal charges in federal court. Mandatory minimum sentences often require harsh penalties for drug crimes and other federal crimes.

For example, there are more than 170 mandatory minimum sentences under federal law. And, while Congressional testimony did not reveal which sentences the government feels are unnecessary, authorities will seek to revise some of those sentencing laws.

But the debate over mandatory minimums also has broader implications: Federal prosecutors are concerned the strain placed on the system permits undue leniency for white collar crimes in Miami and other non-violent federal charges in South Florida and throughout the nation. Federal authorities also blamed the increase in real estate fraud and other bank fraud cases as a driver of the increasing federal prison population.

Meanwhile, a memo has been issued to federal prosecutors, giving them more flexibility in making decisions regarding charges or in recommending sentences for convicted criminals.

There is some concern the move will create a greater disparity between sentences for the same crime --if a prosecutor's opinion is largely responsible for a recommendation, two defendants convicted of the same crime could more frequently be sentenced to widely variant lengths of time behind bars.

While acknowledging that Congress was unlikely to take action regarding mandatory minimums, Jay Rorty of the American Civil Liberty Union, said the minimums "create excessive prosecutorial discretion, which is exercised in an arbitrary manner and used to coerce defendants into relinquishing their constitutional rights and punish defendants when they exercise those rights."

A representative of the Fraternal Order of Police testified in support of mandatory minimums while a representative of the American Bar Association, which represents trial lawyers, called mandatory minimums "the antithesis of rational sentencing policy."

Continue reading "Mandatory minimum sentences under attack; changes to federal guidelines could impact white collar crime" »

A 62-year-old Apopka man has been arrested on computer fraud charges in Florida for allegedly participating in a "mystery shopper" scam that targeted victims as far away as Colorado, the Steamboat Pilot reported.

As we reported earlier this year on our Miami Criminal Attorney Blog, about one-third of all U.S. computer crimes originate in Florida. Hiring a Miami defense attorney experienced in handling federal criminal charges and computer fraud charges is necessary to build a proper defense in computer crime cases involving victims in multiple states.

In this case, the defendant faces extradition to Colorado, where authorities allege he victimized a local resident as part of a scam that involved at least two dozen victims. Steamboat Springs police contend they followed a money trail that led to the defendant, who is accused of being a middle-man in a series of computer fraud scams across the country.

He is charged with racketeering, larceny, computer crime fraud, financial transaction device fraud, criminal impostor and possession of tools for forgery, according to the media account.

Police in Colorado began the investigation in September when a local woman reported she has been defrauded of $2,500 by a man claiming to represent a mystery shopper organization. He sent her a check and told her to keep some of the money for herself and to wire the rest of the money to the defendant. She complied, but when she went to cash a second check, her bank informed her that the first check was fraudulent. The victim was out the money she wired during the first transaction.

Police claim they utilized an "unusual number of search warrants" in determining that the money went to the defendant via a wire service. Investigators contend the defendant alternately admitted to the scam and claimed to be a victim himself during several telephone conversations with authorities.

A warrant claims he admitted to 7 to 9 transactions in which he kept 10 percent of the money for himself and wired the remaining funds to another party. Police report gathering information regarding 24 victims and 29 wire transfers, which suggest the defendant received $61,967 and sent $42,774 to other parties, mostly in South Africa.

Continue reading "Florida man charged in out-of-state computer fraud scam" »

Federal mortgage fraud convictions reached a record high last year, despite fewer cases being investigated, the Internal Revenue Service reported.

As we reported last week on our Miami Criminal Attorney Blog, Florida -- and particularly South Florida, including Miami, Fort Lauderdale and Fort Myers -- led the nation in mortgage fraud cases last year. With investigators placing increased emphasis on prosecuting mortgage fraud claims, seeking the advice of a qualified Miami criminal defense attorney is critical to protecting your rights.

Gone are the days when white-collar crime in Miami and elsewhere was viewed with tolerance. About 4 of 5 defendants convicted of real estate fraud are sentenced to prison; the average term is three years behind bars.

Why there were more criminal convictions, despite fewer cases, is a complex question. Authorities may be pushing stronger cases, juries may be better educated in the wake of several years of news regarding mortgage fraud (or just more weary and more likely to convict), and the conviction rate could be influenced by several years of backlogged cases reaching conclusion.

The most common types of Real Estate Fraud schemes included:

Property Flipping: Claims over property flipping are increasingly common, despite the fact that it is not illegal to buy low and sell high -- it is the very definition of good investing! However, allegations of fraud can arise when false statements were made to lenders.

Two Sets of Settlement Statements: One set is provided to the seller, accurately reflecting the selling price. Another set is given to a lender, showing an inflated price. After the loan is made, the excess proceeds are split among the conspirators.

Fraudulent Qualifications: Real estate agents who fabricate records to assist buyers in qualifying for a property.

In many faces, federal investigations result in money laundering charges in Miami and elsewhere as the government seeks to root out income hidden from the tax man. And, of course, the ever-popular tax evasion charges are often used when proof of other illegal activity is too hard to obtain.

Real Estate Fraud Statistics 2009 2008 2007
Investigations 336 349 337
Convictions 184 136 130
Average Prison Term 35 38 35

Continue reading "Miami real estate fraud charges resulting in prison time for white-collar defendants" »

Investors are working to determine whether bank fraud or fraudulent mortgages significantly contributed to the collapse of Colonial Bank but a new report pins at least part of the blame on the bank's risky bets on Florida real estate loans.

As our South Florida real estate fraud attorneys reported recently on our Miami Criminal Attorney Blog, the Miami area is second in the nation for the number of mortgage fraud cases. In the case of Colonial Bank, which was the sixth-largest bank failure in American history when it collapsed in August, authorities are investigating whether bank executives committed fraud, according to Alabama Live, where the bank was headquartered.

Bankers and other executives are increasingly being exposed to white-collar criminal charges amid accusations of fraud and other wrongdoing in the fallout of South Florida's real estate market. Victims of bank fraud or professionals who are being targeted by a criminal investigation should consult a Miami trial attorney experienced in real estate and bank fraud in South Florida.

Failure of Montgomery-based Colonial Bank is expected to cost the federal government $3.8 billion. BB&T Corp required most of the bank's assets and now operates branches throughout South Florida. The report found that Colonial focused on risky loans used to buy land and develop buildings in hot real estate markets in Florida, Georgia and Nevada and that it didn't adequately assess the risk.

"As the economy deteriorated, bank management was slow to recognize and effectively react to the bank's deteriorating condition," the FDIC wrote. The government has not indicated whether it will seek to recoup losses from the bank's founder and other managers and directors. As part of the investigation, regulators raided Colonial's mortgage division in Orlando and the offices of a defunct mortgage broker based in Ocala.

Continue reading "Government investigating bank fraud allegations in South Florida's Colonial Bank collapse" »

Authorities contend that 3 of every 10 U.S. computer crimes originated in Florida last year in cases where an arrest was made.

The number of Miami residents victimized by computer crimes continues to increase, even as state, local and federal governments continue to pour resources into the prosecution of white-collar computer crimes in Miami. And, as the focus on computer crimes continues to grow, so do the instances of wrongful arrest. In this series, the Miami defense attorneys at Barakat, Jacobs & Associates will look at eBay and computer auction fraud, computer intrusion and search and seizure of e-mails.

Just this week, Reuters News reported that one of the world's most notorious computer hackers, a 28-year-old college dropout from Miami, was sentenced to 20 years in prison after pleading guilty to charges accusing him of helping to run a global computer fraud ring that stole tens of millions of dollars in credit card numbers.

The cost of computer fraud crimes was $560 million in 2009, while the number of crimes has exploded, from fewer than 20,000 in 2000 to 336,655 last year, according to the Internet Crimes Complaint Center.

Nearly 30 percent of all suspected Internet crimes originated in Florida in 2009, more than anywhere in the nation except California. The federal government reports the top financial crimes online continue to be non-deliver/non-payment of merchandise, e-mail scams, identity theft, credit card fraud, auction fraud and purposeful damage of computers through malware, viruses or other attack.

Continue reading " Miami computer crimes, Internet fraud crimes, on the rise" »

Even now, in the depths of South Florida's real estate bust, instances of mortgage and appraisal fraud in South Florida continue to rise, according to statistics provided by the Federal Bureau of Investigation.

The schemes often involved inaccurate property valuations obtained from exaggerated or manipulated appraisals.

Last month, a Jacksonville appraiser was sentenced to four years in federal prison after he and a partner were convicted of purchasing about 55 houses through mortgage and appraisal fraud, the Examiner reported.

Authorities say he inflated the appraisals his partner used to support the purchase price. In that scheme, for example, they would agree to buy a house for $480,000 and then submit an inflated appraisal and obtain loans for $625,000, pocketing the difference.

The top states for mortgage fraud are California, Florida, Georgia, Illinois and Michigan. Additionally, the government reports the downward trend in the housing market through 2009 and 2010 will provide a favorable climate for a continued increase in mortgage fraud claims.

Miami ranks second nationwide (behind Los Angeles) in cases of suspected mortgage fraud, with 5,155 cases identified for prosecution in 2008.

Reports of suspected mortgage fraud increased 36 percent in 2008, to 63,713 complaints, compared to 46,717 complaints in 2007. More than 33,000 cases of mortgage fraud cases were reported during just the first three months of 2009, the latest time period for which statistics are currently available.

The FBI reports that mortgage fraud continues to be a low-risk, high-yield crime perpetrated by all parties, including mortgage brokers, lenders, buyers, sellers, appraisers, underwriters, accountants, real estate agents, land developers and builders.

But plummeting home values can also make appraisal fraud difficult to prove or can subject appraisers to unfair criminal or civil charges. Yesterday's $400,000 house really is today's $200,000 property.

The government defines mortgage fraud as "fraud for property," which typically involves a borrower misstating income to qualify for a loan, or "fraud for profit," which often involves elaborate schemes and multiple properties, straw buyers, inflated appraisals and other schemes aimed at diverting excess proceeds into the pockets of those involved.

Continue reading "Miami ranked second nationwide in mortgage fraud claims " »

A former police officer -- and son of Cape Coral's current police chief -- entered a plea deal last week as part of a $4.2 million mortgage fraud conspiracy, according to the Fort Myers News-Press.

The high-profile case is the latest in a string of arrests for mortgage fraud in South Florida since the real estate market collapsed in 2007.

Earlier this month, two Miami men were sentenced to 45 months in prison for obtaining two fraudulent loans totaling $1 million. The defendant's used the financial information of a mother-in-law to obtain the loans and used a home she owned as collateral, BNO News reported.

In the latest case out of Southwest Florida, the 35-year-old former police officer and four other defendants, including the brother of a Cape Coral police sergeant, pleaded guilty to a charge of conspiracy to commit bank and wire fraud and a count of money laundering. All 5 defendants face up to 30 years in prison at their upcoming sentencing.

The plea agreement contends that three of the defendants, including the police chief's son, made more than $300,000 each, while the remaining men made between $65,000 and $150,000.

According to court documents, two of the men ran a brokerage firm that invested in real estate and flipped properties. In a classic "straw buyers" fraud scheme, the men found houses for sale by owner and used third-party buyers to purchase the properties at inflated prices. The defendant's paid the seller and pocketed the additional money loaned by banks to purchase the properties.

The buyers provided false or inflated financial information on loan applications. Several payments would be made and then the property would be allowed to go into foreclosure.

Continue reading "South Florida mortgage fraud scheme involves police chief's son" »