Assistant District Attorney for Harris County Texas (Houston) said, “We don’t want Houston to become the foreclosure capital of the world.” Yet, his office charged 37 people with an alleged scam to commit mortgage fraud – a fraud worth $5.6 million authorities state.
According to a report from the Associated Press:
The charges, contained in indictments unsealed Thursday, follow a yearslong investigation by the Harris County District Attorney’s Office and the U.S. Secret Service. Police said 12 of the suspects have been jailed.
The scheme involved players including buyers, mortgage brokers and construction company owners. It’s similar to other scams uncovered in Harris County recently, said Lester Blizzard, assistant district attorney.
The alleged ringleaders, Obbie Toliver Sr. and Joyce Toliver, were being held without bail in the Harris County jail. They are charged with theft, money laundering and organized crime, Blizzard said.
The Tolivers, a married couple with at least one child, used three businesses over the past several years to submit false loan documents, artificially inflate appraisal values and launder money, according to an affidavit attached to a warrant to search the Tolivers’ home. The businesses named in the warrant were Magic Processing, Magic Financial Services of Houston and Your Processing Center.
Well…these folks were from Houston and if proven guilty won’t be spending much time enjoying the fruits of their labor. In fact, many people who unknowingly fell prey to their scheme will suffer long term consequences. In the case above, the Tolivers used straw buyers with a good credit score to effect their fraud. Again according to the Associate Press:
Officials said the scheme involved a recruiter finding a “straw man” with a good credit score who agrees to buy a house as an investment. The buyer is told he’s getting involved in a real estate investment in which the house will be resold at a profit or leased on a rent-to-own basis.
The recruiter, colluding with others in the scheme, gets the house appraised at an artificially high value. He then gets the loan approved using fraudulent documents overestimating the straw buyer’s income, officials said.
When the home purchase is closed, the straw buyer is paid off for the use of their credit. The other parties also take their cut, with the recruiter taking the most.
After the house sits vacant for months with no one paying the mortgage, the bank forecloses and the straw buyer’s credit is ruined, officials said.
Every choice has a consequence. As a business ethics speaker, I talk with groups around the country on that very fact…outlining the truth about consequences. There are certain facts that seem to follow most of the frauds I see:
- There are three things that generally become part of a fraud: Need – Opportunity – Rationalization
- Most times when a fraud is perpetrated, if there is no immediate consequence (like getting caught) it will esclate
- The short term benefits from the fraud (especially if financial) can be quite addictive and lead one to want more
- There is always a day when one must face the consequences of one’s actions
Likely the most significant outcome is – the consequence is far greater (especially is the consequence relates to prison) than any enjoyment that might have been gained from the fraud.
The Tolivers, if convicted, will perhaps spend the rest of their lives in prison, they will not have the joy of rearing their child, they will not have the pleasure of spending their married lives together, and they will leave a shattered legacy of fraud behind them that will likely overshadow any prior good that they might have accomplished.
As a business ethics speaker, I ask folks often – is the price you might pay for a fraud committed worth it? Having been there myself…and speaking for myself…the answer is a resounding – NO!
If you’d like to receive my free Ethics Ezine… go to http://www.chuckgallagher.com/about.html and fill in the form. I’d love for you to receive this free material where we talk about the truth about consequences.