As the year draws to a close (2007 that is) it seems that there is no vacation when it comes to indictments for those who have chosen a life that will being unpleasant consequences. Prison isn’t fun! There, in reality, is no amount of gain that is worth the cost. Soon many folks in Ohio will be finding that out as indictments turn into prosecutions and then into punishment. Let’s review.
Case One For Ohio:
A two-year investigation in the Akron, Ohio area charges 17 people and two companies with 147 counts related to mortgage and securities scams. Oh, and this is just the tip of the iceberg. More to come.
Below are excerts from an article found on Ohio.com- for the full report click on this link: (http://www.ohio.com/news/12695602.html)
Authorities paused Thursday to announce a 147-count indictment against 17 people and two Akron investment and mortgage companies alleging a web of predatory borrowing and securities scams that allegedly bilked investors, homeowners and lenders out of at least $16 million.
More charges are promised across the state as authorities try to attack one aspect of the foreclosure and mortgage fraud crisis facing Ohio.
Authorities say Evergreen Investment, Evergreen Homes and Carnation Banc had been involved in the alleged schemes since 2002.
Those named in the indictment include Evergreen President David Willan and Carnation Banc President Craig Conner.
Willan, 37, was indicted on charges ranging from engaging in a pattern of corrupt activity to aggravated theft to money laundering to mortgage fraud. He was being held in the Summit County Jail while awaiting an arraignment hearing.
Prosecutors said Willan sold more than 300 homes in two years. Currently, more than 40 percent are in foreclosure, resulting in $6 million in losses and neighborhoods riddled with vacant homes, prosecutors said.
In all, the investigation involved about 446 properties and as much as $10 million in securities fraud, prosecutors said.
In court Thursday, Conner pleaded guilty to charges of engaging in a pattern of corrupt activity and 21 counts of mortgage fraud, prosecutors said.
The schemes involved predatory borrowers, as opposed to predatory lending, authorities said.
”They are the financial criminals who overvalue homes, borrow money under false statements and sell securities backed by worthless second mortgages,” Summit County Sheriff Drew Alexander said. ”These crimes against our citizens can’t be ignored anymore than we can ignore vacant, abandoned houses that blight our neighborhoods.”
The investigation is ongoing and involves county authorities, Akron and Cuyahoga Falls police, the Ohio Attorney General’s Office and Ohio Department of Commerce.
Attorney General Marc Dann told re
porters that the scheme even touches on some state employee pension funds. He said the state is looking at bringing a civil case on behalf of the funds, which invested in companies that had purchased investment bonds connected to the fraud scheme.
Dann said the indictments and lawsuits will continue across the state, with hundreds being charged or sued in related and unrelated cases.
Authors of the article on Ohio.com are: Phil Trexler can be reached at 330-996-3717 or email@example.com. Rick Armon can be reached at 330-996-3569 or firstname.lastname@example.org. Beacon Journal staff writer Betty Lin-Fisher contributed to this report.
From an investigative standpoint, I can’t imagine how tedious this process has been. According to reports there were nearly 800,000 documents related to this case.
The process was complex. One scenario went like this. Buyer would find a home for $50,000 then offer the homeowner $60,000. If you were the seller you’d have to be pleased if not thrilled. The next step. The buyer conspires with an appraiser to inflate the value of the property to $125,000 (for example) and obtain a loan for the higher amount. Next…the buyer would pay the homeowner the amount agreed to ($60,000), provide a kickback to the appraiser and pocket the difference. Finally, the mortgage would be sold to another lender that was unaware of the fraud committed. Home then would sit vacant and eventually be foreclosed on. Fraud complete.
Another approach listed in the indictments is the use of “straw buyers” – in other words people who never intended to live in or use the home. The “straw buyer” would receive a kickback for allowing mortgages to be placed in their name.
In this scheme it is stated that there were more than 500 victims.
Case Two for Ohio:
5 people were indicted for mortgage fraud and ponzi schemes in Ohio. The charges were conspiracy to commit mail fraud, wire fraud, securities fraud, money laundering, mortgage fraud, and bank fraud – to name a few. The indictment charges that two of the five solicited investments that, in reality, did not exist. The program was a classic Ponzi scheme. The funds from some of the investors were used to pay “interest” to other investors to give the illusion of reality – when in fact it was not.
A Ponzi scheme is where one set of investors’ funds are used to pay supposed interest payments to other investors to encourage others to invest, or re-invest, and to keep investors from realizing that there are no investments and that they have been defrauded.
(Side note: Not proud of this, but that is in effect what I was convicted of in the early ’90’s and for which I served time in Federal prison) Today, I am a Senior Sales Executive in a public company and speak nationwide on Choices and the Truth About Consequences. http:www.chuckgallagher.com
The mortgage fraud part of the indictment related to the purchase of property using, yet once again, a “straw buyer”. The purchase price was inflated in order to make the purchase work at 100% financing and provide funds to pay for the fraud. False employment and asset information were provided to the bank and resulted in charges for bank fraud.
First, let’s say Ohio law enforcement has been busy. Every choice has a consequence. Based on the time and depth of the charges – it is clear that the consequences won’t be pleasant for these folks. Having been there myself, I can categorically state that prison is no fun. The price that these folks will pay will far outweigh the short-term benefit that they might have received from the money scammed. Perhaps those who read this will think twice about similar schemes or be able to better detect patterns of abuse.
If you have been the victim of a mortgage fraud or have been invited to participate in an investment that is too good to be true…please comment. We’d love to hear from you!
Business ethics speaker (see YouTube Demo Video) – Chuck Gallagher – signing off.