Fraudulent Appraisals Earns Georgia Man Time In Prison – Comments by Business Ethics Expert Chuck Gallagher

A Decatur, Georgia man – Darryl L. Cooper, age 27, was sentenced to one year and six months for a mortgage lender fraud scheme. Cooper created fraudulent appraisals reflecting completed construction for homes that were incomplete.

Beyond his 18 month sentence, he will have three years of supervised release and must pay restitution of $4,720,500. That’s a big ole number. However, his active sentence was reduced due to his cooperation in the investigation.

Jeffrey Alan Teague was a builder/coconspirator. Teague was sentenced to 15 years 8 months in prison and ordered to pay over $7,800,000 in restitution. The mortgage fraud blog reports:

According to information presented in court, Cooper was recruited by coconspirator/builder Teague of ”The Pacific Group, Inc.,” d/b/a ”Value Homes Ltd.,” to prepare fraudulent appraisals reflecting photographs and $5 million in appraisal valuations for 15 completed houses in the Greenleaf Subdivision of Forsyth County, when Teague had not completed the construction of these homes. A California lender relied on Cooper‘s fraudulent appraisals which reflected completed construction to make $4.7 million in mortgage loans secured by these properties, which in fact had no value whatsoever. Many of the borrower/purchasers from California, New York and Florida also relied on the Cooper appraisals, rather than inspecting the properties before closing on their loans.

United States Attorney David E. Nahmias said of the case, “This case highlights the problems created by mortgage fraud in which the appraiser conspired with the builder to misrepresent that construction on homes was complete, compounded by out-of-state ‘investors’ who sign for loans without inspecting the properties. The partially built houses in this case may be subject to condemnation, as the portions completed were not built to code, leaving mortgage lenders with little security for their loans and ‘investors’ with nothing to resell, and neighborhoods full of vacant and uninhabitable houses.”

Every choice has a consequence. According to the FBI collusion is one of the key factors in mortgage fraud and in this case it cost both of them.

Keep in mind that part of the guilty plea was conspiracy. While I’m not an attorney, therefore my characterization might be lame, but conspiracy is easy to prove as it is the intent to commit the crime. How many times do you seen guilty verdicts when conspiracy is involved? Plenty.

Chuck Gallagher - The Ethics Expert

As a business ethics speaker, I often speak to financial institutions on fraud – and these days – mortgage fraud is the hot topic.  To view my demo video click here:  youtube
Question:

Have you ever been a victim of mortgage fraud or known someone who committed mortgage fraud? Perhaps you’d be interested in sharing some of that experience.

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