Real Estate Agent Admits Cash Back Scheme
Joseph Bowen Brown, 30, pleaded guilty in federal court conspiracy to commit wire fraud in a mortgage fraud scheme based in Phoenix, Arizona. Five others have entered guilty pleas in the same scheme and are awaiting sentencing.
As previously reported by Mortgage Fraud Blog, and as confirmed by his guilty plea, Brown, as a principal of The Solid Group, a local real estate firm that has since collapsed, orchestrated illegal "cash back" mortgage sales on homes in the Phoenix area. From mid-2005 through mid-2007, he and others at The Solid Group purchased properties at or below market value and re-sold them based on inflated appraisals. They used some of the profits to provide cash kickbacks to the buyers and failing to disclose those cash payments to the mortgage lenders. Brown and his co-conspirators then pocketed the difference. Many of the buyers were vastly unqualified for the mortgage loans and only obtained them because of false statements concerning income, employment, and assets made on the loan applications.
In total, 49 properties were involved in the scheme, and all of the properties have gone into foreclosure. The scheme resulted in nearly $10 million in losses to the mortgage lenders. Brown admitted in his plea agreement that he and his co-conspirators pocketed almost $2.5 million in the deals.
A conviction for a single count of conspiracy to commit wire fraud is punishable by a maximum fine of $1,000,000, a maximum term of imprisonment of 30 years, or both, and a term of supervised release of five years. In determining an actual sentence, the federal district court judge will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.
The case against Brown and his co-conspirators is based on an investigation conducted by the Internal Revenue Service's Criminal Investigations Division.
The investigation in this case was conducted by the Internal Revenue Service, Criminal Investigations Division. The prosecution is being handled by Kevin M. Rapp and Monica B. Klapper, Assistant U.S. Attorneys, District of Arizona, Phoenix.
"This is yet another reminder of the damage that mortgage fraud has caused to our community," said U.S. Attorney Dennis K. Burke. "The mortgage crisis wasn't just the result of an economic downturn. It was made larger and more painful for everybody by criminals out to make a fraudulent profit."
"With a $10 million dollar loss to lenders and 49 properties in foreclosure, we are once again reminded of the economic devastation that mortgage fraud wreaks on communities," said Dawn Mertz, Special Agent In Charge, Phoenix Field Office, Internal Revenue Service, Criminal Investigation. "IRS will continue to pursue the prosecution of those individuals that profited at the expense of others."
This case is one in a series of recent successful federal mortgage fraud prosecutions in Arizona. Many of the prosecutions were the result of a multi-agency initiative called "Operation Stolen Dreams," in which dozens of defendants were indicted in the summer of 2010. Brown's guilty plea is the 28th conviction obtained as a result of this effort.