David Saks: Real Estate Agent, Joseph Bowen Brown, Admits Cash Back Scheme in Phoenix

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Real Estate Agent, Joseph Bowen Brown, Admits Cash Back Scheme in Phoenix

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.

Thanks to Rachel Dollar - Mortgage Fraud Blog 




David Saks



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Comment balloon 4 commentsDavid Saks • June 29 2011 01:38AM

Comments

David, that's amazing! Thanks for posting this. There was a similar scheme in my market area around the same time. So many lost their homes because of it. The agents were prosecuted, lost their real estate licenses and went to jail.

Posted by Pamela Seley, Residential Real Estate Agent serving SW RivCo CA (West Coast Realty Division) over 8 years ago

It's a desperate, tragic crime story that seems to repeat itself every day, every week somewhere in our struggling nation, Pamela.

Posted by David Saks ((retired)) over 8 years ago
Some people will start with a lndeer, others a Realtor. Depends on you. Call a Realtor, tell them you're a 1st time buyer and ask them if they have a couple of lndeers they like to work with. Most of us do, they know what to ask for, what info they need upfront and will not usually say, go find a house and I'll tell you if you can get it. ALWAYS, get at least 2 lndeers numbers, different lndeers have different programs, experience and know how. Once you have been pre-approved (make sure you really are, ie: they ran your credit, have your paystubs, bank statements, last 2 years taxes and W-2 s) start looking, be realistic, even in this market a 2500 square foot home on an acre with an in-ground pool for $125,000 probably won't happen. Check the internet, check the neighborhoods where friends and family live, drive around, check the commute to work (it may only be 15 miles from work, but may take 45 minutes).Most Realtors have access to the MLS (Multiple Listing Service), meaning we can show every listing out there, no matter what agency it belongs to. Find an agent you are comfortable with, it's important, you need them to understand what's important to you. When it comes time to close you can choose your own Attorney, Closing Agency etc Again, most of us have companies we work with frequently, they are responsible, respectful and get the job done, just ask.Home Inspectors, you'll need a good one, ask for a minimum of 3 recommendations, call them all and ask questions, what they look for, what they charge, do they offer a warranty if you find something they missed after move-in. You should really be at the inspection, the appraisal too if possible, it's interesting and it's going to be yours.If the home is on a septic system, have it checked.The appraiser will be an "agent" of the bank, you don't get to choose.Call the electric, gas and water companies, ask about the last 12 months bills. You'll have a better idea as to what to expect. If there is a Home Owner's Association (HOA) ask what the monthly fee is, if there is a transfer fee and how much, is it paid yearly, quarterly etc Find out about the restrictions, can you put up a fence, what kind, can you plant a tree, shrubs, park 6 cars in your driveway? Outside of the purchase price you'll pay:inspection, appraisal, document fees for the closing, escrow taxes & insurance, title recording fees, loan origination fees for the lndeer, I forgot some but yo get the jist. Be prepared, your lndeer should be able to give you a Good Faith Estimate. Happy Hunting
Posted by Reismarys over 7 years ago
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Posted by nmsblb over 7 years ago

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