Property Flippers Charged with Mortgage Fraud
Raymond Paul Morris, 51, South Weber, Utah, was arrested on an 18-count indictment containing wire fraud, bank fraud and conspiracy charges.
According to the indictment, Morris was involved in a sophisticated, multimillion-dollar mortgage fraud scheme along with co-conspirators Joyce, and Hurd. A single count was filed against Hurd in the Southern District of West Virginia, charging him with conspiracy to commit wire fraud and bank fraud. Hurd was charged in the Eastern District of California with one count of mail fraud linked to 20 properties in Modesto and Stanislaus Counties, California.
According to court documents, the mortgage fraud scheme was based on properties in a West Virginia subdivision and involved illegal property "flipping" to out-of-state borrowers at inflated prices using Hurd's company "The Gift Program" or "Advanced Capital Services."
The mortgage fraud plot was initiated by the conspirators using the following process:
· A sales price at or near the then-current market value is negotiated with a homeowner, then they would agree to a fictitious sales price that was substantial higher;
· False and inflated appraisals of the homes were presented to members of Morris's real estate investment club in Utah, claiming that the properties were significantly undervalued and could be "flipped" again for a quick profit. He claimed the purchase was a "no risk" proposition because they would have to put no money down and be given cash back at closing to make the initial mortgage payments while the property was marketed on their behalf at an even higher price;
· The buyer obtained loans based on the higher fictitious value;
· Morris explained that the funds for the down payment were coming from Hurd's Gift Program, which he described as a "seller-funded down payment assistance program";
· Morris and Hurd concealed the source of the funds from the bank, setting up sham bank accounts and falsifying loan documents, they also did not tell the lender the true sales price, cash back to the buyer, and "commissions" that they received for arranging the fraudulent transactions.
In total, Morris, Joyce, Hurd and others were able to close loans on six properties as part of the fraud scheme. Deborah L. Joyce was sentenced in April 2011 to 46 months in prison and five years of supervised release for her involvement in the mortgage fraud scheme. Her husband, Todd Joyce, 38, Hurricane, W.Va., was sentenced in April 2011 to 18 months in prison on mortgage fraud and tax evasion charges.
The scheme in California operated in the same way. According to court documents filed in the Eastern District of California, Hurd used "The Gift Program" to fraudulently obtain over $14 million in loans that caused a loss to lenders in California of $7.2 million. An indictment against a second defendant allegedly involved in this scheme, Tony Havens, is currently pending before the United States District Judge Lawrence J. O'Neill in Fresno.
If convicted, Morris faces up to 540 years in prison and a $1 million fine, and Hurd faces up to 60 years in prison and a $2 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.
U.S. Attorney Wagner said, "The Eastern District of California has been one of the hardest hit by the mortgage fraud crisis, and the people in our communities and across the nation have suffered the consequences of it: steeply reduced home values, ruined credit, foreclosures, and evictions. Lenders have suffered losses as a result of fraud by real estate and mortgage professionals, their own employees, and buyers, all of whom took advantage of an atmosphere where fraud was rife. This district has dedicated extraordinary resources to pursuing those who perpetrate mortgage fraud."
"These two prosecutions drive home the point that, although our area has not been as hard hit by the mortgage fraud crisis, the devastating financial tides can quickly wash up in our pleasant communities," U.S. Attorney Goodwin said. "Mortgage fraud has left many communities across this country devastated by foreclosures, plummeted home values and cost many citizens their jobs and savings. My office will remain committed to pursuing mortgage fraudsters to protect neighborhoods and communities across the Southern District of West Virginia."
This case is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. Assistant United States Attorney Thomas Ryan is in charge of the prosecution in the Southern District of West Virginia, and Assistant United States Attorney Mark J. McKeon is in charge of the prosecution in the Eastern District of California.
The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Mortgage fraud is a priority area for the President's Financial Fraud Enforcement Task Force. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit StopFraud.gov.
Courtesy Mortgage Fraud Blog