David Saks: MAN PLEADS GUILTY TO FLIPPING SCAM

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MAN PLEADS GUILTY TO FLIPPING SCAM

Utah Man Admits Illegal Flipping Scam in West Virginia

Michael S. Hurd, 37, Salt Lake City, Utah, pleaded guilty in federal court before U.S. District Judge Thomas E. Johnston to charges connected to a multi-million-dollar mortgage fraud scheme involving properties at a Hurricane, W.Va., subdivision.

Specifically, Hurd pleaded guilty to conspiracy to commit wire fraud and bank fraud. The defendant also pleaded guilty to mail fraud arising out of his involvement in a similar scheme in Modesto, Calif.

Hurd admitted that during the early and mid-2000’s, he operated a company called “The Gift Program,” which he described as a “seller funded down payment assistance program” used to provide home buyer’s money to make the down payment and initial mortgage payments on real estate purchases.

Hurd further admitted that he used The Gift Program to create an elaborate scheme to defraud lenders by concealing the transfer of loan funds to the borrower from the lender.

In essence, through the use of The Gift Program, lenders unwittingly funded their own down payment and made the initial mortgage payments.

Hurd admitted that in 2006 he became involved with Deborah and Todd Joyce, Hurricane, W.V, the “flipping” of homes in the Stonegate subdivision in that town.

Deborah Joyce obtained inflated appraisals from two local appraisers, James Thornton and Mark Greenlee, and subsequently sent the appraisals on to another co-conspirator Raymond Morris, Salt Lake City, Utah. Morris identified investors to purchase those properties at fraudulently inflated prices. Morris then got those investors in contact with Hurd, who then used The Gift Program to conceal the transfer of a portion of the loan proceeds to the investor from the lender. Hurd admitted that he paid Morris an undisclosed “commission” for this referral.

Hurd also admitted that during the scheme, he wired additional loan funds to the investor to make initial mortgage payments. Once those funds ran out, the investors defaulted on the loans and the properties went into foreclosure.

All told, Hurd, Joyce and Morris illegally flipped six properties in the Stonegate subdivision. The respective lender losses total almost $2 million.

At the same time, Morris and Hurd orchestrated a similar investment-type scheme in Modesto, California.

Hurd acknowledged that he was involved in illegally flipping 20 properties with losses in excess of $5.5 million. As part of his plea agreement, Hurd agreed to transfer those charges from the Eastern District of California to the Southern District of West Virginia so the matters could be disposed of jointly.

Hurd faces up to 60 years in prison and a $2 million fine when he is sentenced on Feb. 29, 2012.

Deborah Joyce was sentenced in April 2011 to 46 months in prison for her role in the scheme.

Todd Joyce received an 18-month prison sentence.

Thornton and Greenlee are set to be sentenced in December 2011.

Hurd’s co-conspirator, Raymond P. Morris, was charged in September 2011 and his trial is set for Feb. 28, 2012.

This case is being investigated by the FBI and the Internal Revenue Service - Criminal Investigation. Assistant U.S. Attorney Thomas Ryan from the Southern District of West Virginia is in charge of the prosecution.

This case was prosecuted as part of President Obama’s Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. 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.

Courtesy Mortgage Fraud Blog




David Saks



Time&Temp Memphis

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Comment balloon 4 commentsDavid Saks • November 16 2011 01:13AM

Comments

Wow it is no wonder that the banks are paranoid when you have crooks out there doing stuff like this! 

Posted by Rosalie Evans, The Evans Group, Sioux Falls, SD Homes For Sale (Meritus Group Real Estate) about 8 years ago

Good, lock him up and throw the key on the sea!

 

Posted by Hector Reyes, Southern California (NHNR) about 8 years ago

Now that is creative.  Unfortunate, that the result of this type of creativity is a loss of freedom.  I guess the smart thing to do is to sell real estate legally. 

Posted by Tim Lorenz, 949 874-2247 (TIM LORENZ - Elite Home Sales Team) about 8 years ago

Thanks for the comments, Rosalie, Hector and Tim. Appraisals are a source of contention because of the high level of distrust because of unrestrained, rampant deception and fraud.

Posted by David Saks ((retired)) about 8 years ago

This blog does not allow anonymous comments