David Saks: REAL ESTATE FIRM OWNERS ADMIT STEALING OVER $600k FROM SELLERS

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

REAL ESTATE FIRM OWNERS ADMIT STEALING OVER $600k FROM SELLERS

Real Estate Firm Owners Admit Stealing Over $600k from Sellers

Joann Smith, 47, and her boyfriend, Wayne Betha, 42, Ewing, New Jersey, who ran a real estate firm, pleaded guilty to stealing from home sellers by diverting proceeds from home sales, and also defrauding mortgage companies by falsifying the earnings of loan applicants.

As previously reported on Mortgage Fraud Blog, the state’s investigation revealed that between August 2006 and February 2008, using their real estate firm, S&B Property Management and Maintenance LLC of Trenton, the pair stole over $600,000 from sellers in connection with 11 home sales.  Smith and Betha allegedly diverted proceeds of the sales into their own bank accounts for their personal use, deceiving the sellers into believing they were not entitled to all of the profits from their homes.  Most of the sellers were having serious financial problems and could not continue paying their mortgages.  The 11 homes are in Trenton (4 homes), Ewing (1 home), Hamilton (2 homes), Orange (1 home), Willingboro (2 homes), and Camden (1 home), New Jersey.

In arranging for sales of three of the homes, Smith and Betha provided false information about the salary or wages of the buyers on settlement forms filed with the U.S. Department of Housing and Urban Development (HUD) and mortgage applications, causing three mortgage companies to issue loans totaling approximately $641,800.

The couple used a variety of schemes to fraudulently divert proceeds from the home sales into bank accounts maintained by Smith and S&B.  They represented to sellers and title companies that monies were owed to them for expenses, including property renovations and repairs that were never done and exorbitant consultant fees that they claimed the sellers had authorized. Many of the checks issued by the title companies handling the property sales were written to the home sellers, but Smith convinced the sellers to sign the checks over to her for payment of business expenses and fees.  In several instances, the defendants falsely indicated on HUD forms and tax forms that the sellers directly received all of the profits from the home sales.  They also omitted to tell sellers that they were agreeing in mortgage closing documents to pay large, unauthorized “seller’s concessions or seller’s assists” to the buyers.

The victims were not financially sophisticated. 

They did not understand the details of the property closings and, because of their financial woes, were anxious to be free of the obligation of paying mortgages they could no longer afford.  Smith and Betha took advantage of these facts to steal the victims’ profits from the home sales.

Smith sometimes wrote false notations on checks written from her account and the S&B account to make it appear that payments were made for home repairs. Other times she would write a small check to the seller and write “gift” in the memo portion of the check.  Smith and Betha used the diverted funds for personal expenses, withdrawing hundreds of thousands of dollars, primarily as ATM withdrawals, checks written to cash, and checks written to Betha.

No corporate business tax returns were filed with the State of New Jersey for S&B for 2005 through 2008.  Smith also failed to file state personal income tax returns for those years.  Betha failed to file a state personal income tax return for 2007.

Under their plea agreements, they will each face a sentence of five to 10 years in state prison and will be required to enter a consent judgment to pay restitution to the home sellers, as well as the mortgage lenders, to the extent that the lenders have sustained losses. 

Attorney General Jeffrey S. Chiesa made the announcement.

This couple ruthlessly stole from vulnerable homeowners who were forced to sell their homes due to hardship and who could not understand the complexities of a real estate closing,” said Attorney General Chiesa. “It is a sad reality that times of economic crisis bring out predators who exploit those who are desperate for solutions but lack financial sophistication. With these guilty pleas, we are sending a message that we will aggressively prosecute such criminals.

Beyond stealing from victims who were down on their luck, these defendants defrauded mortgage lenders, falsifying mortgage applications so unqualified buyers could secure loans,” said Director Stephen J. Taylor of the Division of Criminal Justice.  “The end result of mortgage fraud is typically foreclosure, which is destabilizing for housing markets and represents a lose-lose situation for lenders and homeowners.  We’ve made prosecuting mortgage fraud a priority.” 

Supervising Deputy Attorney General Francine Ehrenberg, Deputy Chief of the Division of Criminal Justice Financial & Computer Crimes Bureau, presented the case to the state grand jury.  The investigation was conducted and coordinated for the Financial & Computer Crimes Bureau by Detective Martin Farrell, Analyst Rita Gillis, and Deputy Attorneys General Ehrenberg, Curley and Carpenter.

source: FBI




David Saks



Time&Temp Memphis

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Comment balloon 0 commentsDavid Saks • July 03 2012 10:32PM

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