| An article in Forbes talked about a report released | | | | May 2006 in what officials called a Ponzi scheme. |
| by the Federal Bureau of Investigation this week | | | | In a news release from federal officials, they |
| stating that real estate fraud cases were on the | | | | stated "He told the victims that he was making |
| rise. They said reports of suspicious mortgage | | | | 'lucrative' real estate and other investments which |
| filings increased 36% during fiscal 2008 compared | | | | were not actually transacted. He often used |
| with 46,700 filings the year before, and that 2 | | | | bogus HUD-1 settlement statements, warranty |
| 3rds of all pending FBI mortgage fraud | | | | deeds and sales contracts to reflect non-existent |
| investigations last year involved more than $1 | | | | property purchases, while using a portion of the |
| million at a clip, putting a rough estimate of the | | | | scheme proceeds to repay former victim |
| total at $1 billion. | | | | investors. While the repayments included |
| It's easy to understand why people would try to | | | | investors' principal plus "returns" often exceeding |
| exploit a bad economy to help themselves, since | | | | 50 percent of their initial investment, those |
| that's what criminals do, but it's scary to see just | | | | repayments were all funded with money from |
| how pervasive it is. Just this week, there were | | | | new victim investors." |
| four instances in four different states confirming | | | | In the Philadelphia area, Jason Bloom was charged |
| what the FBI stated. | | | | with keeping more than $1 million that was |
| In North Carolina, banking regulators fined | | | | intended for mortgage and tax payments, |
| mortgage lender North American Real Estate | | | | according to the U.S. Attorney's Office there. He |
| Services Inc. $320,000 and revoked its state | | | | was charged in one-count information, which is |
| operating license after ruling the firm used shell | | | | considered to be the prelude to a guilty plea. He |
| companies and fictitious names to avoid state | | | | did this over an almost 4 year period, and could |
| regulation. They also ordered the company to | | | | be sentenced to 30 years in prison and fined $1 |
| refund $60,000 in what it called "illegal" broker | | | | million. |
| fees to 13 borrowers. Regulators allege the firm | | | | And finally, in the Detroit area, 7 men were |
| was engaged in a practice known as "net | | | | charged in two separate real estate schemes. In |
| branching, which is where an existing mortgage | | | | the first instance, 5 men were accused of using |
| company gives a franchise to another mortgage | | | | straw buyers (people who use, or allow their |
| company in order to carry out its business in a | | | | credit to be used, for the purchase of a property |
| particular area." Only, in this case, all the | | | | they never intend to use or control) to get |
| companies were under the same umbrella. The | | | | fraudulent loans and sell homes with fake |
| North Carolina Commissioner of Banks' office says | | | | appraisals and buyers. A fifth man was arrested |
| it has taken enforcement actions against a | | | | for finding people to pose as home buyers. In the |
| number of net branch companies in recent years, | | | | second instance, a mortgage broker was charged |
| with fines and settlements exceeding $1.3 million. | | | | with buying foreclosed, rundown or uninhabitable |
| In Georgia, former attorney Steven H. Ballard pled | | | | properties cheaply, then selling them using fake |
| guilty in federal district court to defrauding over a | | | | appraisals that overvalued the properties, while his |
| dozen victims in Georgia, Florida and Tennessee in | | | | partner paid underwriters to disregard any |
| a real estate investment scam. Ballard collected | | | | irregularities. |
| over $2 million between September 2002 and | | | | |