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Arizona AG Sues Two for Loan Modification Fraud

AUG 23, 2012 3:08pm ET
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The defendants admitted that from 2006 through 2007, they recruited others, mainly relatives and friends, to act as straw buyers for the purchase of homes in the Twin Cities. At the time, the men worked as loan officers at Prestige Mortgage, a mortgage brokerage company in White Bear Lake, where they brokered numerous fraudulent mortgage loans by submitting false loan applications to prospective lenders. Anderson admitted to recruiting five straw buyers to purchase 17 homes during the course of the scheme, while Huston admitted to recruiting an unspecified number of buyers to purchase additional homes. The scheme involved a total of 32 homes in Minnesota. All of the mortgage loans involved have gone into default, causing losses to the mortgage lenders that exceed $2.5 million.

Anderson and Huston were also involved in Lofton Property Management, a property management company in Chisago City. They used Lofton’s name on construction invoices and other statements to obtain loan proceeds for property management services never provided. In addition, they used Lofton’s name on property settlement statements, thereby receiving fraudulent mortgage loan proceeds, which they disbursed among themselves, the straw buyers, and others involved in the scam.

At the same time, Huston was involved in Yes Financial a property management company in Chisago City. Through that company, he received additional, illicitly acquired loan proceeds. Moreover, he arranged for a colluding appraiser, who offered appraisals to support the inflated prices of the properties. He also prepared false loan applications on behalf of the straw buyers, often overstating their income, misrepresenting their employment, and failing to disclose their other mortgage obligations or the true source of their down payments.

For their crimes, the defendants face a potential maximum penalty of five years in prison. Judge Ericksen will determine their sentences at a future hearing, yet to be scheduled.   (usattymn81312)

MORAL

Note that the problems took place in 2006-2007 and six years later they are indicted and plead guilty! A word to the wise—see your attorney now if you have straw buyers. She or he can do more for you now then when the federal agents arrive at your door if you were overly creative.

THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE.

AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.

 

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