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Alabama Investor Pleads Guilty to Bid Rigging

APR 24, 2012 12:53pm ET
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ALABAMA REAL ESTATE INVESTOR AGREES TO GO TO PRISON FOR RIGGING BIDS AT HOME FORECLOSURE SALES

FACTS

On April 20, Lawrence B. Stacy, a Mobile, Ala. real estate investor, agreed to plead guilty for his role in a plot to rig bids and commit mail fraud at public real estate foreclosure auctions in Southern Alabama. So far, three individuals and one company have pled guilty.

Stacy was charged with one count of bid rigging and one count of conspiracy to commit mail fraud. According to the plea agreement, which is subject to court approval, Stacy has agreed to serve six months in prison. Additionally, Stacy has agreed to pay a $10,000 criminal fine and to cooperate with the department’s ongoing investigation.

According to court documents, Stacy conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at the public auctions, which typically take place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.

Stacy was also charged with conspiring to use the U.S. mail to carry out a scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices, to make and receive payoffs to co-conspirators and to cause financial institutions, homeowners, and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. Stacy participated in the bid rigging and mail fraud conspiracies from at least as early as May 2002 until at least January 2007.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum fine. Each count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime, or twice the gross loss caused to the victims of the crime by the conspirators. (usattysodtal42012)

MORAL

Most of you should remember that I have said the federal prosecutors have 10 years from the act to prosecute the people involved. Note that this started in 2002 (10 years ago) and went to 2007 (five years ago.) Anyone do any foreclosure bid rigging anywhere in the last 10 years? If so, I suggest you see your attorney and discuss the issues under attorney client privilege.

ARIZONA AMENDS LOAN ORIGINATOR LICENSING LAWS

FACTS

The amendments clarify the de minimis exemption from the licensing requirement for loan originators. Under the new laws a loan originator does not include a person who originates five or fewer mortgage loans per calendar year if the source of the prospective financing also makes five or fewer mortgage loans per calendar year. The amendments provide that the Superintendent of the Department of Financial Institutions may refuse a license or suspend or revoke a license if the applicant has been involved in a misdemeanor or felony related to fraud, dishonesty or a breach of trust or money laundering. (Compliments Weiner/Brodsky, et al.)

MORAL

So do five or fewer loans and no license is needed. But I would read the actual code section first if I were you. Equally important note the reasons why a license may be denied, suspended or revoked.

ARIZONA REAL ESTATE INVESTOR GETS EIGHT-PLUS YEARS IN A FEDERAL PRISON FOR MORTGAGE FRAUD

FACTS

Eitan Maximov, a real estate investor, was sentenced after a six-day jury trial to nearly eight-and-one-half years in federal prison for his role in a 2006-2008 cash-back mortgage fraud scheme.

Maximov played a leadership role in the underlying conspiracy, which involved at least nine residential properties in the Scottsdale area. The objective of the conspiracy was to recruit unqualified borrowers as straw buyers, submit fraudulent loan applications on their behalf and on behalf of Maximov, obtain mortgage loans in excess of the selling price of the property, and then take the excess amount of the loans out through escrow in what is known as a "cash-back" scheme, prosecutors said.

Not only did Maximov recruit straw buyers and work with an escrow officer in order to carry out the scheme, but he also financially benefited from their involvement in the scheme, evidence showed. The purchase prices on many of the properties involved in the scheme exceeded $1 million.

Evidence at trial showed that Maximov had no legitimate employment, income, or assets to afford the numerous million-dollar properties. After a foreclosure on Maximov's primary residence, the home was stripped of its assets, further depreciating its value and the value of the homes in close proximity.

Evidence at sentencing demonstrated that Maximov returned to purchase his foreclosed property using a false name. His last address before being arrested in 2008 was a luxury condominium in the Esplanade. All of the homes purchased through the conspiracy have been foreclosed or sold at a loss to the lending institutions. Three other co-conspirators were also charged and have pleaded guilty for their involvement in the conspiracy. The conspiracy resulted in approximately $5 million in loans obtained by fraud and an actual and intended loss to lending institutions of nearly $6.5 million. (usattyaz41712)

MORAL

It was reported he was a citizen of Israel. I imagine when he gets out immigration will put him on a plane for Israel.

ARIZONA MORTGAGE BROKER AND FORMER ASSOCIATE ADMIT TO COMMITTING MULTIPLE TRANSACTION MORTGAGE FRAUD

FACTS

On April 3, Michele Mitchell entered a guilty plea to one count of conspiracy to commit wire fraud in federal court. Codefendant Jeremy Pratt previously pleaded guilty to the same charge.

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