Las Vegas Realtor Heading to Prison for Mortgage Fraud

The agent was sentenced to 70 months behind bars. Image: Thinkstock

A Las Vegas real estate agent was sentenced to a 70-month prison term for her participation in a mortgage fraud scheme that brought in more than $10 million in fraudulent mortgage loans.

In May, after a five-day trial, a Las Vegas federal jury found Linda Kot guilty of three counts of bank fraud and one count of conspiracy to commit mail, wire and bank fraud.

Court documents said Kot participated in a scheme with members of an investment group to submit fraudulent loan documents to lenders that involved straw buyers—individuals with good credit scores whose names were put on the properties but were not intended to be responsible for the payment of the mortgages or other property expenses.

The scheme took place in 2006 and involved 13 new home purchases, three existing home sales and several loan applications that were not approved, the Department of Justice said. 

According to court documents and evidence presented at trial, Kot and her co-conspirators caused material misstatements to be placed on loan applications, including information about the true owners and controllers of the properties; whether the properties would be primary residences; and the level of assets and income of the straw buyers.

In some cases, Kot put straw buyers on her bank account to make it appear that they had assets in order to qualify for a mortgage loan, which was not the case. Kot made over $276,000 in commissions on the fraudulent sales, court evidence revealed.  

One of the counts of Kot’s conviction involved a similar scheme she engaged in with members of her family from 2005 to 2006. During this scam, she also used straw buyers and fraudulent loan applications to buy properties. The straw buyers were paid and any profits made from the home sales were split among the family members.

While Kot and her family were able to sell the majority of the properties they acquired with straw buyers before the market downturn, the investment group that she conspired with did not have similar luck. As a result, most of the mortgages for the houses that the investment group bought in 2006, in which Kot acted as the Realtor, ended up in default and foreclosure, with many of the straw buyers ending up in bankruptcy. 

Besides her prison term, Kot was also sentenced to serve five years of supervised release and ordered to pay approximately $3.9 million in forfeiture.