Fraud and Prevention

Denver Real Estate Agent and Mortgage Broker Charged With Fraud

By James Comtois
September 9, 2009

Licensed real estate agent Cedric Lipsey and loan officer/mortgage broker Philip A. Martinez, both from Denver, were indicted by a federal grand jury last week on charges of wire fraud as part of a mortgage fraud scheme.

According to David Gaouette, U.S. attorney for the District of Colorado, beginning in April 2004 and continuing until March 2006, Mr. Lipsey and Mr. Martinez, who were unavailable for comment, allegedly devised a scheme to defraud lending companies that funded residential mortgage loans and to obtain money from them by means of materially false and fraudulent pretenses, representations and promises.

Mr. Lipsey allegedly orchestrated the purchase and resale or refinancing of numerous residential properties, including the sale of one of his own homes, by paying individuals to participate as "investors" in what he referred to as an investment opportunity.

The indictment alleges that the defendants arranged for these so-called investors to use their good credit to obtain mortgage loans to purchase the properties. Shortly after the first set of loans that helped these individuals purchase properties, Mr. Lipsey allegedly caused them to sell the properties to a second set of buyers at substantially higher prices, with Mr. Lipsey and Mr. Martinez allegedly taking a combination of commissions, fees and proceeds from the first and second transactions.

The indictment further alleges that Mr. Lipsey falsely represented that the first buyers would be purchasing and had purchased the properties for less than their actual market value. The first sales were not "distressed," as the defendants sometimes allegedly represented to facilitate their fraud. In fact, the first buyers purchased the properties at or near their market value, and there was no legitimate reason for the substantial increase in price when the same properties were resold shortly thereafter.

Mr. Lipsey and Mr. Martinez allegedly arranged to have a variety of fraudulent documents submitted to the lenders in support of the loan applications. These consisted primarily of documents purporting to show proof of the borrowers' employment, proof of the borrowers' assets, and sources of the borrowers' assets and incomes.

The defendants also allegedly used forged signatures where necessary to facilitate the scheme. Furthermore, Mr. Lipsey enabled certain appraisers to create false reports, which reflected that the subject properties were "comparable" to the higher quality or otherwise more valuable properties, when they were not.