An Austin, Texas, man who was operating a national foreclosure rescue scam for four years was recently sentenced to five years in prison.
Frederic Gladle pleaded guilty in January to one count of bankruptcy fraud and one count of aggravated identity theft for charging distressed homeowners fees in exchange for fraudulently delaying foreclosure sales.
Gladle was ordered by U.S. District of Texas Judge Lee Yeakel to pay more than $84,000 for running a scam in which he collected $1.6 million from more than 1,100 struggling homeowners in Southern California and other regions hard hit by the foreclosure crisis. Gladle also had to forfeit 63 prepaid debit cards that he used during his scheme.
Between October 2007 and October 2011, Gladle admitted that he recruited homeowners whose properties were in danger of imminent foreclosure and falsely promised to postpone the foreclosure for up to six months if the victims paid him a fee of $750 a month.
The homeowners were told by Gladle to sign deeds granting fractional interest in their properties to debtors who were already involved in bankruptcy proceedings. These debtors were unaware that Gladle was using their names and bankruptcy cases to run his scam.
Gladle said he used five identifications to avoid being caught by federal regulators. He then sent the unsuspecting debtors bankruptcy petitions and the deeds that transferred a share of the properties to the debtors and asked the homeowners’ lenders to stop foreclosure proceedings.
Because a bankruptcy filing helps protect a debtor from losing their property, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales. Due to Gladle’s scam, the lenders, which included banks that received government funds under the Troubled Asset Relief Program, could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts.
When homeowners wanted to cancel the deeds giving their properties to the unsuspecting debtors, Gladle forged the debtors’ signatures on papers.
“Mr. Gladle concocted an elaborate fraud scheme to use the financial crisis to his criminal advantage,” said Lanny Breuer, assistant attorney general of the Justice Department’s criminal division. “He preyed upon vulnerable homeowners facing foreclosure, just as the housing bubble began to burst and stood in the way of financial institutions attempting to collect on their debts.”
