Three more real estate attorneys may be headed for prison.
Lawyer Reginald Derrick Greene, 41, of Bowie Maryland, will spend one year and one day in prison after pleading guilty to fraud for his role in a mortgage flipping scheme. A federal judge in Maryland also ordered Greene to pay $191,984 in restitution, according to a statement from the U.S. Attorney’s office in Maryland.
Also convicted was Waldo Alicea, 45, who federal prosecutors identified as Greene’s coconspirator. He was sentenced to 15 months and also ordered to pay the restitution amount.
The fraud scheme targeted homes in Charles and Prince George’s counties near Washington D.C. Greene worked as a settlement agent for DHC Title Company and was responsible for closings for title insurance companies.
“Greene and his coconspirators contracted to purchase a foreclosed or bank-owned property at a depressed price,” prosecutors said in the statement. “They then entered into a second contract to ‘flip’ or sell the property at a much higher price to a straw purchaser.”
As in many property flipping schemes Greene and Waldo used phony documents and inflated, fraudulent appraisals to pull off the scheme. The fake papers were given to the phony buyers the pair recruited to pull off the fraud, prosecutors said.
“Once a lender agreed to fund the mortgage,” prosecutors said, “the conspirators arranged for settlement and distribution of the loan proceeds to be handed by Greene and DHC.”
“Greene would cause DHC to issue a title commitment, assuring the lender that the seller owned the property as of the date of the settlement, when it fact the seller had not yet purchased the property,” prosecutors said.
In Hattiesburg, Miss., a lawyer teamed up with the son of a preacher and eight others in a mortgage flipping scheme.
Kimberly Castle was charged with nine other people — including William V. Fairley, the son of a Baptist minister — in a 12-count indictment announced by the U.S. Attorney’s office in the Southern District of Mississippi.
“All 10 defendants participated in a conspiracy to commit bank and wire fraud by defrauding mortgage lenders of loans,” prosecutors said in a statement.
Among the others faces charges are the operator of a real estate investment and development company, appraisers, real estate investors and alleged straw buyers.
Prosecutors say Castle’s role was to conduct closings “knowing that the borrowers did not make down payments reporting on” loan applications and official government forms. She handled real estate settlements for Richard B. Lucas, the alleged ringleader of the fraud who faces up to 100 years in prison.
Phony buyers, inflated appraisals and fake documents were used to defraud lenders, prosecutors said. Nine homes totaling nearly $600,000 were part of the fraud.
Castle was charged with conspiracy to commit bank fraud and wire fraud as well as a separate conspiracy of money laundering. She was among the members of the ring that “used the proceeds of earlier transactions to promote the ongoing scheme.”
She has pleaded not guilty, according to federal court records.
And in Madison, Wisc., former lawyer John Sanborn, 66, and his paralegal, Joan Marcott, 65, face criminal charges for allegedly swindling a client in a mortgage-related loan transaction.
“Wisconsin citizens have the right to expect that the trust they place in legal counsel is done in mutual good faith,” Wisconsin Attorney General Peg Lautenschlager said in a statement.
According to state investigators Sanborn and Marcott allegedly talked a man out of $35,000 by telling him the money would be used to improve a house that was going to be put up for sale. The man was told Sanborn had a buyer for the home.
But investigators say Marcott allegedly committed “slander of title by knowingly mortgaging a property she did not own.”
They say she filed a mortgage property and then transferred it to the investor. But the crime was committed because neither Sanborn nor Marcott had a legal claim to the house, it was only used as part of the scheme to get the $35,000, investigators say.
The state uncovered the case while investigating other clients’ claims against Sanborn. Documents show the Supreme Court of Wisconsin revoked his law license in 2002 and ordered him to pay $5,000 in restitution to a client. In several instances he was accused of depositing clients’ money into his personal accounts.
