Mortgage Fraud 2008: Bellevue
This story is from the Seattle Times. A federal indictment has been issued for a Bellevue loan officer and his assistant.
A former loan officer at a Bellevue mortgage company and his assistant have been indicted on a charge of conspiracy to commit wire fraud in a scheme that prosecutors say involved using straw buyers to purchase dozens of homes at inflated prices and siphoning off the extra cash for their own use.
Christopher Brooks and Amani Moss allegedly obtained more than $27 million in fraudulent loans for the purchase of at least 54 homes beginning in 2005, according to an indictment unsealed this morning.
The charges allege that they recruited straw buyers, who would allow the men to falsify loan papers for them. At the same time, Brooks and Moss would use a realtor, who is identified in the indictment by the initials “L.A.,” to find home sellers who were willing to overstate the purchase price of their homes. The straw buyers were paid between $7,000 and $10,000 for each transaction, the indictment says.
Brooks, who worked for America Mortgage in Bellevue, would then prepare and submit the false loan papers to several lenders in the area, according to court papers.
The difference between the inflated price and the actual purchase price of the home ranged from $30,000 to $778,000 per home, and the charges allege that money was funneled through a business owned by Moss, Peachtree Development, and into their pockets..
Home sellers, if your home is not selling and someone from our industry approaches you with an idea to take your home off the market and relist at a much, much higher price, please turn the person in to his or her regulator. If you are not sure who the regulator is, contact one of us and we can point you in the right direction.
The DFI Licensee database shows America Mortgage in Bellevue as a licensed mortgage broker. I wonder how many of these loans went into early payment default and how many the broker was asked to buy back from the lender.
In order to commit fraud at this level, the Realtor and mortgage broker would have had some help from an appraiser as well as an escrow closer.
Hi Jeremy,
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1st payment for September 1st but is included in the $6523.My 2nd payment will be due on October 1st. Im ...
Comment by Susan Lohse on 19 September 2008:
No way!! This is unbelievable. Did they think they wouldn’t get caught???
Comment by Michael Belisle on 3 November 2008:
Wow, that is pretty out there. If you cannot make money properly in this business get out. OF course that is why all this regulation and new rules are made law.
Comment by Kevin Haynes on 4 November 2008:
I’m sure there are others out there continuing to try and do the same thing. Another scam is owner’s in or soon to be in foreclosure offering lease option to potential buyers. They pocket the money and then are foreclosed upon leaving the renter/buyer out in the cold.
Comment by John Mayfield on 15 November 2008:
This is the kind of information that consumers need to hear and read about more often.
I am sure that eager homeowners who really want to sell their homes would jump at the offer. Unfortunately, most consumers don’t know enough about the market to be savvy enough to see through this scheme.
Comment by Kelly Molenda on 20 November 2008:
Wow! Do they have no scruples? This type of information should be more readily available to the home sellers to make them aware that it is happening everywhere.
Comment by Cheryl Nopson on 23 November 2008:
There we go again, How 1 or 2 people can get people in the industry to go along with this. Then again back to the lender after viewing the appraisal, If the purcahse price is inflated, there would have to be comparables. At times the lender is at fault as well.
Comment by Jeff Hilt on 24 November 2008:
This scheme just shows the extent to which greedy people will break the rules to line their pockets. Here we have a whole lineup of guilty people from all walks of life .. LOs, straw buyers, sellers, realtors, etc. It doesn’t really say whether the mortgage broker was involved or just failed to oversee one of the employees. I would think this shouldn’t be that hard to spot if one is providing proper business oversight.
Comment by Gail Burgess on 25 November 2008:
Once again this is unbelievable. I agree there must
have been many people complicit in these transactions.
Comment by richard martin on 2 December 2008:
Wow! right in our own back yard not Florida or Camille st.
Actualy these case studies represent just the tip of the Mortgage Iceberg. Most of these scammers can switch tactics and even professions because they are only driven by greed and anyting else they can lay their hands on. Dont be surprised if they show up again with a slightly different act, from the same play.
But why are these fraud stories so secret the public needs to know.
Comment by Bridgette Verna on 6 December 2008:
There have been stories like this. They really don’t make the front page so most individuals are not aware of the scams. Sounds to me like more then two people were involved. Where are the other players today? I always say to my clients if it sounds to good to be true then it is. Plain and simple.
Comment by Toby on 8 December 2008:
30K to 778K is a MASSIVE increase in “value”… I’m absolutely amazed that they were able to get away with this for any length of time!! I think that for many of us, it is difficult to imagine the depths of others scheming.
Comment by James A. Nelson on 9 December 2008:
I hope those involved at all levels get and serve jail time,
lose all of their ill-gotten gains and are never allowed to work in the mortgage industry again–forget that after seven years stuff!!!!
Comment by jeremy hickling on 9 December 2008:
I’m impressed they survived for so long…I am from humble Renton. I think City Hall is worth about a million bucks but these are big numbers. And again it’s weird to think they weren’t being caught early in this practice. I would agree that clearly this level of decispt runs deep – more people involved for sure.
Comment by Teresa Gallaher on 10 December 2008:
I am always amazed at the depth of thought that goes into these scams. If only these people could use their skills for good. They could run very successful honest businesses. Greed can lead people to do things they should never do. I wonder how do you find so many dishonest people to make it work. They must have discussed this plan with honest people that declined to be involved. If someone came to me and said I’ll pay you 7k to falsify loan documents, not only would i decline, but I would call someone like the DFI and report the activity. I wonder if this happened and it wasn’t investigated, or it took years to be investigated. I hope all involved get stiff punishment so others will think twice before going this route.
Comment by Laura Shields on 10 December 2008:
It is a shame that people are way to greedy. People that do this are not out for the best interest of a buyer/seller, they are looking at their own interest in which fancy car they can drive.
These type of people are the kind that make a bad name for Mortgage Brokers/Loan Officers! Hang them!!
Comment by David Bietz on 11 December 2008:
I hope they through the book at them and get rid of the key.
I am always amazed at what crooks conger up and think they will
get away with. Greed will take them out sooner or later.
Comment by Marty Boswell on 14 December 2008:
I cant beleive that they could have orchastrated such a scam. It’s amazing the broker wasn’t involved or oversaw the types of loans being brokered. Apparently they got away with it once and greed took over and they had their guard down because it appered to be so easy to do. People will talk and word will get out. It just takes on person to make a wrong right. Of course you will get caught and suffer the consequences.
Comment by Vance Won on 15 December 2008:
How can these people think they can get away with it? They must be the beyond stupid or insane to think with all the parties involved that one person gets caught they all wouldn’t get caught. More and more of these people we can weed out of the industry more honest people are left to restore some integrity back into the mortgage profession.
Comment by Branda Luke on 18 December 2008:
Yet another outrageous fraud case I’ve learned in this course. Just when you thought you’ve heard it all. Similar to the comment I made in another article and like the last sentence here, I’m surprised it has just been the loan officer and his assistant that was indicted. This scale definitely has to have other players involved to which I am VERY curious to find out who they are. This will be one story I think I’ll be following up on.
Comment by Pedro Riojas on 18 December 2008:
The artical comfirms the many differant ways that fraud is conducted in the mortgage industry .It identifies how this fraudulant activity affects the victim . In this case a loan officer and his assistant conducted fruad to the tune of 27 million dollars where 54 diffrent properties where puchased .It also shows that the problem is national in scope .
It Seems that this activity lasted for a good time since a lot of money was made . There must have been a complete break down in communication for this to occurr . It is hard to believe that the broker was not aware of what went on, or very little oversight was taking place. It is good that these individuls were caught.
Comment by Luis Diaz on 19 December 2008:
Yes, indee, for these Relator and Mortgage Broker to run this shame they had to have a team of rats: Appriser; Escro; Title and possible an underwriter from one or more lenders. This sounds like a real mafia and have not doub it was set up in that way.
Comment by Sterling Ward on 19 December 2008:
The appraiser(s) involved should also be listed on the indictment, as there is no way that the homes could have hit those values without some sort of fraud. Amazing that they lasted as long as they did with this scam.
Comment by Alice Yu Uy on 21 December 2008:
These are people who do not know fear and the outcome of being greed. We don’t need to be greed. Just work for honest money. There’s is no short cut way. Do it accordingly and avoid mistakes.
Comment by Alice Yu Uy on 21 December 2008:
Everyone that is involved in the transaction of the scheme shoucld to indicted.
Comment by Sean Clift on 23 December 2008:
The parties involved in this type of flagrant theft and fraud should be sent away for a very long time. This is mortifying. I believe that people like this however are in many industries across the nation. There will always be scum out there feeding off society, ignorance, and loop holes, but I do believe that with the NMLS and tighter State tracking these people will be identified faster and prosecuted harder than in years past. They will not be allowed to run their scam, get caught, and flee to another stae as they have in years past.
These are not your average greedy inexperienced LO’s. These are financial pirates and they exist in the financial industries, in the insurance industries, and many other markets. The difference in our industry is that before 2007 we had no way to track, red flag, or eliminate these folks and if anyone ever did catch up to them they would flee and start pillaging in another area of the country with little consequence. These felons need to be exterminated from not only our industry but the “market” as a whole. They need to have very long prison sentences so all they can “ponzi” is cigaretts and bunk space with Bubba.
Comment by Carmen Ziranda on 24 December 2008:
It’s hard to believe that this happened in our community.
What were they thinking? It’s amazing how greedy people have become. Never before we have seen so much cynicism.
Comment by Mark Middlebrooks on 24 December 2008:
This was obviously a reasonably elaborate scam going on with several parties involved. I’m not so sure that regulatory laws will stop people from doing business dealings such as these. Hopefully the increased or at least more clearly stated ramifications will deter some of the parties involved.
When you start off with somebody who’s moral compass is allready completely out of whack, the phrase risk vs. reward is often just seen simply as REWARD! No amount of regulation is going to stop that but it will at least make it harder. As well as, hopefully scare away some of the parties somehow involved but not steering the scams. That will definitely make them much more difficult to pull off.
Comment by R Scott Tollefsen on 28 December 2008:
I find it hard to believe this went on for so long with no complaints from anyone and how these made it past underwriting is amazing. I think it went a little deeper than what I am reading here and should be investigated further.
Comment by Angela on 29 December 2008:
I can’t believe I hadn’t heard about this. How do people like this sleep at night? How is it possible that they are still licensed? I am with Laura on this… These are the people that give Brokers/LO’s a bad name.
Comment by Bartholomew Henning on 29 December 2008:
I hadn’t heard about this either. I know how they sleep at night, they could care less about people. There are people like this all over the place and in every industry. They are the same people who will scare elderly people into buying storm windows for thousands of dollars. They have no conscience.
Comment by Jim LaLone on 29 December 2008:
Too bad the geniuses that perpetrate these deals can’t channel their ideas in a positive endeavor. there must have been alot of money in this program, ’cause it sounds very complicated to put together, and there were more than a few mouths to feed from the procedes. I’m thinking that Joe Arrapio in that jail he runs in the Pheonix area might enjoy entertaning this group for many years.As I have said before, maybe it needs to be more painful.
Comment by William Schornack on 29 December 2008:
I happy to hear they caught these people! It always amazes me how many people are part of these schemes. I’m hoping with the increased licensing requirements we have weeded most of the bad apples out of our industry.
Comment by Jim Haechler on 30 December 2008:
This doesn’t surprise me. I know this broker and choose to stay away. This was only a part of it. It takes all types to give an industry a black eye.
Comment by Dennis Tyler on 30 December 2008:
These people aren’t geniuses… They are just plain dumb. It’s really hard to believe that people do this. They must know that they’ll get caught sooner or later. I had a realtor call me today asking about a scheme that a non-realtor is pulling off right now, to get control of property that is in trouble. I encouraged her to call the DA’s office.
Comment by Brian Paine on 30 December 2008:
This is what I’ve been talking about. Morals and ethics are not lacking in only those with criminal backgrounds. A state or national license nor an $80K degree from an accredited institution, nor thousands of dollars on continuing education would have, or will, prevent this from happening again.
There are dozens of these schemes taking place right now just here in the little state of Washington and will make headlines in another six months…it’s just got a few twists to the story. These are difficult times and those who aren’t afraid of the repercussions in place now will not be deterred from their get rich, launder the money here, schemes.
Comment by shelley safronek on 30 December 2008:
It’s sad to see how desperate people can get. I’m not sure how they sleep at night. I can’t even imagine how devious your brain needs to think to create these situations. I’m sure there were many players that had their pockets lined with these schemes and I hope they are all paying for it now!
Comment by Susan Lohse on 31 December 2008:
Well, apparently I read this article in the last class I took. I couldn’t believe it then, and still can’t believe it. Maybe they assume they will get caught at some point, but are just addicted to the rush they get from ripping people off. Then they have all kinds of fun spending the money and look for their next victim. The state should offer an incentive program to anyone who reports a fraud suspect and they get indicted. That way the ones who originally didn’t have the ill mind in the first place will have a reason to report the fraud. The state needs more investigators on these cases to deter their criminal activity – I’ll be one – Where do I sign up.
Comment by John Sarausad on 31 December 2008:
I am extremely shocked on this story. I do not see why someone can’t appreciate the fact that we get paid to make a difference in our clients life, and that right there, is worth fighting for every loan that we can and make a decent living doing it. This story reminds me of the movie Point Break, where they can’t stop robbing and robbing and robbing. Just sick…
Comment by Cheryl J Barr, 510-LO-38949 on 31 December 2008:
It is hard to believe that sellers would buy into this. If your house isn’t selling, what makes a person think it will sell for alot more? There are all kinds osf people who continually try and skirt the system to make a quick buck. There is so much money in the mortgage industry we are sitting ducks for the criminals that really don’t have anything to loose and come in and try to destroy our industry. I believe threw tougher licensing and education requirments for all aspects of the business we will be able to deter some of this activity.
Comment by Joe Hrebik on 31 December 2008:
Its unfortunate that the bad guys don’t use some of their smarts to benefit the industry instead of all this destructive stuff. This was a well thought-out scheme and its scary how easy it was to carry out… we are talking 54 properties here!
The main culprit to me is the appraiser, without his bloated values this scheme could not be successful, hope he got a big cut, also hope he got some nice long prison time. Lenders should do more on their end, they should not put so much reliance on the appraiser’s numbers, a quick check of Zillow would at least give them an idea of whether the appraised value is realistic… also, hugh home value increases in a short time period should require a second appraisal, by an appraiser approved by the lender.
Comment by Mary Schimmelbusch on 31 December 2008:
How does it go on for that long? How many people just turned a blind eye?
Comment by Carla on 14 January 2009:
Big Egos – Greed, so much dishonesty. One of the many ways that fraud is conducted in the Mortgage Industry. I am hopeful that stricter licensing requirements and increased continuing education will help to deter some of this type of activity.
Comment by Scott on 27 January 2009:
Shameful actions from all those involved
Comment by Robert Paterson on 7 February 2009:
For this to happen you need a crooked loan officer, crooked appraiser, crooked home owners and crooked home buyers. I’m amazed that they started this in 2005 and didn’t get caught until 2008 with all these moving parts.
Comment by Teresa Tait on 11 February 2009:
All of those involved were determined to commit fraud without concern or regard for the harm that they would cause. All for 1 thing: MONEY. There will always be people like this and that is why we need to make sure that adequate rules and regulations are put into play and enforced. Lending is a very serious business and should be treated as such. Too many people have lost way too much because of the lack of oversight.
Comment by Sharon Eva on 11 February 2009:
I am speechless. It is apparent that our current system in terms of oversight is not working very well. What was DFI doing while all of this was going on? I thougt that when a forclosure occurs, it signals a red flag on the LO, lender, etc. that are involved and an investigation is typically done? For this to be going on for years is simply wrong and I’m upset that our tax paying dollars that pay for institutions such as DFI and the police department has let us down. We cannot let matters like this happen again.
Comment by Chris Madden on 28 February 2009:
This scheme went across four different occupations. Can anybody say Victor Madoff. If these types of schemes are being executed on Wall Street, what makes people think the same schemes are not happening on main street. This went from the buyer, seller, appraiser, LO, processor, mortgage company, and the bank. They all had a role in this. It goes back to my last comment about this case. There was greed on several different levels.
Comment by Mr. P. Greg on 30 March 2009:
It not a surprise, that this has happened. When I started seeing sub prime products in 1996 I knew it was only a matter of time before it would all come tubling down. History repeats itself. Problem is that people forget. We now whitness another credit collapse, the last time markets collapsed to this degree it revolved around margin accounts. Want to point a finger, look at the private cartel of Central Bankers, who run 13 of the most influential banks in the world. As a private bank they even get to print thier own money, and lend it to a government that has to pay them back with interest to use that money. Who is it…why the Federal Reserve….anyone want to venture a guess why M3 figures haven’t been released…anyone? Those that understand probably have a very sick feeling in your stomachs. By the way the last guy to stand up to them and start printing US treasure bills was shot in Dallas Texas 1 month after the treasury started printing Treasury Bills in 1963…anyone remember silver certificates? Now what was that about mortgage fraud? Think this is fiction huh? Anyone wonder why the truth about the Federal Reserve Act, who actually was behind it, and why a group of powerful bankers started it, how it was promoted, and why the Internal revenue Act was passed. And how many of you know anything about Fiat money? If our US Treasury prints money, how does it owe itself the money it prints? Wow I bet that just flew right over the heads of most of you? Your all in the mortgage business for crying out loud. Dont feel bad most bankers haven’t even figured this out…to close to the trees to see the forest. Henry Ford was quoted “It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” This econiomic collaps was planned, it takes down any banks that could pose a threat to central Bankers. I’m sick of the one fact people don’t know that the subprime lending industry, was perpetrated, created, promoted, and managed by the federal reserve. Take a few minutes, your all online, and look up to see who the stockholders of the Federal Reserve are, then start thinking. Money is not what you think it is. it is Fiat money, which isn’t money, at least not in the sense it is supported by Gold. And don’t talk to me about floating dollars, thats BS Finance 400 class crap you learn from some goofy professor in college, whose clueless about the corruption in the central banking system. Theft and stealing from unsuspecting borrowers is low, but what the fed does is evil. No I’m not a radical, and I suggest you look up to G Edward Griffin – Creature From Jekyll Island A Second Look at The Federal Reserve…its chilling. And it will piss you off…Sub Prime…yea ok…whatever
Comment by Mary McGraw on 21 April 2009:
I can’t believe that people would do these things and not let it bother them when they are asleep also that they wouldnt get caught.
Comment by Mary McGraw on 22 April 2009:
Personally i think people with that frame of mind should have some kind of action taken on them to learn that it is just wrong to do those things to others and feel good about it gives the ones that truly care a bad name.
Comment by Raylene Ramos on 23 April 2009:
It really pays to do your homework as a consumer to not get into this type of situation. I can see how a seller would love to inflate the price of their home for their benefit. However, if the right, (or wrong), person were to come along as the uneducated buyer, this is where the fraud begins. Beware buyers and do your homework!!
Comment by Yvette on 18 December 2009:
The problem with the people that do these types of schemes is that they honestly think they are doing good for the seller and everyone involved. The seller was able to sell his house and walk away with money, the Lo and assistant made money, the realtor made money, the appraiser. I am not so sure that escrow knows about what is going on, not unless they are using the same escrow company and closer. It really Depends on who is notarizing the documents to know that the buyer is not a real buyer. The buyer has to provide identification that they are the person that is signing loan documents. If they provide proper documentation I am not sure escrow would know. Hopefully they are not notarizing documents where the buyer is not present. That would definately raise a red flag.
I just hope that everyone involved is prosecuted and that the guilty do not go free.
Comment by Chris Yanke on 30 December 2009:
The biggest problem with stories like this is that it makes it hard on Thanksgiving to be the one to tell your family that you’re a Loan Officer. In this particular case you have a lot of collusion because once you see a pattern of parties involved in this type of scenario you can only imagine that everyone has been enticed by easy money.
In my mind even if they get prosecuted to the full extent of the law, it’s the rest of us that will have to continue to pay in the eyes of a skeptical public.
Thats the unwritte part of our job; to rebuild an industry and reshape the value we create.
Comment by Daniel Mulvehill on 27 February 2010:
well I hope theysaved there fraud money because you will need this to pay as an example F.Lee Bailey? Greed prevails, no Ethics, temptation, these types of people think that the rest of us as the late Paul Harvey would say, were’s here’s the rest of the story, YOU BUSTED enjoy the view they deserve it. There is a correct way toearn your income, these people had to know that but decided to make up there own drive through lane and it ends up in prision?