Lawyer Nailed In Shady "Cash Back" Land Deal
"A veteran New Haven, Conn., lawyer has been suspended from the practice of law for six months for his role in a real estate transaction that may be a blatant case of mortgage fraud," is how an article in The Connecticut Law Tribune, reported at law.com, begins.
The invetigation, conducted by disciplinary officials with the Connecticut Bar Association, only determined one thing: that the attorney, acting in his capacity as closing agent in a real estate transaction, falsely reported the sale price of a West Haven, Conn., property and deserved punishment.
What was not determined, however, was the degree of culpability of everyone involved in the transaction.
All parties signed off on a HUD-1 closing statement that reflected a sale price of $505,000 and that the purchaser received a $378,750 mortgage. The warranty deed, however, reflected a sale price of $285,000. The buyer reportedly walked away with an additional $79, 000 in his wallet, and the other parties involved in the deal received their fees based on the $505,000 amount. An existing $65,000 second mortgage (which turned out to be the big "monkeywrech" in the deal; more later) was also left off the closing statement.
Other Reported Facts:
1) The lawyer characterized his conduct as nothing more than sloppy oversight. Through counsel, the lawyer essentially blamed his paralegals (who presumably handled all the closing "paperwork") for the errors. He is also accusing the buyer of "inappropriate conduct."
2) The buyer, owner of a local appraisal company, reportedly also served as appraiser in the transaction, according to disciplinary officials.
3) An "unsigned addendum" exists expressing an agreement between seller and buyer that seller would only get $285,000 from the sale, with the balance going to "closing cost repairs." It also states that both seller and buyer agreed to use one attorney in the closing.
4) The seller, an attorney himself as well as an accountant, is blaming the buyer and the suspended attorney for the mess. While he reportedley acknowledged signing the incorrect documents and knew of the "unsigned addendum," he described himself as "a distracted seller going through a contentious divorce [who] just wanted to finish the entire process," according to the article.
5) The lawyer has been a defendant in five civil suits charging malpractice since 2004, of which two were dismissed (possibly settled out of court???).
6) A private individual who held the $65,000 second mortgage (the mortgage constituted the deferred sale price of an accounting business sold by the individual to the property seller in this story, unrelated to the real estate deal in question) attempted to enforce a 50% "shared equity" clause in the mortgage based on the "inflated" $505,000 price of the home. When the parties in the transaction failed to "pay up," the individual, through counsel, filed a grievance against both the attorney and the seller (presumably, this was the grievance that initiated the Connecticut Bar investigation resulting in all these facts coming out).
For the whole story, see Conn. Attorney Suspended for Shady Land Deal
To read another story about Connecticut Bar Association investigations of attorneys, see Theft Of Client Funds Concerns Connecticut Bar Association.
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The invetigation, conducted by disciplinary officials with the Connecticut Bar Association, only determined one thing: that the attorney, acting in his capacity as closing agent in a real estate transaction, falsely reported the sale price of a West Haven, Conn., property and deserved punishment.
What was not determined, however, was the degree of culpability of everyone involved in the transaction.
All parties signed off on a HUD-1 closing statement that reflected a sale price of $505,000 and that the purchaser received a $378,750 mortgage. The warranty deed, however, reflected a sale price of $285,000. The buyer reportedly walked away with an additional $79, 000 in his wallet, and the other parties involved in the deal received their fees based on the $505,000 amount. An existing $65,000 second mortgage (which turned out to be the big "monkeywrech" in the deal; more later) was also left off the closing statement.
Other Reported Facts:
1) The lawyer characterized his conduct as nothing more than sloppy oversight. Through counsel, the lawyer essentially blamed his paralegals (who presumably handled all the closing "paperwork") for the errors. He is also accusing the buyer of "inappropriate conduct."
2) The buyer, owner of a local appraisal company, reportedly also served as appraiser in the transaction, according to disciplinary officials.
3) An "unsigned addendum" exists expressing an agreement between seller and buyer that seller would only get $285,000 from the sale, with the balance going to "closing cost repairs." It also states that both seller and buyer agreed to use one attorney in the closing.
4) The seller, an attorney himself as well as an accountant, is blaming the buyer and the suspended attorney for the mess. While he reportedley acknowledged signing the incorrect documents and knew of the "unsigned addendum," he described himself as "a distracted seller going through a contentious divorce [who] just wanted to finish the entire process," according to the article.
5) The lawyer has been a defendant in five civil suits charging malpractice since 2004, of which two were dismissed (possibly settled out of court???).
6) A private individual who held the $65,000 second mortgage (the mortgage constituted the deferred sale price of an accounting business sold by the individual to the property seller in this story, unrelated to the real estate deal in question) attempted to enforce a 50% "shared equity" clause in the mortgage based on the "inflated" $505,000 price of the home. When the parties in the transaction failed to "pay up," the individual, through counsel, filed a grievance against both the attorney and the seller (presumably, this was the grievance that initiated the Connecticut Bar investigation resulting in all these facts coming out).
For the whole story, see Conn. Attorney Suspended for Shady Land Deal
To read another story about Connecticut Bar Association investigations of attorneys, see Theft Of Client Funds Concerns Connecticut Bar Association.
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posted by Home Equity Theft Reporter at 1:27 PM
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