North Carolina "Cash Back", "Straw Buyer" Scam Nets 2

Businessman James Thomas Davis was sentenced to 200 months in prison in Raleigh Federal Court on conspiracy and fraud charges for his role in a mortgage fraud where he would target builders who had new homes on the market and offer them more than the asking price for the homes. In exchange, the builders would allow Davis to keep the difference between the asking price and the inflated offer, according to investigators.

Mr. Davis was convicted after a jury trial. Residential home builder David Layton, who admitted to prosecutors to conspiring with Davis in using phony real estate closing documents in the sale of the homes, was reportedly sentenced to four months in prison.

The scheme:

• involved the use of "straw buyers" in consummating the bogus sales,
• recruited renters to live in the properties and pay rent under a "rent-to-own" arrangement, and
• used what essentially was a pyramid scheme by luring additional straw buyers and tenants to obtain new money to cover the cash shortfall between the monthly rents collected by the scammer and the higher house payments made to mortgage lenders.

To read more, see Two sentenced in mortgage fraud scheme, reported by The News & Observer, at newsobserver.com.

Go here for other posts on "rent to own" scams. rent to own lease purchase option scams zebra