Failing To Report Bogus Transaction Is Criminal, Says Prosecutor

According to a recent article in The Modesto Bee, Stanislaus County, California real estate fraud prosecutor Marlisa Ferreira emphasized recently in a talk to a group of real estate professionals that everyone involved in scam transaction can be held criminally liable. Whether its predatory lending practices that rip off naive buyers to bogus loan applications that dupe lenders, she urges real estate professionals who witness such fraud to blow the whistle on their colleagues.

• "Letting a suspicious transaction proceed is not just unethical, it's illegal, the deputy district attorney explained: 'If you know the deal is hinky and you do it anyway, you're aiding and abetting a crime.' "

The article lists nine red flags for real estate agents, mortgage brokers, and escrow agents to watch out for that could signal a bogus real estate transaction.

The bottom line here appears to be: if you see something going down in a real estate deal that isn't kosher and "do nothing", you may find yourself being admitted into one of our fine state correctional facilities (ie. prison) where you may find yourself wearing those bright orange prison overalls and picking up garbage on the side of the road. For more, see Realty agents tipped to scams, liability (Prosecutor cautions pros with the red flags of fraud).

Editorial Note

"Doing nothing" in a situation like this can apparently also qualify you for admission into a fine Federal corrections facility as well. See, for example, Mississippi Man Gets 2 Year Prison Term For "Doing Nothing" In Mortgage Fraud Scam, where a man pleaded guilty to failing to alert authorities to a scheme he knew others were involved in.

See also, California Foreclosure Rescue Operator Gets Five Years In Federal Prison, where two straw buyers got into hot water for failing to report to authorities criminal conduct by another in a foreclosure rescue scam that they all had some participation in.

The Federal crime of "doing nothing" in this context is formally known in the statute as Misprision of felony, can be found at Title 18, Section 4 of the U.S. Code, and apparently applies only to failure to report illegal conduct that constitutes a felony (as opposed to a misdemeanor).