Monday, December 03, 2007

Disbarred Florida Attorney To Plead Guilty To Misleading Lenders; Swiping Loan Proceeds From Foreclosure Rescue Transactions

This is a story that even a yet-to-be criminally charged foreclosure rescue operator named ARO Properties Corp. (who has been referred to by Federal prosecutors as a co-conspirator in an equity stripping operation) was screwed over by a now-disbarred attorney it hired to oversee dozens of Central Florida real estate transactions in a so-called "Fresh Start Lease Back" home rescue program for homeowners facing foreclosure. The St. Petersburg Times reports:
  • Disbarred Clearwater lawyer Graham Kligerman is scheduled to plead guilty this month to federal charges of stealing more than $1-million in a multistate equity-skimming fraud. [...] Two years ago, the Florida Supreme Court [in a separate, unrelated incident] disbarred Kligerman. In its complaint against him, the Florida Bar said he diverted money from one of his practice's trust accounts.

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  • Now prosecutors say that at that time Kligerman was involved in a real estate scam with two co-conspirators from California. Federal prosecutors accuse Kligerman of diverting money from the fraudulent real estate transactions' trust accounts without the knowledge of his co-conspirators. Over two years, Kligerman acted as the closing agent on about 60 fraudulent real estate transactions in which banks were misled into making millions of dollars in loans, prosecutors say. And without the knowledge of two co-conspirators in California who hired him to oversee the transactions here, Kligerman diverted at least $1-million from trust accounts to himself and unwitting clients of his practice, authorities say.

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  • [Kligerman's attorney] said his client has taken responsibility and is cooperating with prosecutors investigating the two co-conspirators [the foreclosure rescue operators]. [...] The federal complaint states that as part of the real estate scheme, the conspirators used false representations to obtain loans from banks and homes from people facing foreclosure. The main aim of the scheme, prosecutors said, was to strip the homes - most in Florida, a few in Georgia - of their equity.

  • ARO [the California-based foreclosure rescue operator named as a co-conspirator] advertised a product called "Fresh Start Lease Backs." The company found homeowners who could not make payments on their mortgages but had a lot of equity in their homes, according to prosecutors. ARO then found investors to supposedly buy the homes, lease them back to the original homeowners and eventually sell the properties back to them.

  • But banks were not told the real arrangement of the transactions, prosecutors said. The banks were not told that the down payments were being provided by the co-conspirators, not the loan applicants. The down payments that swayed the banks to make the loans came from the equity of the actual homes, prosecutors allege. Nor were the banks told that the buyers had no plans to live in the homes as their applications claimed. The buyers were unsophisticated investors with good credit who paid ARO $2,500 to be buyers, according to the complaint. They unwittingly submitted fraudulent loan applications.

Kligerman's plea agreement requires him to pay a yet-to-be determined amount of restitution to at least two loan processors, four banks, 53 homeowners and 18 unwitting straw buyers. For more, see Disbarred lawyer to plead guilty to fraud (Prosecutors say Graham Kligerman misled banks into making millions of dollars in loans).

For story update, see Former Lawyer Cuts Plea Deal In Real Estate Scam (Disbarred Clearwater lawyer Graham Kligerman pleaded guilty on Tuesday (12-17-07) to conspiracy and wire fraud, admitting he stole millions in a real estate scheme).

Go here for a description of ARO's Fresh Start Lease Backs program (no longer available online).

To view the relevant federal court documents in this case:

For more on Graham Kligerman, see:

For more on equity stripping scams, generally, see DREAMS FORECLOSED: The Rampant Theft of Americans' Homes Through Equity-stripping Foreclosure 'Rescue' Scams (4.61 MB approx.).

posted by Home Equity Theft Reporter at 6:57 AM