North Carolina Feds Indict Attorney & Broker In Alleged Flipping Scam

In Charlotte, North Carolina, the Charlotte Observer reports:

• A federal grand jury in Charlotte has indicted a real estate attorney and a mortgage broker, accusing them of defrauding banks and clients during illegal real estate transactions in 2001 and 2002. The attorney, Victoria Sprouse, and the broker, Michael Pahutski, both of Charlotte, were indicted Nov. 16 on charges of mail, wire and bank fraud, conspiracy and money laundering. Sprouse was also indicted on a perjury count. Stephen Hawfield, a Charlotte real estate investor, was named as an unindicted co-conspirator. According to the indictment, Sprouse and Pahutski prepared false mortgage loan applications, submitted false documentation in the applications and illegally held money during the closing of home sales.

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• In February, a jury in U.S. District Court awarded a company that had sued Sprouse $1.15 million in damages, although the amount was later reduced. The company, SouthStar Funding, accused Sprouse of defrauding them during real estate transactions.

For more, see Attorney, broker indicted (Pair accused of creating false documents to profit from home sales).

Foer story update (April 2, 2009), see Sprouse guilty of mortgage fraud (Real estate lawyer weeps after jury convicts her of 18 charges of conspiracy, fraud, money laundering).

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