Head Of Illegal House Flipping Operation Gets 27 Years; Scam Lead To 60+ Foreclosures; Collateral Damage To Surrounding Neighborhoods Pegged At $90M

In Charlotte, North Carolina, the Charlotte Observer reports:

• A man convicted in 2007 for his role in a mortgage fraud scheme affecting homes in the Charlotte area was sentenced Monday to 27 years in federal prison. William Roosevelt Cloud, 62, also was ordered to pay more than $880,000 in restitution to several financial institutions. Cloud was convicted two years ago of crimes including mortgage fraud conspiracy, bank and mail fraud.(1)

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• He and others would recruit people to buy homes, sometimes promising to help them rent out homes and sell them later for a profit. In some cases, promoters and brokers would arrange for an inflated appraisal of a property, purchase the home at the lower fair market value, then sell the property to a buyer at the inflated price. The transactions sometimes would occur on the same day. Eighty percent of the homes purchased with Cloud's direct involvement went into foreclosure, U.S. District Judge Frank Whitney said. [...] Whitney called Cloud the main organizer in the scheme, saying he was able to convince some licensed professionals to breach their responsibilities.

• The judge and prosecutors also said that Cloud caused or contributed to more than $19 million in losses. An expert who testified for prosecutors, however, pegged the collateral damage to the communities around the more than 61 foreclosed properties at nearly $90 million.

For more, see Mortgage conspirator sentenced to 27 years (80 percent of the homes involved in the scheme, which falsely inflated house values, landed in foreclosure).

(1) Reportedly, at least 19 others have pleaded guilty as co-conspirators in the scheme, including three attorneys, five mortgage brokers and an appraiser.