St. Louis Real Estate Broker Admits Pocketing Cash By Collecting On Bogus Liens Placed On Property Facing Foreclosure In Equity Stripping Scam

In St. Louis, Missouri, the St. Louis Business Journal reports:

• A St. Louis real estate broker has pleaded guilty to bank fraud in connection with brokering real estate transactions in 2006 and 2007. Randall Penberthy Jr., 40, of St. Charles, operated and controlled several business entities, including Covenant Financial, First Choice Investment and Loan and Midwest Management.

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• Penberthy recruited investors to buy residential real estate directly from distressed property sellers whose homes were in danger of foreclosure, according to the U.S. attorney’s office. With Penberthy’s assistance, investors would finance the purchases through bank loans, prosecutors said.

• Penberthy would fraudulently place and record a second or third deed of trust on the property, typically in the name of First Choice or some other entity he controlled, in order to make it appear that a legitimate second or third mortgage had been placed against the property, when in fact he knew that no such legitimate second or third mortgage existed, prosecutors said. Bank loan funds were used to pay the sales price of the property as well as to pay off the fraudulent second or third mortgage, according to the U.S. attorney’s office.

Source: St. Louis real estate broker admits bank fraud.