In Mobile, Alabama, the Press Register reports:
- A federal judge in Mobile [...] sentenced the ringleader of a fraudulent Baldwin County real estate scheme to 5 years in prison and hit him in the wallet, ordering the Georgia man pay more than $5 million to his victims.
- Lance A. Collins pleaded guilty in August to conspiracy to commit mail and wire fraud. His written plea agreement listed 7 condominium sales in Gulf Shores in 2006 and 2007 in which Collins or other members of the conspiracy submitted false information to mortgage companies.
- There were indications that the damage was more extensive. At least 16 homeowners have filed suit in Jefferson and Baldwin counties over soured real estate deals involving Collins, and the plaintiffs’ attorney estimated that the defendant and others engineered at least 50 similar transactions.
- According to court records, it worked like this: Collins founded and ran a company called Tradestone Industries, which also did business as Alabama Coastal Renovations. His plan was to buy older condos, renovate them and quickly resell them at a profit. He used creative financing that he picked up from watching late-night infomercials of gurus like Carleton Sheets.
- Collins and others would persuade sellers to hold a "silent second mortgage" on their property, meaning that the buyer promised to make monthly mortgage payments directly to the seller. Meanwhile, the buyers would obtain a traditional mortgage without informing the lender about the seller-financed second mortgage.
- When Collins or "straw purchasers," which he set up as buyers, defaulted, the commercial lenders foreclosed and the sellers ended up with no money and no property.
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