Ex-Real Estate Developer Gets 70 Months In Mortgage-Stacking Scheme That Left Unwitting Homebuyers w/ Multiple Liens & Screwed Title Insurers Out Of $8M+; Co-Conspiring Title Agent (45 Months In Slammer) Knocks 18 Months Off Prison Sentence By Cooperating w/ Feds To Convict Former Scam Partner

In Grand Rapids, Michigan, mlive.com reports:

• Former real-estate developer Charles Patrick Gahan was sentenced Wednesday, Nov. 4, to five years and 10 months in federal prison in an $8 million "mortgage-stacking" scheme.
  
  Gahan, 52, was remanded to the custody of U.S. Marshal's Service after sentencing by U.S. District Judge Robert Holmes Bell. The judge ordered Gahan to spend five years on supervised release when his prison sentence ends and to pay $8,205,405 in restitution.
  
  Co-defendant Scott Hoeft, formerly the owner of Prime Title Services, is serving 45 months in prison for his role in the scheme.
  
  The government said the two conspired to defraud banks, lenders and title companies by obtaining multiple mortgages on property without disclosing prior liens. Hoeft wrote title insurance policies for First American Title and Old Republic National Title Insurance.
  
  The insurers lost over $8 million.
  
  "This was a very sophisticated and long-running title insurance fraud scheme that involved numerous residential developments," U.S. Attorney Patrick Miles Jr. said in a statement.
  
  "Innocent homeowners arrived home to find foreclosure notices on their doors, from banks they had never heard of, solely because Gahan fraudulently diverted closing funds from those banks to his own pocket. The Court's sentence [] reflects the seriousness of this financial crime."
  
  Old Republic and First American in 2005 began receiving title insurance claims from homeowners who bought homes in the many developments of GBW Development. Gahan was part owner of the company.
  
  These homeowners reported that liens existed against their properties that were not disclosed on the title commitments issued as part of the closing process for their homes, Assistant U.S. Attorney Ronald Stella said.
  
  Investigation by the title insurers showed Hoeft intentionally failed to disclose or satisfy preexisting liens on the residential properties. The funds at closing were diverted to Gahan.
  
  Among Gahan's projects was a 2003 development of Cornerstone Estates in Caledonia Township, the government said. The government says the fraud occurred from 2002 to 2006.
  
  Defense attorney Helen Nieuwenhuis said the fraud started small.
  
  "It was fraud and Mr. Gahan admits it was wrong," she wrote. "Over time the fraud became so large it virtually became impossible to keep up payments and pay outstanding liens or meet obligations related to properties. ... (A)s some of the banks and private lenders began to discover the ongoing fraud, in an attempt to meet obligations and owed money Gahan and Hoeft began using Prime Title's escrow account to trade in currency markets."
  
  He told a probation officer that he "made horrible decisions out of greed and fear of failure," his attorney said.

Source: Michigan developer sentenced in $8M mortgage fraud.

For the U.S Attorney (Grand Rapids, Michigan) news release, see Real Estate Developer, Charles P. Gahan, Sentenced To 70 Months For Eight Million Dollar Title Insurance Fraud Scheme:

• The two title insurance companies that Hoeft used to issue the title insurance policies suffered over $8,000,000.00 in losses to provide clear title to the homeowners.
  
  Hoeft was previously sentenced to 63 months’ imprisonment for his role in the scheme, which was reduced to 45 months’ imprisonment for his cooperation in the prosecution of Gahan.