Saturday, December 03, 2016

Another Aging Lawyer Forced Into 'Involuntary' Retirement Gets 17 Years For Role In Racket That Used Falsified Legal Descriptions, Phony Lien Releases In Real Estate Development Scam; Victims Include Private Investors, Title Insurers, Bank Lenders

From the Office of the U.S. Attorney (Raleigh, North Carolina):
  • The United States Attorney’s Office announced that [...] JOSEPH HAL KINLAW, JR., 64, of Bald Head Island, North Carolina, was sentenced to 17 years in prison for Bank Fraud. KINLAW was also ordered to serve 3 years of supervised release following imprisonment, and to pay $23,796,372 in restitution to the victims of his offense.

    Based upon the Criminal Information and evidence offered at the time of KINLAW’s sentencing, KINLAW was a licensed North Carolina attorney who operated various alleged real estate investment and development entities on behalf of investors in the Hubert area of Onslow County. KINLAW used the entities to obtain real estate development loans from Branch Banking and Trust (BB&T), and First Citizens Bank. BB&T and First Citizens Bank extended loans to these entities under the auspices that the entities would be engaged in the development of residential real estate in various subdivisions in the area of Camp Lejeune in Onslow County.

    Between 2004 and April of 2013, KINLAW used the real estate development entities to defraud BB&T and First Citizens Bank by falsifying the legal descriptions of the loan collateral, and by falsifying releases of the collateral.

    By drafting a false legal description of the property, KINLAW was able to use the collateral for other real estate investment activities and loans. By fraudulently releasing the banks’ collateral before the banks’ loans had been satisfied, KINLAW was able, in several instances, to convey the collateral to third parties for value and continue the scheme.
    ***
    Because KINLAW had substituted false legal descriptions of bank collateral, and fraudulently conveyed bank collateral, BB&T and First Citizens Bank were unable to capture their loan losses in foreclosure.

    Various title insurance companies and investors also lost substantial funds to due to the scheme. While the exact amount of the loss remains the subject of investigation, losses are presently anticipated to exceed $18 Million.

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