Friday, July 10, 2009

Detroit Feds Indict Five In Alleged Straw Buyer Scam Involving Fraudulent Short Sales Of Luxury Condos

In Detroit, Michigan, Crain's Detroit Business reports:
  • Terrence Berg, the U.S. attorney for the Eastern District of Michigan, announced the unsealing Wednesday afternoon of a felony complaint involving the fraudulent short sale of luxury condominiums at the Harbortown development on the Detroit River.

  • The complaint alleges that Edward Tate, Craig Covert, Richard Allen, Richard Watts and Louis Lynch conspired to commit wire fraud involving unqualified straw buyers and false loan applications. It is alleged that Tate, 27, masterminded the scheme, which involved an unnamed real estate developer who defaulted on a loan from the Bank of America.

  • As part of the work-out plan with the bank, the developer was allowed to sell the condos at a drastically reduced price in what is termed a short sale. The complaint alleges that Allen, Watts and Lynch were the straw buyers, who were in prison for such crimes as murder and attempted rape at the time the loan applications claimed they were suitably employed. It is alleged that Covert was paid to recruit straw buyers. All five were arrested Wednesday. In addition to arrests, a search warrant was executed at Pure Title Agency L.L.C. in Farmington Hills.

Source: U.S. attorney charges suspects with mortgage fraud at Harbortown project.

For the U.S. Attorney press release, see Seven Charged In Two Separate Mortgage Fraud Schemes.