Menu
TwitterRssFacebook
More Links

Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Carlsbad
(760) 434-5000

Carmel Valley
(858) 560-7700
jim@jimklinge.com


Category Archive: ‘Fraud’

Cole Gets 17.5 Years

crispy

Hat tip to W.C. Varones for sending in this article on Crisp and Cole, the two real estate agents in Bakersfield who were found guilty of defrauding banks out of nearly $30 million:

http://www.bakersfieldcalifornian.com/local/breaking-news/x2027872331/David-Crisp-sentenced-to-17-1-2-years-wife-to-probation

FRESNO — For their roles in a mortgage fraud case that rocked Bakersfield, David Crisp was sentenced Monday to 17 1/2 years in prison while his wife, Jennifer, received what the federal judge in the case called “the break of a lifetime”: five years probation.

David, 34, was immediately remanded to custody to begin serving what amounts to the same sentence given in February to his former business partner, Carl Cole, who like Crisp had pleaded guilty to conspiracy to commit mail, wire and bank fraud. Both former principals of Crisp & Cole Real Estate and Tower Lending were ordered to pay restitution of more than $28 million.

In a news release, federal prosecutors said David had finally “crashed hard” after flaunting his “ill-gotten wealth” and going around in exotic cars, Armani suits and a private jet.

“David Crisp lived in the fast lane, steering a real estate company that was all image and no substance,” U.S. Attorney Benjamin B. Wagner wrote.

As the housing bubble burst, Crisp & Cole’s projects fell through, home defaults mounted and lawsuits were filed. By September 2007 the IRS had slapped David and Jennifer Crisp with a $111,170 lien in back taxes and the FBI began investigating.  Within days, more than 75 federal agents swarmed over 13 properties related to the former Crisp & Cole company.

In his plea agreement, David Crisp admitted that he and his co-conspirators caused losses of at least $29.8 million to defrauded lenders.

The Crisps’ guilty pleas brought to 14 the number of defendants who have done so in the case.

As for the success he appeared to achieve as a young real estate mogul, Crisp told the judge, “It got to my head, your honor.”

His Fresno lawyer, Eric Kersten, portrayed Crisp as an inexperienced “kid” caught up in a booming market. Kersten tried to shift some of the blame to Cole and the bankers anxious to give out loans during the real estate boom.

“Everybody was making money. It was like the wild West,” Kersten said.

Posted by on Jul 16, 2014 in Fraud, Scams | 6 comments

Short-Sale Flipping

Here is investigative reporting for you.

Jason Hidalgo from the Reno Gazette-Journal found that dual-agency short sales with a prearranged cash buyer accounted for more than 10 percent of Northern Nevada’s 2,096 single-family home short sales last year.  He looked me up in February to get my thoughts on short-sale flipping, and then in his story he lays out two offenders:

http://pages.rgj.com/specialreports/soldshort/index.html

Here is an excerpt:

Krch Realty, which triple dipped commissions on more than half of its dual-agency short sales with cash buyers last year, did not respond to a request for comment for this article.

ssmarshallMarshall Realty accounted for nearly a third of such short sales in 2013. Broker-owner Marshall Carrasco defended his company’s transactions and referred further questions to his lawyer, who wrote to the Reno Gazette-Journal to “proceed with caution” on any article about Carrasco.

“Mr. Carrasco and Marshall Realty have represented many sellers in short sale transactions,” attorney James M. Walsh wrote. “As noted, full disclosure is made to the short sale sellers of the nature of the transaction. Mr. Carrasco, on occasion, presents these listings to individuals or entities that he knows are interested in purchasing short sale properties.”

Investor Jeremy Page of Harcourts NV1 Realty, a key player in the area’s real estate investment scene, stressed that all his short sale deals were done within the scope of the law. Page says his short sale purchases not only took distressed houses out of the market, they pumped more than $20 million back into the Northern Nevada economy in 2013 in the form of payments to suppliers and contractors who worked on his properties, as well as real estate agent commissions.

Real estate experts say such short sales come at the expense of the average homeowners, who do not fully understand how real estate transactions work, making them easy targets. It’s a problem that’s not limited to Nevada but is seen in other states as well where agents bend the rules for profit, said Jim Klinge, broker for California-based Klinge Realty.

“Typically, the homeowners don’t even know what they signed when these sharks get into their living rooms,” Klinge said. “I have had people call me asking if they have been taken advantage of, and in every case the answer is yes, but they never asked questions.”

The practice is especially a concern in Nevada, which saw the steepest decline in home values at the peak of the U.S. housing crisis. In recent years, the FBI identified the Silver State as a prime target for short sale fraud due to its high percentage of distressed properties.

Klinge called the lax environment surrounding short sales laughable.

“Nothing is done by anybody to stop this outright defrauding of banks, servicers and investors,” Klinge said. “There is no law enforcement or industry watchdogs, so it runs unabated. When other agents see people get away with it and make 5 percent or 6 percent commissions, then the amateurs give themselves permission to do it, too. It is going to take a district attorney vigorously pursuing this until we see perp walks nightly” for it to stop.

http://pages.rgj.com/specialreports/soldshort/index.html

This stuff happened in every major city in America over the last 2-4 years, and thankfully it’s mostly over.  Thank you Jason for a great investigative report!

Jason answers reader questions here:

http://www.rgj.com/story/news/2014/04/21/short-sale-flipping-reporter-answers-reader-questions/7983239/

Their Facebook entry here with 25+ comments and 57 likes:

Posted by on Apr 22, 2014 in Fraud, Scams, Short Sales, Short Selling | 2 comments

Mortgage Fraud

FBI-logoLast summer I met with an FBI agent to discuss a local realtor. I submitted 32 pages of conclusive evidence that implicated the realtor in committing 19 cases of short-sale fraud.

Though the agent said he would pursue it, I never heard from the FBI again.

Hat tip to daytrip for sending in this article from the nytimes.com:

http://www.nytimes.com/2014/03/16/business/a-loan-fraud-war-thats-short-on-combat.html?ref=business&_r=0

Two excerpts:

“The I.G. report confirmed what’s been clear for quite a while — that the D.O.J. has never taken mortgage fraud seriously,” Professor Levitin said. “There is going to be no comeuppance for crimes committed during the financial crisis. This sets a really bad precedent for future crises because we’re seeing that there is going to be no deterrent effect of criminal law.”

“The report fits a pattern that is scary for a democracy, that there really are two levels of justice in this country, one for the people with power and money and one for everyone else. And that eats at the heart of what I think makes this country great.”

Posted by on Mar 17, 2014 in Fraud, Market Conditions, Mortgage News, Scams | 7 comments

Short Sale Fraud is Illegal

Hat tip to Booty Juice!  From calcoastnews.com:

timbTimothy William Barnes, 37, pleaded guilty Monday to committing bank fraud. Barnes, a San Francisco resident, owned and operated Apex Properties Real Estate Brokerage in San Luis Obispo. Barnes is accused of orchestrating a property-flipping scheme in San Luis Obispo, Paso Robles, Pismo Beach and other Central Coast cities that netted him more than $500,000 in profits between January 2010 and September 2012.

Barnes understated the value of homes in documents he submitted to banks that he was asking to approve short sales. He then sold the houses at higher prices. Often Barnes concealed higher offers he had already received and simultaneously negotiated the short sale and resale of the houses.

Short sales can occur when the value of a property drops below the amount of money owed on the mortgage. In that instance, a bank can agree to a short sale, in which it accepts less than the total owed on the loan.

The FBI and the Federal Housing Finance Agency’s Office of Inspector General investigated the Barnes’s property-flipping scheme. FBI agents raided his downtown San Luis Obispo office in September 2012.

Barnes is scheduled for sentencing on June 16. He faces a maximum of 30 years in federal prison.

http://calcoastnews.com/2014/03/former-slo-broker-charged-federal-bank-fraud/

Posted by on Mar 5, 2014 in Fraud, Jim's Take on the Market, Scams, Short Sales, Short Selling | 6 comments

$15 Million in Kickbacks

The Wolf of Ramona! From Channel 6:

thatsallSAN DIEGO – A Ramona real estate agent who admitted taking part in an investment and mortgage fraud scheme that generated tens of millions of dollars in phony loans and illegal kickbacks was sentenced Friday to serve 15 months in federal custody.

During a hearing in downtown San Diego, U.S. District Judge John Houston also ordered Teresa Rose, 58, to pay more than half a million dollars in restitution to victims of the offenses.

Read More

Posted by on Jan 4, 2014 in Fraud, Mortgage Lawsuits, Scams | 3 comments

More Pocket Scum

Realtors will put a twisted spin on any new gadget in order to justify hoarding commissions.  In this article, one manager convinces himself that because he gets ’300 emails a day and four actually apply’, it’s good to use a separate system that enables pocket listings:

http://www.latimes.com/business/realestate/la-fi-lew-20131020,0,7268732.story

An excerpt:

That means agents no longer have to fool with emails selling Viagra, unwanted notices about office pools, and other non-work-related messages. That frees them up to spend more time listing houses, showing and selling properties, and attending closings. Agents found that the software allowed them to “preview” possible listings with their fellow agents and market them internally before they hit the open market.

That’s a form of so-called pocket listings, which are somewhat controversial in and of themselves.

With a pocket listing, a property for sale is held out of the local Multiple Listing Service while the seller’s agent shops it among his list of clients and friends. If the agent finds a buyer, he gets to keep the entire commission rather than share it with a buyer’s agent.

But while a house is in the agent’s pocket, so to speak, it is not exposed to the entire market, as it would be if it was on the MLS. And in theory at least, if the house was listed, the seller might have been able to secure a higher price.

Under the rules of most MLS systems, a property must be listed within 48 hours of receiving a signed listing agreement. So a true pocket listing is only a short-term ploy at best.

But the Yapmo software makes the process more efficient. Agents are able to automatically shop the property in-house directly to buyers and other agents who have expressed an interest in that kind of house, that price range or perhaps that area.

It isn’t intended to limit exposure to keep the deal in-house, Van Eck said. Rather, it is intended to maximize exposure during the “downtime” between when a listing is taken and the house is ready to show.

“Nothing in the MLS defines what people are looking for,” says Boehmig, the Atlanta broker. “But with this tool, a conversation can ensue while a house is getting ready to come on the market. Our agents can say, ‘I want to hear about that kind of stuff but not that kind of stuff.’”

Yapmo also works well for sellers who don’t know what their homes are worth, or for those who value their privacy and don’t want to tell the world that they are getting ready to put their properties on the market or what price they are asking.

“One of our agents just took a listing but was concerned about the price,” Boehmig says. “He was able to email other agents in the company saying, ‘Here’s what the seller is thinking. What do you think?’ And when the house actually came on the market, it was positioned properly to sell.”

They can dress it up all they want, but when they prominently mention that they have closed 275 pocket sales, you know their objective.  Realtors won’t police themselves – sellers need to insist on their home being placed on the open market!

Posted by on Oct 21, 2013 in Fraud | 5 comments

Short-Sale Bribes

Hat tip to bode for sending this in from the latimes.com:

A Bank of America Corp. employee assigned to deal with delinquent mortgages has been arrested on federal charges of accepting more than $1 million in bribes to allow homes to be sold far below their market value.

Kevin Lauricella worked at a BofA facility in Simi Valley where he focused on short sales, said Ariel Neuman, an assistant U.S. attorney in Los Angeles. Short sales are transactions that allow borrowers in default to satisfy their mortgage debts by selling the property for less than they owe.

A 28-count grand jury indictment, unsealed Tuesday, listed 18 properties allegedly sold in late 2010 and early 2011 at prices below those the bank would have approved. Lauricella is accused of enabling the sales by improperly approving short sales and falsifying bank records.

Most of the homes were in the San Fernando Valley, but others were in Corona, Coto de Caza, Beverly Hills and Bel Air.

“The buyers would either resell the homes at the actual property values or in some cases would refinance the property at the actual value, thereby extracting profits on the deals,” Newman said.

Lauricella, 28, of Thousand Oaks, entered a not guilty plea Tuesday before a federal magistrate and was released on a $100,000 property bond, said his attorney, Ronald D. Hedding. Hedding said he had not yet had time to study the evidence against Lauricella and could not comment.

Documents filed with the indictment indicated the government seized Lauricella’s Chevrolet Suburban on grounds it had been purchased with criminal proceeds and intended to try to take away his home.

http://www.latimes.com/business/money/la-fi-mo-bofa-short-sales-bribes-20131016,0,2008694.story

Posted by on Oct 16, 2013 in Fraud, Short Sales, Short Selling | 5 comments

More on Pocket Listings

My contribution to a big article on pocket listings in the OC Register:

http://www.ocregister.com/articles/mls-529529-pocket-home.html

Other agents say pocket listings are never a good idea.

kobe“If being on the open market is good enough for Kobe Bryant, arguably the biggest celebrity in the O.C., then it’s good enough for everyone,” said Jim Klinge, a Carlsbad Realtor. Bryant’s 8,471-square-foot home in Newport Coast’s gated Pelican Ridge, with a shark tank, hair salon and “extra deep” swimming pool, went on the MLS in August for $8.59 million. The home is still for sale.

Often, homes start out as de facto pocket listings without the sellers’ knowledge, Klinge said, as many agents ask sellers to sign a form allowing them to exclude a home from the MLS for longer than a 48-hour period.

“Agents will tell you it’s because they need time to develop their marketing, but in reality they are shopping around the listing first to their own buyers, then among agents in their office and their waiting buyers, and then if all else fails, the listing gets inputted onto the MLS,” he said. “This practice happens in virtually every office, big and small, and among the most successful agents to the rookies.”

His advice? “Sellers should check the Internet themselves to verify their home has been properly listed on the MLS for sale, and advertised to the open market, before negotiating an offer.”

Klinge thinks that off-MLS listings hurt not only sellers, but buyers, too.

“If a seller has found a buyer, and wants to dupe him into paying too much, he might try to tantalize the buyer with an ‘off-market opportunity,” Klinge said. “It is the reason why buyers should insist on buying only those homes on the open market.”

Read the full article here:

http://www.ocregister.com/articles/mls-529529-pocket-home.html

Posted by on Oct 14, 2013 in Fraud, Listing Agent Practices, Scams | 5 comments

Summer Distressed Pricing

The impact of the short-sale fraud is becoming more obvious. It was at its worst in 2012, and though there has been some rebound this year, the short-sale average pricing is still well below the rest:

NSDCC detached homes sold between June 1-to-August 31:

Year
REOs
SS
Non-Dist
All Avg $/sf
All % chg YOY
2009
$272
$310
$393
$380
-13%
2010
$311
$296
$385
$371
-2%
2011
$296
$296
$393
$378
+2%
2012
$299
$269
$390
$371
-2%
2013
$347
$287
$445
$437
+18%

Fewer distressed properties selling for below-market prices this year has contributed to the spectacular rise in the cost-per-sf statistics – without them the year-over-year comparisions are going to flatten out.

Posted by on Sep 14, 2013 in Fraud, Listing Agent Practices, Short Sales, Short Selling | 0 comments