The latest update from Kelly Bennett on the big condo scam:
Jim McConville needed help to pull off a massive mortgage swindle. He couldn’t let the banks making the mortgages know that he was sucking at least $120,000 each out of more than 80 condo sales in Escondido and San Marcos in 2008.
He got the help he needed, federal prosecutors say, from Bay Area escrow officer Donna Demello of Stewart Title of California.
Demello cloaked the payments to McConville by creating two versions of the official receipts from the real estate deals, according to prosecutors. One version included the payout to McConville’s company. The other version, the one that went to the banks, didn’t.
The payout would’ve been of special interest to the lenders because it could have signified that the price they were making a loan for was inflated.
In any real estate deal, the escrow officer has a big job. Escrow is supposed to be a neutral third party, a kind of impartial holding place for all of the money involved. The escrow officer disburses the money following instructions agreed upon by all parties.
In this case, escrow wasn’t neutral, prosecutors say. They allege Demello was a key part of the mortgage scheme McConville orchestrated using straw buyers to purchase hundreds of condos throughout California. New details about those roles emerged in an indictment released Friday, which charged McConville and five others with conspiracy to commit fraud.
In North San Diego County, McConville picked up condos for a low price from distressed developers and arranged for them to be sold to buyers who’d rented their identities to him, our investigation showed.
By arranging high purchase prices, McConville could pay off the developers and rake in a chunk of money for himself on each condo — a payout the developers’ records showed to be more than $12.5 million on just the San Marcos and Escondido properties.