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.
http://www.voiceofsandiego.org/housing/article_7db297a8-6233-11df-b2a8-001cc4c03286.html
FINALLY. Somebody is going to jail.
Jim, You could make a living putting away all the corrupt people in real estate.
“Lawyers Guns and Money” -Warren Zevon
What Jail? Bwa ha ha. Call Mozilo next.
And how many neighbors were pricing their homes based on this fraud?
Kelly’s reporting on this has been excellent. Thanks.
Defying some analysts’ predictions of a slow and subpar U.S. recovery, researchers at the Federal Reserve Bank of San Francisco are predicting a rapid economic rebound.
Citing growth in both consumer and business spending, economists Justin Weidner and John C. Williams said recovery “is likely to be faster than from the two previous recessions” in a report released Monday.
Recent wild swings on Wall Street, tepid April retail sales figures and fears of global contagion from the Greek debt crisis have some worried that the improving U.S. economy could easily reverse course.
But that hasn’t tempered the optimism of the researchers at the San Francisco Fed.
“I see no signs of a double dip,” said Williams, director of research at the San Francisco Fed. “The economy continues to gain momentum, and consumer spending and business investment continue to improve.”
The part that always amazed me about these people who commit these large real estate frauds is :
why the hell are they still in the US when they could be living the charmed life on some island or other tropical country? It Doesnt take a rocket scientist to find a decent island or country with no reciprocation to the US.
Geez no friggin brains.
Me too – this joker could have been long gone with $12 million!! Was he was a little short because he gave the escrow lady a million or two?? Find a way to get by on $10 million!!
BTW, the realtor still has an active real estate license, with no disciplinary action.
This is why I’ll never manage to be an Evil Genius, because I can’t follow the multiple layers of perfidy involved here.
Near as I can tell from the story, McConville approached the developer and the bank, claiming to have buyers, when in fact all he had was an autopen. An appraisal appears showing the condo is worth X, when in fact it’s probably worth 0.5 X. Inflated appraisal is then bundled with McConville’s inflated commission, and the “buyer” agrees to the deal. Developer signs off on it, believing everyone has all the same disclosures. Although improbable, the developer is still within “plausible deniability” territory.
McConville then sends to the bank a fake appraisal (based on the already-inflated one) that is pre-padded with his commission. He then engages a corrupt escrow agent to shuffle the double set of paperwork to appropriate parties. He also engages a corrupt notary to certify faked documents from buyers who do not actually exist.
The end game appears to be the developer ends up as the “innocent” beneficiary of a bank-funded “sale,” McConville ends up with the money from exhorbitant commissions, and the properties themselves are just sort of left flapping in the wind until the bank forecloses on the non-existent buyers and realizes it now owns a pile of overpriced condos.
Did I miss anything? ‘Cause that end game seems kinda sloppy to me unless an express charter flight to the Caymans for McConville, the escrow agent, the notary, and probably half a dozen other people is involved…
“BTW, the realtor still has an active real estate license, with no disciplinary action.”
Good to see SANDICOR is on the case! Sheesh.
vegasandre- save me the research…where would you go?
this site has some pretty funny error messages. sharing my latest one for those of you that never get on the bad person list, “You are posting comments too quickly. Slow down.” I swear I didn’t make that up.
See, most people who skimmed money off mortgage deals at least did it in a virtually unprovable fashion. 10% commission on an inflated house, kickbacks in cash, etc.. You’d have to be wiretapping people to catch that. This, not so much. He was caught because two books were kept and the one with kickbacks had to be passed around.
ewhac, when you’re an Evil Genius, you only need a ticket to the Caymans for yourself.
So much fraud took place and still is in many places.
So much fraud, so little prosecution.
Why don’t the crooks leave after they get the loot? Because that’s not what criminals do. Crooks don’t rob and then close up shop and get out of town. Crooks rob so they can rob some more.
Folks, that’s why we are not even close to being in a housing/financial recovery. Both sectors have become mostly places for criminal activity (Jim and people like him are in the minority).
Until we indict, prosecute, convict and jail huge numbers of top and mid level housing/financial sector criminals, nothing will change.
researchers at the Federal Reserve Bank of San Francisco are predicting a rapid economic rebound.
No fair! Individual comments can’t be tagged as “psychobabble”! 🙂
Rosenberg — Why The Depression Is Ongoing
There are classic signs indeed that the recession in the U.S. ended last summer — output, sales, etc. But the depression is ongoing and the reason we say that is because real personal income, excluding handouts from the government, has barely budged. In fact, real organic personal income is nearly $500 billion lower now than it was at the peak 16 months ago and this has never occurred before coming out of any technical recession. It is a depression…
Interesting point from the link “‘One version’ including the payout to McConville” is the ‘marketing fee’ 3Mac received is larger than the amount the prior 1st lien holder/bank received. That’s pretty gutsy for McConville to take a larger payout than the prior secured lender on the project. Another great name for a crook – mcCONville! Since he’s ‘missing’ maybe he did take his $12 million and Superman comic book and headed to a little island somewhere…
TJ, I’m almost finished reading “The Great Depression Ahead” by Harry Dent. It seems like a book you’d like if you haven’t read it already. Most people won’t like it because it’s not what they want to hear, but it makes a very compelling case for a depression. It also makes a strong case for deflation (which until a few days ago, I couldn’t foresee at all.)