Fraud isn’t always obvious if you don’t know what to look for. This can be especially true in real estate when people who are unfamiliar with the industry get caught up in murky finance deals. The best advice is to do your homework and make sure the deal is clean. But here are some cases of real estate fraud around San Diego to give you a glimpse into what some of these scammers have tried to do.
In 2009, two dozen people were accused of racketeering for a mortgage scheme organized by a street gang member. From 2005-2008, they took out loans that were higher than the value of the homes which they bought, profited off of the difference, then allowed the house to fall into foreclosure. Many of the co-defendants were not your run of the mill gang members, either, but included people in real estate, title insurance, appraisal and notary public businesses. They were able to get the excess funds in order to make the homes accessible to the disabled, but the contractor supposed to do the construction was a dummy company set up by the scheme’s leader. This lead the FBI to investigate, and ultimately arrest the perpetrators.
Larry Smith, the mastermind of a real estate scam, was convicted of many charges related to his scheme on 17 June 2010. These included grand theft and conspiracy to commit unlawful acts by a foreclosure consultant. He was one of eighteen defendants standing trial for the scam. Smith offered “land patents’ to home owners who were in fear of defaulting, persuading the victims that it would prevent foreclosure because the banks would own the house but not the land beneath it. Smith had previously been convicted of other offenses, including robbery and second-degree murder. Nice guy.
In September of 2010 a couple brothers were caught in a widespread fraud scheme that included forty properties in San Diego County. Among the 106 separate felonies they were charged with were identity theft, forgery, grand theft, rent skimming, and conspiracy. According to NBC San Diego, “the brothers created false or faulty quit-claim deeds on several properties in California and Nevada. The [brothers] rented out these foreclosed homes to unsuspecting renters pocketing the rent money for themselves.” They were acquiring these properties by convincing home owners they could prevent foreclosure if they transferred the title over to them. Then they would rent the property out and file bankruptcy petitions to extend the period over which they could collect rent.
Finally, just a few days ago a local business owner was convicted in a loan-mod case. The defendant, Borzou Hamzaviabedi, promised to lower homeowners’ mortgage payments in return for an upfront fee. He then pocketed the money without ever giving them anything in return. Hamzaviabedi was the co-owner of Fair Lender Audits. He pleaded guilty to serving as a real estate agent without a license and accepting cash for illegal loan modifications. Simply charging the fees is illegal both in California, and more recently at the federal level, since the FTC instituted a rule banning upfront fees effective January 31st. As part of Hamzaviabedi’s sentence, he must cooperate in the prosecution of his partner, Esteban Arjona. The fees they took were from $2,500 to $3000.
