Men Used Client Trust Account to Fund Mortgage Fraud

Allison Tussey —  April 12, 2011 — Leave a comment

Robert Ernest Brandt, 42, a former Kirkland, Washington, attorney and escrow officer, and William Anderson, 49, Bellevue, Washington, were each sentenced to federal prison for their roles in a $7 million mortgage fraud scheme. Brandt was sentenced to 78 months in prison and three years of supervised release. Anderson was sentenced to 5 years in prison and three years of supervised release. The amount of restitution owed by the men will be determined at a hearing in December 2010. Brandt was convicted in U.S. District Court in Seattle last April 2010 of Conspiracy and four counts of wire fraud. The jury deliberated approximately one day following an eight day trial. At sentencing U.S. District Judge Richard Jones said “You were a two person wrecking crew in the mortgage industry. Money was your goal and greed was your facilitator.”

According to records in the case and testimony at trial, over a dozen people, including Brandt, were linked to an extensive mortgage fraud scheme operating in 2004 and 2005. Ten members of the scheme were charged, six in federal and four in state court. All of the charged defendants pleaded guilty except for Brandt. A number of the charged co-conspirators testified at trial. Anderson, who worked at the same escrow company as Brandt admitted he operated some of the shell companies involved in the purchases. Other defendants already sentenced include Mustafa “Marc” Khosraw, 48, a real estate agent and mortgage broker sentenced to 30 months in prison; Kristyn Jupiter Moss, 40, a branch manager for Viking Bank sentenced to 24 months in prison; and Zachary Joseph Namie, 32, a loan officer with a mortgage company sentenced to five months in prison.

The conspirators would identify houses and would use shell companies or third parties to purchase the homes. At the same time they recruited “straw buyers” who would enter into a purchase agreement to buy the same home from the conspirators at an inflated price (a flip). The conspirators assisted the straw buyers with phony paperwork for the home loans, making it appear that they were qualified for the mortgage loans and planned to occupy the houses. Members of the conspiracy allegedly falsified numerous documents including appraisals, verifications of deposits, employment verification and closing documents. In fact, the conspirators simply split the proceeds from the fraudulent mortgages, and the straw buyers defaulted on the loans after pocketing as much as $20,000 for their fee. The homes were foreclosed and financial institutions and mortgage lenders suffered substantial losses, estimated to exceed $7 million dollars.

For his part, Brandt ran a company called “Escrow Authority,” that closed all of the sales of the flipped properties. He permitted other members of the scheme to use money out of his lawyer’s trust account to acquire properties. The same properties were then quickly resold to straw buyers for significantly higher prices, and fraudulent loans were obtained to finance the fictitious resales. Brandt was disbarred in 2006, after the Washington State Bar Association concluded he had allowed the improper use of his client trust account in the mortgage fraud scheme, and had improperly engaged in transactions in which he had a conflict of interest.

In asking for a lengthy sentence for Brandt, Assistant United States Attorney Vince Lombardi noted that individuals – not just mortgage lenders – lost money when Brandt‘s trust account closed with a nearly $3 million deficit. “Brandt’s actions betrayed his duties as a member of the bar to safeguard the interests and property of clients and third parties entrusted to his care. Brandt also signed off on documents he knew to be false, in particular the HUD-1 forms, concealing the nature of the transactions from lenders and clients. Brandt created the corporate vehicles Anderson used to perpetrate the flips – and repeatedly lied about that fact,” Mr. Lombardi wrote in his sentencing memo.

The federal case was indicted in June of 2008, as part of Operation Malicious Mortgage, and the overall investigation was conducted jointly with the Washington State Department of Financial Institutions, the King County Prosecuting Attorney’s Office, and the Kirkland Police Department.

The case was investigated by the FBI, the King County Prosecuting Attorney’s Office, the Washington State Department of Financial Institutions (DFI) and the Kirkland Police Department.

The case is being prosecuted by Assistant United States Attorneys Vincent T. Lombardi and Nicholas W. Brown. This case was prosecuted as part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

 

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Allison Tussey

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