2 Sentenced for Illegal Flipping Scheme

admin —  September 20, 2012 — Leave a comment

Robert Strong, 48, Bothell, Washington, and Anthony Waldron, 49, Kirkland, Washington, were sentenced for engaging in a mortgage fraud scheme that collapsed with the real estate downturn.

Between 2005 and 2008, the men used fraudulent information to obtain more than $13 million in loans on 30 different properties, primarily in South King County, Washington.  When the scheme ended and the homes went into foreclosure the lenders had lost more than $2.5 million.  At sentencing U.S. District Judge Thomas S. Zilly told the men that they knew what they were doing was “false and fraudulent”¦ (they were) defrauding the banks” and their “motivation was money and profit.”

According to records filed in the case, the men recruited straw buyers with good credit to “purchase” the houses.  These straw buyers were paid as much as $18,000 for use of their identity and credit score on the loan documents.  The men submitted false employment information on the straw buyers, in one case claiming the woman made $22,000 per month working for an entity they created and controlled.  Using this false information the men got banks to fund the mortgages on the houses, then the men would quickly “sell” the house to another straw buyer at a higher price to claim the additional mortgage funds.  The men also rented the houses on “rent to own” plans, asking the renters to pay an option, ranging from $400-$7000, to purchase the home at a later date and at an increased price.  The men also falsely claimed repairs were made to the homes and increased the value of the homes based on those repair bills.  Instead they pocketed the money that they claimed went to home improvements. 

The amount of restitution the men owe is still being calculated and will be considered by Judge Zilly at a future hearing.

In asking for prison time for both men, prosecutors wrote to the court, “Over the course of two years, Messrs. Waldron and Strong repeatedly made false representations on loan applications.  Moreover, Mr. Waldron took the extra step of actually verifying this false information when called by ndividuals seeking to confirm the soundness of the application.  In addition, over nearly a year long period, Messrs. Waldron and Strong created and submitted eleven fraudulent invoices so that they could obtain an additional $400,000 in loan proceeds.  Messrs. Waldron and Strong’s actions affected approximately 30 properties, each of which was sold at a decreased price or foreclosed upon, thus causing a loss to each of the lenders, and damage to the neighborhoods.”

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).  The case was prosecuted by Assistant United States Attorney Tessa Gorman

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