A federal jury in Greenville, North Carolina convicted James Thomas Davis, 60, Raleigh, North Carolina, of conspiracy, false statements on real estate closing documents, wire fraud, and mail fraud following a four-day trial in federal court before Senior United States District Judge Malcolm J. Howard.
Davis was convicted of a conspiracy and fraud scheme involving newly built houses in Raleigh, Garner, and Wake Forest, North Carolina. Davis purported to be a real estate “consultant” and ran entities called “Easy Financial Service” and “Eagle Investments Club.” Davis and others defrauded mortgage lenders by submitting false and misleading documents, particularly HUD-1 settlement statements, to induce the lenders to make loans to borrowers recruited by Davis. Among the false statements in these documents were inflated sales prices, backed by appraisals, down payments secretly provided by the seller, and hidden cash kickbacks to Davis.
Davis and others also defrauded individuals who were told by Davis that they could “lease-to-own” the houses until their credit was repaired. These victims lost thousands of dollars in down payments and monthly payments they believed would be applied to a house purchase.
The jury found Davis guilty on all six counts against him.
In addition to Davis, a Raleigh based residential house builder, David Layton, 54, was charged in this case. In April, 2006, Layton pled guilty to conspiring with Davis to make and use false documents at closings where Layton was the seller. Layton testified at trial as part of the United States’ case-in-chief. Layton told the jury, among other things, that he and Davis had created fake sales prices based on appraisals rather than a bargain between a real buyer and seller.
Acting United States Attorney George E. B. Holding stated, “the fraudulent real estate deals in this case hurt individuals, neighborhoods, and lenders. We will vigorously prosecute all parties to deceit in such common but important transactions."
Sentencing of Layton is scheduled for September 5, 2006. Sentencing of Davis is scheduled for the week of November 6, 2006. Davis is in custody pending sentencing.
Rachel Dollar, the editor of Mortgage Fraud Blog is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors.