Real Estate Firm Owners Sentenced for Fraud Scheme

Allison Tussey —  December 4, 2012 — Leave a comment

Joann Smith, and her boyfriend, Wayne Betha, Ewing, New Jersey, who ran a real estate firm, were sentenced for stealing from home sellers by diverting proceeds from home sales, and also defrauding mortgage companies by falsifying the earnings of loan applicants.

The defendants were sentenced to five years according to media reports.

As previously reported on Mortgage Fraud Blog, the couple pled guilty in July 2012.  Investigation revealed that between August 2006 and February 2008, using their real estate firm, S&B Property Management and Maintenance LLC, Trenton, New Jersey, the pair stole over $600,000 from sellers in connection with 11 home sales. Smith and Betha allegedly diverted proceeds of the sales into their own bank accounts for their personal use, deceiving the sellers into believing they were not entitled to all of the profits from their homes. Most of the sellers were having serious financial problems and could not continue paying their mortgages. The 11 homes are in Trenton (4 homes), Ewing (1 home), Hamilton (2 homes), Orange (1 home), Willingboro (2 homes), and Camden (1 home), New Jersey.

In arranging for sales of three of the homes, Smith and Betha provided false information about the salary or wages of the buyers on settlement forms filed with the U.S. Department of Housing and Urban Development (HUD) and mortgage applications, causing three mortgage companies to issue loans totaling approximately $641,800.

The couple used a variety of schemes to fraudulently divert proceeds from the home sales into bank accounts maintained by Smith and S&B. They represented to sellers and title companies that monies were owed to them for expenses, including property renovations and repairs that were never done and exorbitant consultant fees that they claimed the sellers had authorized. Many of the checks issued by the title companies handling the property sales were written to the home sellers, but Smith convinced the sellers to sign the checks over to her for payment of business expenses and fees. In several instances, the defendants falsely indicated on HUD forms and tax forms that the sellers directly received all of the profits from the home sales. They also omitted to tell sellers that they were agreeing in mortgage closing documents to pay large, unauthorized sellers concessions or sellers assists to the buyers.

The victims were not financially sophisticated. They did not understand the details of the property closings and, because of their financial woes, were anxious to be free of the obligation of paying mortgages they could no longer afford. Smith and Betha took advantage of these facts to steal the victims profits from the home sales.

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Allison Tussey

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