Nine indicted in Colorado short-sale scheme

by Ryan Smith19 Nov 2013

A Colorado grand jury has indicted nine people in connection with an alleged short-sale fraud scheme.

“The nine individuals named in this indictment have allegedly committed fraud against individual victims and Fannie Mae and Freddie Mac,” said acting Colorado Inspector General Michael P. Stephens. “This behavior is unacceptable and anyone found guilty will be held accountable to the full extent of the law.”

According to the Colorado Attorney General’s Office, the scheme targeted distressed homeowners in pre-foreclosure status. “Once a property was zeroed in on by members of this scheme, the goal was to obtain control and ownership over the property through a series of deceptive tactics,” the office stated in a Monday release. According to the release, the scammers would manipulate a homeowner into signing over ownership and control of the distressed property, while filing forged paperwork with the lenders indicating that the original homeowner still owned the house.

“The last key tactic was the use of family members or business associates to serve as ‘straw buyers’ who were fraudulently represented to the banks as being arms length purchasers who also had the financial resources to legitimately purchase real estate,” the Attorney General’s Office stated. “At the same time, a member of the enterprise would list the property in order to sell it to an innocent third party buyer, usually for a significantly higher price than the bank had agreed to.”

The short-sale scheme was allegedly used for at least eight different properties – including some of the suspects’ own homes – from at least 2008 to the present day, according to the A.G.’s office.

“It is unconscionable that this group would target financially distressed and vulnerable homeowners by fraudulently taking control of and selling their properties, with the ultimate goal of defrauding the homeowners’ financial institutions and the subsequent homeowners.” said Colorado Attorney General John Suthers. “This group took advantage of multiple homeowners, using deception and forged documents, to create illegal profits on the sale of various properties.”



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