O’Fallon resident and multi-million dollar real estate developer Robert D. Hartmann pleaded guilty to mail and bank fraud charges related to his real estate business.  Hartmann grew his business by purchasing, renovating, developing, leasing and selling real estate.  His focus was on the purchase of existing properties in need of various degrees of repair.

By late 2005, Hartmann’s business had collapsed.  He was involved in hundreds of residential real estate deals by that time.  He had obtained loans primarily for residential properties through hard money lenders, banks and investors.  Properties he purchased through the loans, however, were left in disrepair and some of the homes even went into foreclosure.

Hartmann’s fraudulent real estate deals generated losses in the range of $400,000.

He even defrauded a St. Charles woman of the equity she had built up in her home.  He posed as someone who was helping the woman keep her home.  He bought the home from her, but worded the terms such that he pocketed over $44,000 and she received only $1,882.93 in the exchange.  In the agreement, he allowed her to buy her home back in a rent-to-own scheme.  She thought the amount owed would be for $56,000, which was the amount originally owed on her property.

In buying her home, however, Hartmann took out a mortgage for $100,000.  Months later, he obtained additional funds in hard money loans against the home in the amount of $68,000.  The woman had no knowledge of the amount for which her home was mortgaged, which totaled well beyond its market value.  Hartmann stopped making mortgage payments to the lenders in November of 2005, even though the woman continued to make payments to him until sometime in 2006.

Several months later, the bank foreclosed on the house, which forced her to leave.  She lost her home, along with all the equity she had built up in it.  Hartman walked away with over $44,000 and with the hard money loans, which he used for his business.  He committed several other acts of fraud for which he was charged.

U.S. Attorney on the case, Catherine Hanaway, commended the USPS Inspection Service, Federal Bureau of Investigation (FBI), HUD Office of Inspector General, and assistant U.S. attorneys who are working the case on behalf of the U.S. Attorney’s Office.

In attempts to thwart fraudsters in their tracks, Hanaway initiated the U.S. Attorney’s Mortgage Fraud Task Force in November of 2008.  The task force includes professionals across all avenues of the lending industry, along with various levels of government and non-government entities and local, state and federal law enforcement agencies.

To report suspected lender fraud or to become involved in the task force call the Mortgage Fraud hotline at (866) 587-9571.

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