No city is impervious to the long stretching arms of mortgage fraud.  Nor is any scammer impervious to the long reaching arms of the law.  Just last year, 9 individuals from the Phoenix area were indicted for mortgage fraud.  Later, the U.S. Attorney’s office and FBI released a statement regarding 36 people involved in mortgage fraud, all of whom were indicted.

What’s interesting about this particular case is that it was part of Operation Malicious Mortgage, a nationwide massive multi-agency smackdown that targeted mortgage fraud schemes.

An indictment was filed in the U.S. District Court of Arizona charging 9 people with conspiracy, money laundering, wire and mail fraud, aiding and abetting relative to alleged involvement in a mortgage fraud “cash-back” scheme.  At least, 22 properties were involved in the scam.  Straw borrowers purchased the properties.  At the closing of each, Daniel Morar, sole proprietor of D. Contractor Invest, Inc., received cash back from the loan disbursement, even though he was not named as the borrower.

Cash back means that money was being skimmed off the top of the loan to be disbursed to scammers involved in the scheme.  Total cash received from the cash back transactions was approximately $1,515,000.  The money skimmed was shared among the 36 defendants with the bulk of the monies going directly to Morar who attended the closing.  A mortgage broker, escrow officer and owner of CI Custom Builders facilitated the scam.  Properties involved in the scam ranged from $375,000 to $900,000.

Fraudulent appraisals were obtained that substantially exaggerated the fair market value for each one of the homes and noted title companies that would falsify the Settlement Statement.  The sale price for each transaction would exceed the seller’s asking price by $69,000 to $180,000.

Loan application documents in the scam misrepresented borrower’s income, employment, assets, intent-to-occupy and other real estate property owned by the stated borrowers.  In addition, the Settlement Statement left out any mention of payments made directly to Morar from the loaned funds.