Dirty Deeds

Real-estate fraud has become epidemic as home prices have surged skyward.

Bill Denny looks like he is always tired. His suit is rumpled, and his eyes bear the marks of poring over thousands of legal pages: quitclaim deeds, reconveyances, and mortgage refinance documents. Since 1998, Denny has run the real-estate fraud unit for the Alameda County District Attorney. But for all the hours he pours into his job, he knows the criminals usually get away with it. For example, over lunch at a greasy Fruitvale restaurant, he demonstrated how to steal $30,000 with a napkin.

“Gimme a pen,” he said, and started writing. “Okay. Take this to the recorder’s office on Oak Street this afternoon. All you have to do is get Joe Smith to sign here, or let’s just forge his name. Just sign right there. Go to the assessor’s office and find out the assessor’s parcel number, ’cause that’s required by law. The notary is sealed here, witnessing the signature of Joe Smith — you can find a crooked notary in about ten minutes. You can take a cocktail napkin to the recorder’s office, and as long as it fulfills these requirements, there’s now on record this property being conveyed to you.”

Two days after the napkin is filed, you can secure a loan against the property for tens of thousands of dollars. Because the mortgage industry is virtually unregulated, almost no one bothers to check if the borrower actually owns the property. As long as there’s a piece of paper on file with the county, that’s good enough for the bank.

“There you have it,” Denny said, shoving the napkin across the table. “You’ve now forged a grant deed. Within 48 hours, you can get an electronic loan. … Why don’t you get somebody to try it? I won’t catch up to them for about two years.”

Eight years ago, Denny was working violent crimes when lawyers with the District Attorney’s office found some funds they could use to prosecute real-estate fraud. When Denny agreed to run the office — which consisted of himself and an investigator — he had no idea what he was in for. But as soon as he started digging, he realized this was perhaps the greatest crime wave he had ever seen.

Thanks to the surreal housing market, and an explosion of new forms of credit, real-estate fraud has become a quiet epidemic. In December, the Federal Bureau of Investigation announced that cases of real-estate fraud nationwide rose from 3,088 in 1999 to 21,944 in 2005, a 600-percent increase. Losses from these cases totaled more than $1 billion in 2005 — and that’s only the crimes the bureau’s investigators know about, since two-thirds of the nation’s mortgage lenders refused to report the incidents they discovered.

As the lenders began aggressively offering subprime loans to people with bad credit in the mid-1990s, and the booming housing market meant elderly Oakland homeowners were sitting on properties worth half a million dollars, unscrupulous mortgage brokers and simple criminals began concocting schemes that boggled the mind: equity skimming, foreclosure-rescue scams, yield-spread premiums, backward applications, identity theft. Dozens, perhaps hundreds of frauds were being perpetrated in the East Bay every year, a phenomenon so pervasive that Denny dubbed it “the theft of Elder Nation.”

Denny has since spent his career trying to stop a massive wave of white-collar crime. But for all his dedication, the unsettling fact is that Denny, and every level of law enforcement, is losing this battle. For one thing, the frauds are so sophisticated that his office must assemble about twenty thousand pages of documents just to prove the average crime. Then Denny has to find a way to explain these cons to judges and juries overwhelmed by their complexity.

But that’s only if he manages to get the documents he needs. The mortgage industry is barely regulated, and almost everyone is tacitly complicit. Title companies aren’t legally required to report crimes that happen under their noses; in fact, when Denny approaches these companies, they often refuse to cooperate, even when he has permission from the victim. “Because they have concerns about the privacy of the other party — who’s often the crook,” he says. “The system is hamstrung by the privacy laws.”

You might think banks would want to help Denny do his job — but you’d be wrong. Because properties have been doubling in value every few years, lenders have made so much money on the collateral that they would rather write off bad loans than raise a fuss and scare people out of taking out new ones. To make matters worse, it’s not unusual for Denny’s elderly victims not to notice the crime for years, or even die during the investigation. All of these factors — the complexity of the crimes, the obstinacy of the credit industry, the vulnerability of the victims — make real estate fraud the safest and most lucrative kind of crime there is. Denny claims his office only opens an active investigation on 20 percent of the complaints he gets. That means if you want to commit real estate fraud in Alameda County, your chances of getting away with it are 80 percent. “In my career, I’ve prosecuted guys and sent them to San Quentin for stealing grapes in a supermarket,” Denny says. “Now I’m seeing rip-offs of $20,000-$30,000 from homeowners. Nobody cares about it. … The good crooks — the ones not being caught — are smart enough to know, ‘Why should I be doing dope anymore, when I could be earning money on the real-estate market?'”

The nation’s mortgage lenders may finally be waking up to this crisis. Home prices have threatened to level off, and lenders may no longer depend on the rising value of collateral to offset their losses. On March 6, the Mortgage Bankers Association sent a letter urging Congress to commit millions of dollars to a new effort to prosecute mortgage fraud. But this may be too little, too late. As refinancing becomes less of an option, the national binge on interest-only loans may finally bite poor homebuyers in the ass. In the last quarter of 2005, the number of mortgage default notices in California rose 19 percent, according to the research firm DataQuick Information Systems. More and more people are defaulting on their loans, and criminals have started deploying other frauds to take advantage of panicked borrowers.

At the same time, California is moving toward a system of electronically recording real-estate documents, creating new opportunities for hackers to steal homes, defraud banks, and destroy homeowners’ credit from as far away as the former Soviet Union. The cons keep growing ever more sophisticated — changing with the times, the market, and the technology.

For nearly a decade, Bill Denny has scrambled to understand an animal that will always be smarter than him. The price of his struggle is measured in foreclosures, bankruptcies, and a fortune in stolen cash.

When Denny first took his job in 1998, he found a lending industry utterly transformed over the previous two decades. Beginning in the 1980s, new forms of credit known as subprime loans were being extended to people with bad credit; the interest rates were higher to compensate for the higher risk. The business took off in the early 1990s, fueled by Wall Street investors. An army of mortgage brokers appeared overnight and hawked these new loans through aggressive marketing, billboard advertising, commercials, and direct mailers targeting poverty-stricken neighborhoods. Car salesmen were recruited as brokers to pressure would-be borrowers and promise the moon, but thousands of dollars in fees were hidden in the mountain of documents borrowers had to sign. Homebuyers had no idea how much debt they were taking on, and lost their homes and ruined their credit in just a few years. Meanwhile, the brokers pocketed their commissions and made a fortune.

Denny couldn’t possibly catch all these shady brokers, so in conjunction with prosecutors around the country, he decided to focus on a few high-profile cases and hope that this would put the fear of God in the rest. His first big case was First Alliance, an Irvine mortgage company with a portfolio of thousands of loans. “I’m seeing all these files where elders were just being gouged,” Denny says. “You look at the closing statement on their home, and they’re being charged $400 for a notary. Most notary fees are twenty bucks. Then the companies were charging an origination fee, duplication fee, document preparation fee. … There were so many of them, we couldn’t deal with individual victims. We just gathered together the package, and we worked with the attorney general on that one, and we filed against First Alliance in bankruptcy court.”

First Alliance’s practices were so dubious that the company filed for bankruptcy eight days after ABC News and The New York Times published an exposé in March 2000. Their stories reported on a investigation by seven states, including Denny’s office and California’s Attorney General, into a pattern of aggressive salesmanship and hiding exorbitant fees, taking advantage of the complexity of the mortgage process. First Alliance charged “origination fees” — industry speak for a document-processing charge — that could reach as high as 25 percent of the actual loan. One employee was caught on tape promising that a $13,000 fee was subtracted on another document. When Denny moved against First Alliance in bankruptcy court in 2000, he managed to get thirteen Oakland homebuyers $1,300 each from the company, but no one will ever know how many East Bay victims were forced into bankruptcy, in part because victims were too embarrassed to come forward, or didn’t understand how they were exploited.

The collapse of First Alliance hardly reformed the subprime lending market, which now accounts for 20 percent of home loans in the United States. Almost twenty companies have faced fines from the Federal Trade Commission since 1998, the most recent of which was Orange County’s Ameriquest Mortgage Company, which agreed in January to pay $325 million to borrowers who claimed the company hid exorbitant fees, falsified home appraisals, and lied on loan applications to qualify people for loans they couldn’t afford. One month later, Ameriquest founder Roland Arnall became the American ambassador to the Netherlands.

Denny worked on the Ameriquest case, but declined to comment on specific details. However, he claims that across the East Bay, brokers routinely lie on mortgage or refinance applications, tripling the borrowers’ stated income to procure the loan and pocket the commission. Meanwhile, homeowners — who often have no idea their broker inflated their earning statement — are stuck with payments they can’t afford.

“The loan representative sits at the kitchen table and says, ‘I see you got a couple of bedrooms here. You could have a child care center, huh?'” Denny says. “And written on the form it’ll be Lewis Child Care Center, gross: $5200 a month. When in truth, her real income is Social Security. So they do a refinance, and the corporation makes the loans, but they can’t make the mortgage payments. … We found one where there’s a 92-year-old San Francisco man who’s earning $12,000 a month as an auto mechanic. We had one woman listed as an interior decorator. … They sent an investigator out, because we saw on her closing statement there were huge junk fees charged. When the investigator comes to the door, she realizes there’s a bit of a problem, because the decorator is blind. A blind interior decorator!”

The lending institutions don’t root out the fraud, Denny adds, because the value of the collateral has risen so fast that banks can still break even on the properties. The brokers collect their points, the banks auction the property on the courthouse steps, and the borrower is left homeless, with his or her credit ruined. “In the rising market, we call this masking,” he says. “When the loan is returned as a bad loan, because the borrower hasn’t performed, everyone goes, ‘Oh yeah, another one of those stated income loans that went bad.’ And there’s no loss taken on the books, because look, the property went up forty thousand dollars in six months. It’s this false aura that’s going to lead to wholesale bitterness and pain in the next year, when the rising market stops. Just like Visa will accept a certain amount of fraud in the system, a certain percentage is tolerable, the lending industry is willing to tolerate a certain amount of loss. They build it into their financials. …

“Around 1929, before the market crashed, everything was fictional,” Denny says. “Investments were made on the margin in borrowing. There are some analogies here. We’ve got home loans that are fraudulent. … It’s like a cancer on the whole system.”

In the late 1990s, as housing-market inflation began to penetrate Oakland’s flatlands, a new species of fraud began to emerge. Thousands of elderly black homeowners had no idea what their homes were suddenly worth. But criminals noticed — and started going to church.

“We started to notice that elders would go to nursing homes, and in the church groups, people would talk about it,” Denny says. Criminals would lurk among the church ladies, murmuring pieties and listening to the gossip. Once they learned the names of women who had retired to nursing homes, they would walk into the county recorder’s office, figure out what properties they owned, and forge documents claiming they owned the properties themselves. Then they would borrow tens of thousands of dollars against the equity. “News started filtering out that there were abandoned properties, so we found some activity where people were just forging these grant deeds from the elders in the nursing home to themselves. You’re waiting for someone to die in a nursing home, let’s just forge it ourselves. The system is just so archaic in terms of how you prove real estate transactions, they would just go to the courthouse and record a forged grant deed.”

One such criminal was Nolita Urias. Between 1998 and 1999, court records indicate, Urias fraudulently transferred ownership of six Oakland homes to herself, claiming they were gifts of “love and affection,” although she never actually knew the owners, three of whom were older than 65 and lived in nursing homes. Urias then secured $142,500 in loans against three of the properties. In the summer of 2000, Urias pled guilty to four counts of forgery and was sentenced to sixteen months in prison.

But the most pervasive fraud remains that associated with subprime lending. In fact, from a crooked broker’s perspective, subprime lending is the gift that keeps on giving. When homebuyers realize the hole they’ve dug themselves into, the same broker who negotiated the initial deal will often return, claim that the market has improved, and offer to help refinance the loan. Although refinancing can often secure better terms after the home’s equity rises or the borrower builds credit, the complexity of refinancing offers yet more opportunities to pile on hidden fees, until the terms of the refinance are worse than the initial deal. Often, brokers are encouraged to negotiate worse deals for their clients by the lenders’ use of “yield-spread premiums,” which are essentially bribes paid to brokers for agreeing to a higher interest rate, or including a prepayment penalty in the deal. “We’ll just refi like crazy, but what we’re not telling them is we’re also getting kickbacks from the lenders, called yield-spread premiums,” Denny says. “You heard about that? It’s probably one of the stinkiest things in the housing industry today.”

From the late 1990s through 2002, while working in Dublin and Pleasanton, mortgage broker Tony Daniloo allegedly used the refinancing process to defraud millions from borrowers seeking to get cash out of their equity. Daniloo’s clients needed the money to pay off credit card or other debts, but Daniloo, who was investigated by the Secret Service as well as Denny’s office, allegedly colluded with an escrow agent to redirect $4.2 million from escrow funds into his personal bank accounts. Daniloo bought a Lamborghini, two 2004 Mercedes Benzes, and five Rolex watches, and pledged $5.5 million in charitable donations to a Turlock hospital and California State University, Stanislaus. Meanwhile, The Modesto Bee reported, fifteen of his clients’ loans fell into default. Daniloo now sits in the Alameda County jail, awaiting trial on 56 counts of fraud, forgery, grand theft, and elder abuse.

Now that housing prices have shown signs of cooling, the mortgage industry can no longer rely on inflated collateral to ride out the fraud, and has begun nagging the government to do something. But fraud on this scale won’t be curtailed until the industry itself agrees to cooperate with law enforcement. Escrow companies, for example, still refuse to blow the whistle on crooked brokers, even though Denny claims their employees spot fraud in mortgage and refinance documents every day. Most mortgage lenders refuse to disclose instances of fraud when they uncover them; even the quasi-public lender Fannie Mae was accused of hiding a multi-million-dollar fraud scheme. Neither lenders nor law enforcement officials are equipped to deal with the criminals, even as new market conditions threaten to spread one of the worst kinds of fraud across the nation.

According to DataQuick, more than half of all 2005 mortgages in the East Bay were interest-only loans, a high-risk scheme that could bankrupt low-income buyers in the long term. If housing prices cool, and interest rates rise, the average mortgage payment will skyrocket. In California, mortgage default rates jumped 19 percent last quarter, and thousands of homeowners may soon stare foreclosure in the face.

Foreclosure is more than a financial catastrophe; it’s an opportunity for criminals to prey on unsophisticated families at their most emotionally vulnerable moment. Last summer, the National Consumer Law Center published a report warning of the sudden rise in “foreclosure rescue scams.” Con artists scan lists of homes in foreclosure and then blanket homeowners with phone calls, mailers, and personal visits, promising to save their homes. Scammers often engage in “affinity marketing,” in which African Americans target black homeowners or veterans target military households, exploiting their sense of trust.

The more benign operators charge thousands of dollars for doing next to nothing. “Sometimes they’ll just go file a skeletal bankruptcy petition, because it operates as a stay on foreclosure,” Denny says. “Basically, a seventh-grader could fill out the form.” The worst scams involve a scheme where you sign over your home to the “rescuer” and pay rent while the rescuer pays your mortgage, giving you a year to rebuild your credit and buy your home back. But as the Consumer Law Center’s report details, the “terms of these deals are almost invariably so onerous that the buyback becomes impossible, the homeowner permanently loses possession, and the ‘rescuers’ walk off with all or most of the home’s equity.” The rescuer takes your house and borrows a small fortune against the property, leaving you with nothing but debt and ruined credit.

Benjamin Diehl, a lawyer in the state Attorney General’s office, worries that such scams are about to sweep through California. “Based on anecdotal experience, it’s growing,” he says, “and I’m really concerned that if the housing market cools, or the interest-only period on these loans expires, then it’s going to mushroom even more.”

Last September, Denny’s office arrested a young Union City man named Kaseem Mohammadi, charging him with thirteen counts of grand theft and money laundering, and accusing him of orchestrating at least six such foreclosure rescue scams. According to James Hand, an attorney representing Mohammadi’s alleged victim Marchella Porche in a civil suit, the racket worked like this. When the mortgage on Porche’s Hayward condominium fell into default, Mohammadi’s office called her and offered to help. “He or one of his assistants tells the property owner, ‘You have bad credit,'” Hand says. “‘We’re going to have to add someone else to title, and their good credit will get a good loan for you.'” After the title holder uses the loan to make payments for a year, Hand adds, the title would be transferred back to the original borrower: “This is the pitch they made to everybody.”

Porche sat down with Mohammadi at a restaurant and looked over his proposal. Soon after signing a grant deed, she concluded that Mohammadi was going to redirect most of the refinancing proceeds to himself. Porche demanded to kill the refinancing, and Mohammadi allegedly agreed to end their arrangement. Six weeks later, Hand claims, Mohammadi offered Porche a check for $20,000, hoping that she would take the money and just get on with her life.

According to Hand, Mohammadi had secretly filed the grant deed. He then allegedly had a friend use the title to take out a $275,000 loan, and Porche, who couldn’t afford to pay her original loan of $150,000, now faced the prospect of repaying almost twice as much — or losing her home. Mohammadi allegedly paid off the original mortgage divided the remaining $120,000 between Porche, the title holder’s girlfriend, and several middlemen, and walked away with $25,000.

The District Attorney’s office has charged Mohammadi with pulling this scam on five other properties, taking in roughly $500,000. Mohammadi’s attorney declined to comment on the accusations against his client. Hand claims to have counted at least 21 victims so far. The people Mohammadi convinced to put the title in their names often felt fleeced by their partner, who allegedly gave them just enough money to pay a few months of the mortgage. Now, they’re on the hook for hundreds of thousands of dollars in mortgage payments, and their credit is ruined. “The straw investors were kind of burned,” Hand says. “Generally, all the investors have stopped making payments and are hoping the lenders will say this matter’s in litigation, and therefore what appears to be a loan default should not be regarded as a loan default.”

One investor, who asked not to be named, claims that his life has been virtually ruined by Mohammadi. In 2004, the investor was working as a telemarketer at Fremont’s Golden Key mortgage company, when an associate of Mohammadi started badgering him to put his name on the titles of three properties. “He said, ‘How’s your credit?'” the man recalls. “I said, ‘Well, I haven’t checked in a long time, but I suppose it’s good.’ After that, he decided to be my friend and gain my trust. … He said, ‘There’s really hard-working people who are going to lose their house, and they need someone to help them out.'”

After weeks of high-pressure pitches, the investor agreed, claiming that Mohammadi exploited “my sense of generosity, honesty.” A few months later, an investigator with Denny’s office explained the nature of Mohammadi’s scam, and the investor was horrified at his naïveté. Now, lenders have defaulted on two of the properties in his name, and he’s scrambling to rebuild his credit. “The amount of stress and depression is just incredible,” he says. “I’m on antidepressants right now. I had never heard of them before this. … To say they are unscrupulous is an understatement. They have violated every moral thing we hold dear in our society. They are impervious to morality.”

Cases like this have left Bill Denny just about burned out. His fraud cases have doubled since 1998, and he has doubled his staff — which brings the grand total of prosecutors to two. He’s desperate for the mortgage industry to take this problem seriously, but worries that lending institutions are about to make the problem worse than ever.

Since the late 1990s, mortgage companies have been pressuring state governments to allow the recording of certain real-estate documents via the Internet. In California, pilot programs are currently underway in San Bernardino and Orange County, and the virtual recording system may soon expand across the state. Prosecutors are terrified that the new system will be vulnerable to hackers who could defraud the real-estate market from anywhere in the world.

Matt Bishop is a computer security expert at UC Davis who was asked by the attorney general’s office to examine the pilot process for potential security flaws. Although Bishop is more sanguine than Denny, he noted a number of potential weaknesses in the system. “Let’s say you’re dealing with paper,” he says. “Someone forges a signature or changes something and can put a lien on your house without your permission. In order to do that, you at least have to walk in and hand in the paper. The problem is if you’re doing this electronically, all this information is kept on a server. … You’ve got deeds to houses, all this stuff, on the server. Someone breaks in, and he or she can change all the documents and go to a bank and say, ‘I’ve got all these houses, I want a loan.'”

Although the pilot program only deals with documents that affirm a mortgage has been paid off, Denny, who sits on the Attorney General’s committee on electronic recordation, worries that even this could wreak havoc with the state’s credit system. “We can’t handle the paper fraud we’ve got now,” he says. “The banks like the cost savings. We don’t have to send messengers to the recorder’s office, just do it like this. So the archaic system is colliding with the high-tech world. And when I have to line up a witness to prove the high-tech crime, I don’t know how I’m going to do it. … Reading all this gibberish about how there’s cover keys, and an e-sign law — I don’t know how it’s going to work. We haven’t encountered our first fraud yet.”

Denny points out how easy it has become for hackers to alter other computerized legal documents. Last year, he said, officers caught a hacker in Alameda County who had figured out how to alter criminal records in San Bernardino County. “They did a search warrant raid on a house in Castro Valley and got the guy. He altered pending criminal cases from felony to misdemeanor for some friends of his. He was only caught by a fluke, a clerk in the courthouse caught him. It was expertly done. Those are supposed to be high-tech records you can’t break into. You see, these systems are only as good as the people you have on each end.”

Thanks in part to the mortgage industry, no one knows how much money is being stolen through real-estate fraud, or how many lives are being ruined. But all you have to do is take one look at Bill Denny’s face, and you know it’s worse than you think. The housing market has become so explosive that new kinds of crime, and new kinds of victims, are emerging far more quickly than law enforcement or everyday consumers can conceive of them. The failure to stop the September 11 attacks has been famously called a “failure of imagination.” We face a similar failure today in the real estate market and the very foundation of credit in America. There are thousands of smart, creative, resourceful people walking through courthouses and county offices around the nation — and they want your house.

What you can do if you get into mortgage trouble.
By Chris Thompson

Real-estate fraud often depends upon the complexity of the mortgage process, in which borrowers agree to schemes they don’t understand. But Rachel Dollar, a Bay Area attorney specializing in fraud litigation, has a few suggestions about how not to get burned. They’re simple and obvious – and yet, thousands of borrowers lose their homes as a result of failing to practice common sense. If you’re planning to refinance, have fallen behind in your payments, or have an elderly relative, here are a few tips to stay solvent.

It’s too good to be true Around the nation, criminals peddle a racket known as “mortgage elimination,” in which they promise you can nullify your loan without having to make the payments you promised. Yes, only an idiot would fall for it, but there are more idiots out there than we’d like to think. “There are ones out there that say other people will make your payments for you,” Dollar says. “Or they have access to humanitarian funds that will pay off your mortgage. … There’s another that claims you make your payments early, you pay that $3,000 that goes into paying off someone else’s mortgage, and you get someone else to sign up and pay off your mortgage. It’s a pyramid scheme.” Crooks will use high-falutin’ language to dangle a loophole in front of you, and for a minute, you just might convince yourself that you’ve stumbled onto a great deal. The basic facts of life are simple: you borrowed the money, so you have to pay it back.

Talk to your lender If you lose your job and fall behind in your mortgage payments, criminals might step in and promise they can help you dig yourself out of this hole. The details of these scams vary, but they all share one common theme: the crooks tell you to stop talking to your lender immediately. Don’t believe them. Foreclosure is a giant headache, and most banks would rather do anything than go through it. They want to find a way to make sure you keep paying them, and will often renegotiate the terms of your loan to make the payments easier in the short term. Criminals don’t want you to get that information.

Check in on Grandma Criminals often search county records, looking for absentee owners who aren’t paying attention to their homes. Often, this means elderly homeowners who have moved into skilled nursing facilities. The crooks then forge documents claiming that they own the house, and borrow against the property. The best you can do is periodically check to see if any documents have been added to your relative’s property records. “If you find out it’s happening, you need to take legal action immediately,” Dollar says. “Seek legal counsel. You have to let the bank know what’s happened. Otherwise, they’ll go ahead with the foreclosure.”

A handful of spectacular real-estate frauds.
By Chris Thompson

The world of real-estate fraud has some truly nasty characters. Most crooks stay with the basic formula, but every once in a while, one or two criminals emerge who have sunk to new lows. Here, courtesy of Rachel Dollar’s blog MortgageFraudBlog.com, are a few of the most colorful and egregious cases around the nation.

The Drugs Made Me Do It. In January 2005, a federal jury convicted Camden, New Jersey resident Kenneth Jenkins of fraud, drug, and money-laundering charges. Jenkins allegedly ran a crack-dealing business that netted $800,000 a week, which he used as capital to start a six-year-long mortgage fraud scheme. Jenkins allegedly bought dilapidated homes around Camden, paid drug addicts in crack to make cosmetic repairs, but never fixed the critical structural problems. He then allegedly sold them at inflated prices to unsophisticated buyers, often using government-backed loans obtained through fraud. During the trial, The Philadelphia Inquirer reported that one alleged victim broke off her testimony to shout at Jenkins, “You’re going straight to hell. … How can you do this to people? You can’t even look [ME?] in the face, can you?”

God Made Me Do It. For some reason, more than a few real-estate frauds seem to involve Christian ministers. In January, Paul Starnes, the pastor of the Springfield, Massachusetts Morning Star Church, pleaded guilty to counts of wire fraud and conspiracy. Starnes allegedly bought homes in low-income neighborhoods and resold them at fraudulently inflated prices, a scam known as a “land-flip” scheme. In February, Larry Davis, the pastor of Cold Spring, Kentucky’s First Baptist Church, was sentenced to thirty months in prison for fraudulently obtaining an additional $500,000 on a loan the church had taken out to build a new sanctuary. He also allegedly converted up to $730,000 of the original loan to his personal use. And in March, Roy Smith, the pastor of Greensburg, Pennsylvania’s Church of Dominion, was accused in federal court of falsifying paperwork to secure $824,000 in mortgage loans.

My Country Made Me Do It. Last month, Orange County authorities arrested Evelyn Oberhuber, the wife of a staff sergeant at Camp Pendleton, on charges of fraud and forgery. Law enforcement officials accused Oberhuber of forging deeds and falsifying bills of sale, in order to get victims to wire her up to $3 million in down payments on properties that were never bought. According to a report in the Los Angeles Times, twelve of her victims were Marines, some of whom were stationed in Iraq.

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