Richard Michael Colbert, Attorney, Florida, was indicted and charged with conspiracy to commit bank or mail fraud, loan application fraud, theft or embezzlement by a bank officer and money laundering.
The indictment alleges a short sale scheme whereby the owner of property negotiates with the original lender holding the mortgage to sell the property to a person whom the original lender believes is a bona-fide purchase but who is, in fact, a straw buyer. The straw buyer, who is typically paid for used of his personal identification information and who is assured he will have no responsibility for the property or the new mortgage, negotiates a purchase price substantially less than the amount owed the lender. On the date that the short sale closes, a second sale of the property at an inflated price occurs to a second buyer.
This second buyers takes out a mortgage from a new lender and purchases at a price substantially higher than the short sale price. The original lender is only paid the short sale price and the perpetrators take the difference between the short sale price and the proceeds of the new loan. The HUD-1 settlement statement created by the title agent reflects that the straw buyer is the true buyer of the property and has paid the full short sale price of the property at closing. The title agent also creates a HUD-1 for the second transaction, reflecting that the short sale buyer is the true seller of the property. The title agent distributes the proceeds of the new loan to pay the original lender the short sale price, fees to itself for closing both sales and distributes the remaining proceeds, after other settlement charges, to the second buyer. According to the indictment, the short sale scheme misleads the original lender as tot the true buyer and the actual sales price and puts the new lender at greater risk because the new loan originates with negative equity in the property.
According to the indictment, Colbert owned 49% of Beach Title Services, LLC, a subsidiary of Beach Community Bank in Fort Walton Beach, Florida. He operated Beach Title and served as the title agent for real estate closings.
Michael Sean Davis was the president of Premier Community Bank of the Emerald Coast and owner of MSD Investments, LLC in Crestview, Florida. Lawrence Allen Wright owned Wright & Associates of Northwest Florida, Inc., a building-construction company in Niceville, Florida. T.R.C. was the president of Outdoor Investments, LLC, a real-estate investment company in Crestview, Florida.
Beginning in January 2006, according to the indictment, Sean Davis and two other individuals purchased three unimproved lots in Walton County, Florida from the Preserve at Inlet Beach. The purchases and construction was funded by Countrywide. The properties were 11 Willow Mist Road, 29 Willow Mist Road and 60 Willow Mist Road. They entered into contracts with Larry Wright and Wright & Associates to build houses on the properties. The purchases and construction was funded by Countrywide. After this, they were unable to pay the mortgages. They solicited T.R.C. as a short sale buyer and other individuals as the end purchasers who would purchase the properties from T.R.C. and Outdoor Investments at inflated sales prices. Bank of America approved the short sales. According to the indictment, Colbert caused to be prepared and submitted to Bank of America, HUD-1’s that knowingly and falsely represented the true buyer and source of funds. Sean Davis approved and authorized two of the loans to the end buyers from Premier Community Bank. At least some of the proceeds from the end sales were paid to MSD Investments.
In addition, the indictment alleges that Wright was the president and Colbert was the registered agent of Bluewater Real Estate Investments L.L.C located in Niceville, Florida. In about October 25, 2006, Wright, on behalf of BlueWater, entered into an agreement to purchase a parcel of land on Winston Lane known as Inlet Beach Lot 54 which consisted of 4 separate lots. In May 2007, Wright, on behalf of Wright & Associates, purchased one of the lots for $529,000 and Colbert acted as title agent. Colbert and Wright signed a HUD-1 that accurately identified the sales price and the payoff amount of the outstanding mortgage on the property ($310,000). This HUD-1 was not submitted to the lending bank. Instead, they both signed HUD-1 that stated that the prior lender payoff was $725,000 and submitted it to GulfSouth Private Bank for Wright and Wright & Associates to obtained a mortgage loan in the inflated amount of $1,181,250. After closing, Colbert issued a check to Wright & Associates for approximately $194,013.
In addition, the indictment alleged that, in June 2009, Colbert opened an account at Beach Community Bank in the name of “Presidio Developers, LLC by Beach Title Services, LLC, as Escrow Agent,” on which he was the sole signer. In 2010, Beach Community Bank was engaged in the sale of bank owned property known as Marbella Unit 1-B, Destin, Florida. During the sale, litigation was initiated between Beach Community Bank and Yates & Sons Construction Company regarding the sale. Rather than lose the sale, Beach Community Bank and Yates agreed that the proceeds from sale would be held in escrow until the conclusion of the litigation. Colbert signed the escrow agreement as manger of Beach Title, the escrow agent. Approximately $459,959,75 was wire transferred to the escrow account. According to the indictment, in December 2010, Colbert embezzled or otherwise misapplied the funds, by causing a check for $403,410.14 to be drawn on the escrow account and deposited into the Presidio Developers escrow account and thereafter used the monies for his own personal benefit and the benefit of others not entitled thereto.
The indictment seeks criminal forfeiture of all property involved in or traceable to the offenses.
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