Monday, August 08, 2005

DC Real Estate Developer Receives Maximum Sentence

Brodie Sentenced to 57 Months for Role in Mortgage Fraud Scheme

Wilbert Brodie, real estate developer, Mount Rainier, Maryland was sentenced to four years and nine months in prison and ordered to pay over $355,000 in restitution in connection with a mortgage loan fraud scheme in the Washington D.C. Area. Brodie was convicted of conspiracy and wire fraud in connection with allegations that he bought nine distressed properties using inflated appraisals to obtain overvalued loans in a scheme that resulted in losses of over $850,000 to lenders. Brodie spent the money and defaulted on the loans.

Brodie was initially indicted on April 23, 2002.  On November 13, 2003, a superseding indictment was filed that also charged Olurotimi A. Padonu with two counts of conspiracy to defraud and Sarafa A. Kareem with three counts. On August 12, 2004, a Second Superseding Indictment was filed against Brodie.

Padonu plead guilty on August 3, 2004 to two counts of conspiracy to defraud and was later sentenced to eight months in prison followed by three years supervised release and ordered to pay restitution of $976,129.19. On August 9, 2004, Kareem plead guilty to one count of conspiracy and was later sentenced to four years probation.

Brodie’s trial began on January 10, 2005 and, on January 18, 2005, the jury returned a verdict of guilty on three counts of wire fraud and one count of conspiracy to commit making false statements and wire fraud.

According to court documents, the evidence at trial established that Brodie, over the course of approximately eighteen months: (1) used his small company to contract to buy shell or distressed properties; (2) contracted to buy from his company the same properties in the same condition at more than double the sales price; (3) used another company under his control, First Eagle Mortgage, to “guarantee” himself a loan, and thereby, entice the original seller into accepting the defendant’s offer to buy the property; (4) signed certain inflated sales contracts to buy properties from his company even before his company had contracted to buy the properties in the first place; (5) applied for the inflated loans to match the inflated sales contracts; (6) falsely represented in certain paperwork, including a handwritten letter, that he had made earnest money deposits; (7) insisted on his selection of a settlement agent to alleviate his cash-flow problems on a certain property whose settlement resulted in the unlawful diversion of funds to his benefit; (8) “flipped” the same properties in the same condition, almost always on the same day, for more than double the lower sales price; and (9) obtained an inflated loan which was at least double the lower sales price.  As the evidence established at trial, the properties were never worth the amount of the “flipped” sale. Because the properties were not renovated, the lender was not able to recover top dollar for the properties.

The Sentencing Memorandum filed by the United States defines the harm caused by Brodie:

In addition to greed, however, the defendant’s recidivism, spanning over eighteen months, reflects a callous indifference to the social effects of his scheme. A potential supply of moderate income housing for the citizens of the District of Columbia degenerated into uninhabitable shells replete with ceilings and walls collapsing from water damage, bathrooms stained with pigeon defecation, and floor supports giving way to gravity. A potential supply of cash in the form of loans for individuals interested in home ownership was diverted to cover the lenders’ expensive foreclosure costs on the Brodie properties. Ultimately, then, it was the district’s housing market, including those interested in receiving loans to buy and those interested in moderate rentals, who bore the cost of the defendant’s crime.

mortgage fraud

1. I currently serve as the President of my Condomimium Association. Our Association has been fighting for over a year to recoup our Capital Contribuition funds of over $11,000.00 for our Reserve account from the developer. I have done research and I have each unit owners closing statement detailing the check # and the amount provided to the developer at closing as proof that the Title company provided him with these funds. I also have a statement from the management company stating that the funds were not deposited to the Association’s account.

   The developer has been non responsive in communications, and it doesn’t seem like he will cooperate. This developer has left the Association with bills over $8,000 for repairs he was to pay for, but instead left them in the Association’s name. We desperately need help in this situation. Any guidance would be greatly appreciated.

   At this point, I would like to know the following:

   1. Due to the current state of debt the developer has left us in, what is the best way to report the developer taking over $11,000.00 in capital contributions and not providing this to the Association as stated in our Bylaws?

   2. Is there any way the Association can recoup the funds for $8,000 in repairs the developer made and stuck the Association with paying the bill?

   We are limited to the amount of money we have for legal, and I’m willing to save on cost by doing any necessary leg work to see that the Association is reimbursed.

   Posted by  on  11/24  at  08:49 AM