Monday, July 21, 2008

Denver Realtor Convicted Of Mortgage Fraud And Witness Tampering

Arvin Weiss, 58, Englewood, Colorado, was found guilty of mortgage fraud and witness tampering. The guilty verdict came after a 13-day trial before Senior U.S. District Court Judge Lewis T. Babcock, where the jury deliberated for one day.  Weiss is free on bond.  A status conference is scheduled for October 22, 2008, at which time Judge Babcock will set a sentencing date.  Weiss was found guilty of 16 counts, including 8 counts of mail fraud, 5 counts of wire fraud, and 3 counts of witness tampering.  Other counts had been dismissed earlier in the case.

Arvin Weiss was indicted by a federal grand jury in Denver, Colorado, on April 20, 2005.  The indictment was superseded on September 27, 2008.  The trial began on June 23, 2008.

According to the indictment, as well as facts presented during trial, from June 1998 through January 2002, Weiss devised a scheme to fraudulently obtain money and property from mortgage companies which funded federally insured loans.  Weiss was a licensed real estate broker buying and selling properties as Reserve Capital Funds, Inc.  He acquired numerous single-family residences in the Denver, Colorado area at low prices.  Within a few months, and after some improvements had been made, Weiss resold the properties at substantially higher prices to unsophisticated low-income buyers.  The buyers Weiss targeted were Hispanics who knew little or no English, many of whom were living in the United States illegally.

Many of Weiss‘ buyers did not understand the mortgage loan process, but wanted to purchase their own homes even though they could not legitimately qualify for mortgages.  Weiss arranged for buyers to acquire mortgages insured by the Federal Housing Administration (FHA), so they could purchase homes his company owned.  Knowing that the buyers he targeted could not afford to buy houses or legitimately qualify for home loans, Weiss allegedly arranged for false information about the buyers’ qualifications and the sources of their down payments to be provided to various mortgage companies and HUD, making it appear that the buyers were qualified to receive FHA insured loans when they were not.

Operating under the name of Fairfax Homes, Ltd., Fairfax Express Corporation, or Fairfax, all entities controlled by Weiss, the defendant would represent to prospective buyers that he had houses or could find houses the buyers could purchase, and that he and an assistant would take care of all the necessary paperwork.  The defendant also told buyers that they would not have to make the down payments from their own funds, despite a requirement by HUD to do so. 

The buyers would provide their personal information directly to him or an assistant.  Weiss would then provide information about the borrowers, some of which was true, but material portions of which were false, to the mortgage companies and HUD, injecting false information about the borrowers’ qualifications when necessary to enable them to qualify for the loans.

Weiss would secretly provide the funds for the down payments for the borrowers to be presented by the borrowers at closing.  Weiss signed numerous false certifications that he had not and would not pay or reimburse the borrowers for any part of their cash down payments.

Weiss usually sold his properties for two or three times what Reserve Capital had recently paid for them.  The buyers typically did not have the option of competitive pricing and did not contest his asking price, because they could not legitimately qualify for the loans.  In some cases, Weiss did not disclose the true purchase price to the buyers until closing.  In many cases, by encouraging the buyers to move into the properties rent free prior to closing, Weiss minimized the possibility that they would back out of their purchase agreements when they were informed of the properties’ true cost.

“Commit mortgage fraud and you may land in federal prison,” U.S. Attorney Troy Eid said.  “Enough is enough.”

Weiss faces not more than 5 years in federal prison and/or a $250,000 fine per count of mail fraud and wire fraud.  In addition, he faces not more than 10 years in federal prison, and/or a $250,000 fine per count for witness tampering.

The case was investigated by the Office of the Inspector General for Housing and Urban Development (HUD), the Federal Bureau of Investigation (FBI) and the U.S. Postal Inspection Service.  The case is being prosecuted by Assistant United States Attorneys Linda Kaufman and Tim Neff.

mortgage fraud