Wednesday, May 24, 2006

Illinois Undercover Operation Nets Two Arrests in Appraisal Scam

Dariusz Przybylek, 36, Highland Park, Illinois and Erwin Espe, 68, Wilmette, Illinois were named in a federal criminal complaint filed on April 10, 2006.  The complaint alleges that from February 2005 through the filing of the complaint, the two committed mail fraud and wire fraud while engaged in a scheme to defraud First NLC Financial Services LLC.  The affidavit filed with the complaint alleges that the scheme involved appraising real property at an inflated price, securing financing from a lender for the sale of the property, splitting the proceeds between the participants including the buyer and seller and then defaulting on the loan.  They are alleged to have engaged in this scheme with regard to 1054 N. Lorel Avenue, Chicago, Illinois.

According to the affidavit filed in support of the complaint:

The United States Secret Services hac been working with a confidential source who was convicted of a felony fraud offense in Wisconsin.  In February 2005, the informant provided information that Przybylek was looking for people to participate in a mortgage fraud and or credit card scheme.  The mortgage fraud scheme as described by Przybylek involved Przybylek making an offer to a homeowner to purchase the homeowner’s property at an inflated price.  Once the homeowner agreed to sell, Przybylek would get an appraiser to value the property at an inflated price and then find a buyer who would agree to purchase at the appraised value.  Przybylek would then keep the difference as profit. The buyer would make a couple payments and then disappear.

The informant met with Przybylek to discuss the scheme and agreed to participate – all the while wearing a wire.  Most of the subsequent conversations were also recorded. 

In July 2005, the Secret Service obtained the use of a piece of property (1054 N. Lorel Avenue, Chicago, Illinois) The property was in very poor condition and was valued at $105,000. It had last been sold in 2000 for $72,000 and HUD took the property after the owner defaulted on the mortgage. At the time the property was put to use in the sting operation, the front and back doors didn’t latch properly or lock, a few of the windows were broken, the kitchen was gutted, with missing or broker floor tiles, there were no appliances or fixtures, water and gas pipes were sticking out of the wall, one of the bathrooms did not have an installed sink, there was no electricity or water to the house, much of the wood floors were dated and in poor condition, the carpet was old and stained, the attic did not have internal walls or a ceiling and portions of the exterior siding were falling off. 

The informant contacted Przybylek and informed him that he had a friend who wanted to be involved in the scheme and who had a home he had purchased for $110,000.  The informant introduced Przybylek to an undercover agent posing as the property owner and seller. Przybylek told the agent in a recorded conversation, that some minor work would be done to the property to justify the appraisal and that the appraiser was a friend.

Both the informant and agent were promised proceeds.  Przybylek told the agent that he would create a fraudulent construction invoice for work that was never done and would show the invoice to his appraiser friend.  He estimated that the appraised value would be $180,000 to $200,000. Przybylek provided the agent with a partially completed sales contract reflecting a sales price of $257,800.  Espe acted as the appraiser and met Przybylek and the agent at the house.  Espe said he forgot his camera and would use the photo from the assessor’s office. According to the affidavit, Espe told the agent that his job was to “play with the paperwork,”

Two mortgage applications were submitted to First NLC by Quotemearate.com, Houston, TX.  The mortgage packages contained a verification of employment signed by Przybylek verifying the borrower’s employment with Professional Home Builders. Other information was also incorrect in the loan package.

The package also contained an appraisal by E.R. Espe, Aaron Company, Wilmete Illinois, signed by Erwin R. Espe valuing the property at $257,800.

The appraisal stated “House now has new electrical, plumbing was upgraded, significant amount of dry wall was replaced.  Hardwood floors on first and second floors were refinished.  Kitchen has new ceramic floor, a new front door to be installed immediately prior to move in or closing, new insulated windows on first and second floors, new carpeting in third floor bdrm and study, new carpeting in the family room.”

A few weeks after the appraisal, the agent inspected the house and although a few windows were placed in the front and back of the house and new siding was affixed to a portion of the back of the house, no other work had been done.

The affidavit further states that the closing attorney indicated that the lien for the construction work would not be recorded but that a check would be issued from closing for the payment with the remaining proceeds to the seller.

Przybylek was arrested last month at the closing on the property, according to media reports.

mortgage fraud

1. First NLC cheated me of my rebate but I’ll see them in court. Let me know if they cheated you.

   Posted by  on  12/29  at  07:13 PM

2. Finaly, you’ve caught him!!! Since 1997 he owes me 5’000 USD (converting polish zloty into USD) and he even never wanted to pay it back. He is criminal and he has many criminal records in Poland, that’s why he escaped to USA. You should never set him free because this is way of his living and it’s better for people to leave him in jail. I’m not alone in his frauds, I know few people which have been commited a frauds by PrzybyÅ‚ek…

   Posted by  on  07/19  at  01:28 AM

3. Finaly you’ve cought him!!! Since 1997 he owes me 5’000 USD (converting polish zloty into USD) and he even never wanted to pay it back. He has many criminal records in Poland, that’s why he escaped to USA. You should never set him free because this is his way of living and it’s better for other people to leave him in jail. I’m not alone and know few people that he commited a frauds on them…

   Posted by  on  07/19  at  01:41 AM