Monday, April 14, 2008

Ohio Property Owner Pleads Guilty To Straw Borrower Scheme

Donald F. Green, 48 Columbus, Ohio, pleaded guilty in United States District Court to one count of income tax evasion, one count of conspiracy to commit bank fraud and wire fraud, and one count of bank fraud in connection with his role in a mortgage fraud scheme that fraudulently secured more than $2.6 million in mortgage loans in 2003 and 2004.

According to a statement of facts filed with Green‘s plea agreement, Green bought houses usually in need of substantial repairs in distressed neighborhoods in Columbus, Ohio in 2003 and 2004 at or near their true-market value. In 2003, Green developed a working relationship with Jonathan L. Boyd, a loan officer at Summer Tyme Mortgage. Boyd would recruit “straw buyers” to purchase Green‘s properties, using fictitious income numbers in order to increase their apparent credit worthiness. The court documents also say that Boyd arranged for inflated appraisals of many of those properties by Darneil Gaither. The conspirators used false information to fraudulently obtain approximately $2,651,200 in mortgage loans.

In 2004, Green sold similar houses to other “straw buyers” through a scheme set up by codefendants Aryeh Schottenstein, Jeffrey Lieberman and Shawn Griffin in an investment program with Stillwater Capital Partners. Stillwater paid Griffin substantial amounts of money to renovate these properties provided by Green, but Griffin failed to follow through on any renovations. Green received so-called “consulting fees” on several of these deals yet failed to report this income on his tax returns.

Green also gave his tax preparer schedules of fictitious improvements made on many of the properties in order to reduce his capital gains profits and therefore his taxes on the sale of the properties.

By not reporting all of his income, Green fraudulently avoided an additional tax due and owing of $100,332.97 for 2003, and $130,043.19 for 2004.

Green and the others were indicted in August, 2007. Charges are still pending against Boyd and Gaither. Schottenstein, Lieberman and Griffin have plea agreements pending.

Income tax evasion and conspiracy are each punishable by up to five years imprisonment, complete restitution to the IRS and the victims, and the costs of prosecution. Bank fraud is punishable by up to 30 years imprisonment and a fine of up to $1 million plus restitution.

mortgage fraud