Tuesday, January 29, 2008

Texas Broker/Real Estate Developer Pleads Guilty

Richard Bell, 48, president and CEO of Harborside Mortgage Corporation, has pleaded guilty to one count of bank fraud and one count of engaging in monetary transactions in property derived from specified unlawful activity. Bell pleaded guilty before U.S. District Judge Gray Miller.

According to the plea agreement, Bell entered into a contract to purchase 97 acres of land in Rosharon, Texas, in 2005 for approximately $1.1 million. The contract specified Bell would make a earnest money down payment of $385,000 and obtain a loan for the balance of the purchase price. Bell made application to First National Bank for a loan of $720,000. As part of the loan application package, Bell submitted false and fraudulent documents, including false financial statements, false income tax returns and copies of false and fraudulent cashier’s checks as proof of the $385,000 down payment. Based on the application and the supporting documentation supplied by Bell, First National Bank funded the loan.

The cashier’s checks totaling $385,000 were in reality two money orders obtained from Wells Fargo Bank with a true value of $35.00. According to Wells Fargo Bank records, Bell purchased a $25 money order Nov. 8, 2005, and a $10 money order Dec. 9, 2005. The money orders were altered using an optical scanner and computer software to make them appear to be cashier’s checks in the amount of $135,000 and $250,000.

The settlement statement for the closing of the sale of the property was signed by Bell and the seller and reflected that the cash down payment of $385,000 was “held by seller.” On Dec. 15, 2005, $676,000.84 from the proceeds of the First National Bank loan were wire transferred to the seller of the property.

The factual basis in the plea agreement also included details of an unsecured $100,000 line of credit obtained by Bell from First National Bank Jan. 13, 2006, that was obtained using false and fraudulent tax returns and financial statements. By Jan. 19, 2006, Bell had withdrawn over $50,000 against the line of credit via checks payable to himself, Harborside Mortgage and Custom Design Pools.

Bell faces a maximum sentence of up to thirty years imprisonment, a fine of $1,000,000 and a five-year-term of supervised release for the bank fraud conviction, and up to ten years imprisonment, a fine of $250,000 and a three-year-term of supervised release for engaging in monetary transactions in property derived from specified unlawful activity. Judge Miller has scheduled sentencing for April 11, 2008.

mortgage fraud

1. Until the credit crunch is over we will see more mortgage fraud. People don’t like the idea of losing their homes.

   Posted by  on  09/22  at  08:57 AM