5 Indicted in Michigan Mortgage Fraud Scheme

Allison Tussey —  July 14, 2009 — Leave a comment

Edward Tate, 27, Detroit, Michigan, Richard Anthony Allen, 42, Belleville, Michigan, Richard Ruben Watts, 40, Detroit, Michigan and Louis Anderson Lynch, 57, Detroit, Michigan and Craig Wright Covert, 33, Dearborn, Michigan, were indicted on real estate and mortgage fraud charges.

According to the complaint, in February 2009, Special Agents of the Detroit-FBI began conducting an investigation into a real estate/mortgage fraud scheme involving properties primarily located in the Harbortown Condominium development located along the Detroit River. This scheme, orchestrated by Tate involved a real estate developer who defaulted on a commercial real estate loan that was granted to it by Bank of America. The acquired loan was collateralized by the luxury condominiums located in the Harbortown development. As part of a workout plan that was negotiated by and between the developer and Bank of America, the developer was granted authority to sell the condominiums under the guise of a “short-sale” or at a drastically reduced price.

The scheme to defraud, Tate purchased some of the condominium units from the developer at a short-sale price. With the assistance of Tate and others, loans were obtained for unqualified straw buyers based on false loan applications. Allen, Watts and Lynch were three such straw buyers. Each are convicted felons for crimes such as murder and attempted rape who were in prison during the time period of employment and residency claimed on each of their loan applications. Covert was one of the individuals Tate paid to recruit straw buyers in furtherance of this scheme. All five individuals were arrested today. In addition to the arrests, a federal search warrant was executed at Pure Title Agency, LLC, now located in Farmington Hills, Michigan. Thus far, the fraud exceeds $1,000,000.

This case is being investigated by agents of the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation Division, and is being prosecuted by Assistant United States Attorney Frances Lee Carlson.

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Allison Tussey

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