Thursday, December 20, 2007

Mortgage Fraud - Prison and 1.2 Million in Restitution - Ethics Speaker Chuck Gallagher Comments

Manager of Nations Title Agency of Florida, Robert W. Hulbert, Jr., age 46, was sentenced to three years in prison, 4 years supervised release upon release from prison, restitution of $1.2 million and forfeiture of more than $4 million of assets.

Not only was Hulbert manager of Nations Title where several mortgage frauds were obtained, but he was personally involved in obtaining fraudulent loans on two properties he acquired in his name.

According to the Mortgage Fraud Blog (an excellent source for up to date material on mortgage frauds):

According to court documents, the scheme operated this way: Conspirators negotiated to buy residential real estate at a given price. A conspirator who was a licensed real estate appraiser then fraudulently appraised the property for a substantially higher amount than the actual negotiated price. Documents reflecting the inflated appraisal price were submitted to a lender, along with other fraudulent documents, to obtain first and second mortgage loans on the property. The total amount of the loans was at or near the inflated price.

At the closing on the property, the difference between the actual sales price and the inflated appraisal price—the proceeds of the fraud—was disbursed to one or more of the conspirators as an “assignment fee” or “payoff of third mortgage” that did not exist. During the course of the scheme, the conspirators obtained a total of about $17.7 million in mortgage loans, which would not have been approved but for the fraudulent documents. The conspirators received approximately $4.024 million in proceeds from the fraudulent transactions.

As a business ethics speaker, I am finding that mortgage fraud (of one sort or another) is capturing the attention of law enforcement as the housing market declines. More and more institutions are finding it necessary to reinforce their ethical rules as it relates to this kind of business.

Every choice has a consequence. Having spent time in federal prison for unethical conduct, I understand how easy it is to become embroiled in unethical activity. Today I speak to groups about the Truth About Consequences.

As a result of unethical behavior Hulbert will find his life will dramatically change. He will get up early - go to work (in prison) - be back at 3:30 and be standing for one of the six or so times a day he will be counted. He will walk into prison a nobody and will be treated as such till he leaves. Once out, he will be branded a "convicted felon" and find it hard to regain a normal life. There will be times (many times in fact) while in prison he will wonder if the temporary enjoyment he received from his ill gotten gains was worth it. And, he will emerge a changed man.

Feel free to comment.

If you've been the victim of a mortgage fraud - fell free to share your experience.

If you've perpetrated a mortgage fraud, feel free to share your experience on the price you've had to pay.

Business Ethics Speaker - Chuck Gallagher signing off.

1 comment:

JayPeeFreely said...

I was wondering what your take would be on the mortgage game.

Good posts.