Baltimore Real Estate Investing

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Friday, May 29, 2015

Real estate investor gets 7 years in $15M mortgage fraud scheme

A real estate investor was sentenced to 84 months in prison for conspiring to defraud financial institutions and launder stolen funds as part of a $15 million mortgage fraud scam that used phony documents and straw buyers to make illegal profits on overbuilt condos.

Timothy Ricks, 47, of New Jersey pleaded guilty before Judge Jerome Simandle to a superseding indictment charging him with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering. Judge Simandle imposed the sentence in Camden federal court.

According to the documents filed in this case and statements made in court:

Ricks was among 11 defendants charged in July 2012 with conspiracy to commit wire fraud and conspiracy to commit money laundering. Ricks and others located oceanfront condominiums overbuilt by financially distressed developers and negotiated a buyout price with the sellers. They then caused the sales prices for the properties--located in Wildwood Crest and North Wildwood, New Jersey, other locations in New Jersey and in Naples, Florida--to be much higher than the buyout price to ensure large proceeds. Other defendants helped conceal the true sales prices of certain properties through inflated sales contracts and sale and finder's fee agreements.

Ricks and others recruited straw buyers to purchase certain properties at the inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. The conspirators created false documents, such as fake W-2 forms, pay stubs, bank statements and investment statements, to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.

Ricks and others also caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Ricks and others received a portion of the proceeds after conspirators had funds wired or checks deposited into various accounts they controlled.

In addition to the prison term, Judge Simandle sentenced Ricks to serve five years of supervised release. Restitution will be determined at a hearing scheduled for July 9, 2015.

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