An 11-page indictment from the U.S. Attorney for the Southern District of Iowa alleges that four men, including an attorney, defrauded financial institutions in the area in or around Des Moines, causing losses to the lenders of approximately $400,000.
The four defendants, who have been charged with bank fraud, are attorney Jason Springer, property flippers Nathan Smith and Patrick Steven, real estate agent Rick Makohoniuk and mortgage broker Jerod Hogan.
The indictment charges that Smith and Steven negotiated short sales with the lenders on the behalf of the selling homeowners. Lenders require the purchasers of such properties to be arm’s-length buyers in order to ensure that the properties are sold at fair-market value and are not simply a ruse for the sellers to get their properties back at a reduced mortgage. However, prosecutors allege that Smith and Steven purchased the homes without disclosing this to the lenders and that further, the selling prices were not fair-market value (short sale fraud). Note: Dear Banks: where were your appraisers when this happened?
Following the purchases, which involved 18 properties, Smith and Steven resold the homes for a profit, i.e., their true fair-market values. Attorney Springer is alleged to have participated by conducting the closings. Makohuniuk is alleged to have submitted false documents to a lender and Hogan alleged provided Smith and Steven with false documents they used to deceive the lenders.
The allged crimes occurred from approximately March 2009 to March 2011 and were investigated by both the FBI and the Office of Inspector General for the Department of Housing and Urban Development (HUD-OIG).
Publisher’s note: it is my observation that California has proportionately done less to investigate and prosecute short sale fraud than any other state, which probably explains why short sale fraud is as common as identity theft here.
Read the original article in the Algona Upper Des Moines.
To learn more about short sale fraud, read my book “How to Commit Short Sale Fraud . . . and Get Away with It.”