Sunday, June 26, 2011

Phoenix exec admits plotting wire fraud

Joseph Bowen Brown has pleaded guilty in federal court to conspiracy to commit wire fraud in a mortgage-fraud scheme based in Phoenix.

According to the U.S. Attorney's Office in Phoenix, five others have entered guilty pleas in the same scheme and are awaiting sentencing.

The case against Brown, 30, and his co-conspirators is based on an investigation conducted by the Internal Revenue Service's Criminal Investigations Division, the U.S. Attorney's Office said in a news release.

Brown acknowledged in his Tuesday guilty plea that, as a principal of the Solid Group, a local real-estate firm that has since collapsed, he orchestrated illegal "cash-back" mortgage sales on homes in the Phoenix area.

From 2005 through 2007, he and others at the Solid Group purchased properties at or below market value and resold them based on inflated appraisals.

They used some of the profits to provide cash kickbacks to the buyers and failed to disclose those cash payments to the mortgage lenders. Brown and his co-conspirators then pocketed the difference.

Many of the buyers were "vastly unqualified" for the mortgage loans and obtained them only because of false statements concerning income, employment and assets made on the loan applications, according to federal prosecutors.

In all, 49 properties were involved in the scheme. Prosecutors said all the properties have gone into foreclosure.

The scheme resulted in nearly $10 million in losses to the mortgage lenders, they added.

Brown admitted in his plea agreement that he and his co-conspirators pocketed almost $2.5 million in the deals.

"This is yet another reminder of the damage that mortgage fraud has caused to our community," U.S. Attorney Dennis Burke said.

"The mortgage crisis wasn't just the result of an economic downturn. It was made larger and more painful for everybody by criminals."

This case is one in a series of recent successful federal mortgage-fraud prosecutions in Arizona. Many of the prosecutions were the result of a multi-agency initiative called Operation Stolen Dreams, in which dozens of defendants were indicted in the summer of 2010. Brown's guilty plea is the 28th conviction obtained as a result of the joint effort.

A conviction for a single count of conspiracy to commit wire fraud is punishable by a maximum fine of $1 million, a maximum term of imprisonment of 30 years, or both, and a term of supervised release of five years.

by J. Craig Anderson The Arizona Republic Jun. 26, 2011 12:00 AM

Phoenix exec admits plotting wire fraud

Real Estate News

HootSuite - Social Media Dashboard