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May
21
Written by:
Chuck Gallagher
5/21/2008 6:27 AM
As a mortgage fraud speaker, I observe what's taking place in the mortgage fraud arena, but I have to say, the legal eagles in Ohio are working the mortgage fraud angles hard...
Two more Columbus-area people indicted as part of a mortgage fraud scheme that secured more than $7 million in mortgage loans pleaded guilty in United States District Court. Aryeh Schottenstein, age 34, of Columbus, pleaded guilty to one count of conspiracy to commit wire fraud and one count of money laundering, and Shawn A. Griffin, age 38, also of Columbus, pleaded guilty to two counts of conspiracy to commit wire fraud and one count of money laundering.
 Schottenstein and Griffin were indicted along with Donald F. Green, Jeffrey Lieberman and George “Terry” Jordan for a mortgage fraud scheme in central Ohio in 2003 and 2004. COMMENT: It seems that at the height of easy money for mortgages - mortgage fraud was rising as well. See what these folks did below as their crime is becoming a common pattern.
According to statements of facts filed with Schottenstein’s and Griffin’s pleas, Schottenstein and Lieberman owned a company called Parkview Bank. One of Parkview's business purposes was to locate financing for real estate investors seeking to buy and renovate houses in Columbus. Parkview needed a source for the financing for this venture. In 2003, Schottenstein and Lieberman met with the managing partners for Stillwater Asset Backed Fund to convince them to provide the funding. They were successful.
Parkview and Stillwater entered into an agreement whereby Stillwater would provide the funding for Parkview's deals. Rather than abide by the agreement and locate legitimate investors, Schottenstein used Griffin to recruit straw-buyers to pose as real estate investors. Using straw-buyers was quicker and easier than locating legitimate real estate investors thereby making it easier to generate more loan origination fees. The straw-buyers were told by Griffin they did not need to renovate the houses or make monthly interest payments. Griffin assured them he would take care of all the details.
COMMENT: Two things stand out - (1) impatience with legitimate business became the foundation of the fraud; and (2) the "straw buyers" were motivated by quick money in order to participate in the scam.
Griffin also recruited straw buyers in 2002 and 2003 for Jeff Pearson, now deceased. Pearson bought dozens of low-income distressed houses in Columbus for amounts at or near their fair market value. The houses were in need of renovation. Very little if any renovation was done to the houses. The houses were sold to Griffin's straw-buyers for two to three times the amounts Pearson had paid only a few weeks or months earlier. Despite having good credit, the straw-buyers usually had little income. At the closing on the straw-buyers' purchases of the houses, the title companies issued large checks payable to Pearson as proceeds from the sales.
Green pleaded guilty on April 11. Lieberman and Jordan pleaded guilty on April 24. All are free pending sentencing. Judge Marbley will set a date for sentencing. Conspiracy to commit wire fraud is punishable by up to five years in prison and the money laundering charges carry a maximum sentence of ten years in prison.
According to the Columbus Dispatch a scheme that investigators say bilked millions from banks, lenders and investors was so involved that there were too many fraudulent home purchases to list in the 36-page federal indictment.
Those indicted originally were:
Donald F. Green, 48, of Columbus, real-estate investor
Shawn A. Griffin, 37, of Cleveland, real-estate investor
Aryeh M. Schottenstein, 33, of Oak Park, Mich., real-estate investor
Jeffrey M. Lieberman, 56, of Bexley, real-estate investor
George T. “Terry” Jordan, 50, of Canal Winchester, real-estate agent
Dwayne L. Carter, 37, of Columbus, loan officer
Jonathan L. Boyd, 38, of Columbus, loan officer
Kenyatta Johnson, 37, of Michigan, loan officer
James Darneil Gaither, 37, appraiser
Every choice has a consequence. As a white collar crime and mortgage fraud speaker, I speak from first hand experience about the truth about consequences. Reality is - no one escapes the consequences of their choices. While Schottenstein and Griffin may have enjoyed the money for a time and avoided the consequences - they did not avoid the consequences all together. Prison is no fun and both are facing several years plus substantial restitution for this conviction. Likely they will serve time and that will prove to be a dramatic change from their prior activities. You do reap what you sow.
If you were a victim...please share your experience so other may benefit.
Mortgage Fraud Speaker - Chuck Gallagher - signing off...
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Re: Mortgage Fraud Speaker Chuck Gallagher reports: Aryeh Schottenstein and Shawn A. Griffin Plead Guilty!
I was a straw buyer and have a signed contract with Griffin's "copmpany", Challenge Investment Group (CIG) where they would make all renovations and the monthly payments until the proprty sold. He and his wife, Essence used my SS# to call in payments by phone for 18 months or so and then stopped making the payments after the cash started to dry up. I'm stuck with the payments and property. Do I have any recourse against him or any chance of restituion?
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