They finalling got theirs-Pinnicale

[Verran Jones]

Jury convicts in mortgage fraud

By MIKE TIERNEY
The Atlanta Journal-Constitution

Published on: 03/15/07

Guilty, 166 times. With each verdict announced Wednesday in the mortgage fraud trial of Phillip Hill, the real estate developer stared stoically — the charismatic persona that prosecutors say helped fleece at least $41 million out of investors nowhere in evidence.

A jury concluded after eight days of deliberations that there was sufficient evidence to convict Hill of all but 19 counts against him in the grandest mortgage fraud case ever tried in the U.S. Northern District of Georgia.

(ENLARGE)
Phillip Hill, shown in 1993, was found guilty of 166 counts in the largest mortgage fraud case ever tried in the U.S. Northern District of Georgia.

Hill and nine co-defendants — brokers, appraisers, lawyers and recruiters to the scheme — were found guilty on a combined 436 counts ranging from mail, loan and wire fraud to money laundering. Ninety-one more failed to stick. An hour was needed to read the various verdicts.

"It was just overwhelming," said jury foreman Erica Davis of the trial at the Richard B. Russell Federal Building that extended into a seventh week. "The U.S. [attorneys] did a great job."

"The evidence was there from the government," echoed juror Jessica Howe.

Federal authorities filled eight file cabinets with documents and presented more than 1,000 exhibits — enough that a moving company was hired to haul it around.

"These cases are extremely difficult and complicated to prosecute," said U.S. Attorney David Nahmias. He declared the effort worthwhile, claiming that mortgage corruption in metro Atlanta is rampant and inflates housing costs for all.

"Hopefully," said Assistant U.S. Attorney Barbara Nelan, who tried the case, "this will take a big bite out of" mortgage scams.

Prosecutors say Hill — through his company, Pinnacle Development Partners — acquired more than 50 houses and 250 condominiums at cut rates, then "flipped" them by selling to straw purchasers who applied for loans to cover the higher prices.

Those pseudo-buyers were paid kickbacks, according to prosecutors, in exchange for using their names and credit. Unsuspecting investors in Pinnacle were then left responsible for mortgage payments, prosecutors concluded. When those properties foreclosed, investors were left holding the bag.

Prosecutors portrayed Hill's plan as a Ponzi scheme, whereby some early investors received proceeds brought in from subsequent investors.

Repeating her theme from opening arguments, Nelan said Wednesday in a news conference that such a plot "takes a village — usually a group of professionals working together."

Bruce Morris, Hill's lawyer, called the verdict "deeply disappointing. There will be an appeal."

After the trial, Nelan asked Judge James Thrash that four defendants be denied bond and held until sentencing in July.

Thrash approved the release of all but Hill, 50, after Nelan noted that he "has a way of manipulating the system."

Hill's age, she told the judge, "adds to his motivation to flee," escaping a sentence that could keep him imprisoned for life.

Thrash agreed, characterizing Hill's swindle as of "truly extraordinary and unbelievable proportions."

"The temptation to flee, in Mr. Hill's case, has got to be overwhelming," the judge declared just before Hill was taken into custody.

The trial commenced with 12 defendants, each seated at separate fold-out tables and flanked by their attorneys in a scene remindful of a business seminar. Two were acquitted in directed verdicts.

Five others pleaded guilty to charges prior trial.

The cases of two others defendants are scheduled next month.