Can You Unravel this Mortgage Fraud Scheme?

Question

A few years ago I sold a commercial property to a buyer, and I'm one of eight plaintiffs currently suing him for fraud. He's currently being prosecuted by the DOJ for bank fraud too.

I'm leaving out contextual details to keep this short, my question is: if a buyer wants to borrow $3.25m to buy a $4m property without showing financials, and they have $3.25m in an account with Bank A, could that be used to induce a $3.25m mortgage from Lender B? If yes, if the $3.25m at Bank A was actually a collateral account for which the borrower had already pulled down $3m of credit, would Lender B have a way of detecting that other, or would they rely on representations from the borrower?

Thank you for any insight you can give. If you'd like more details, just ask, but I wanted to keep it as simple as possible, as your time is valuable. Cheers.

Craig Hordlow · Answer

The buyer refused to provide financials for the purchase. They ultimately did obtain a mortgage which was secured by the property, but the fuzzy area for me is how they obtained a mortgage in the first place.

The DOJ is prosecuting the borrower for two other bank fraud schemes wherein he temporarily misappropriated funds (he's a fiduciary) to create collateral accounts for the purpose of inflating the balance for the 3-4 months required to qualify for, induce loans from, third party banks.

A few days ago the DOJ submitted an exhibit list for his jury trial that included mortgage loan docs for my sale, and there was a collateralized account with a bank with a credit line that exactly matched the mortgage amount he obtained from a lender. It might just be a coincidence or nothing at all, but I smell something funny...

Robin Simon · Answer

seems confusing with regards to the collateral - if this is a mortgage loan (i.e. secured by a real estate property), why would the collateral be supposed cash?

Can You Unravel this Mortgage Fraud Scheme?

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