Can You Unravel this Mortgage Fraud Scheme?

[Craig Hordlow]

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.