Is this mortgage fraud? Would this lease be legal?

[John Roberts]

I have a question re: consequences for a property management company and parties involved in a fraudulent transaction. What potential penalties would exist for a licensed property manager / firm who engaged in the following?

1. Client comes and says "I have a property and I need a face value lease of $XXXX to qualify for another mortgage."
2. Property manager says, "Sure, I have a tenant (actually, employee) available who would take on that lease, but they can only afford $XXXX".
3. Property Manager, employee and client agree to draft up lease for face value at $XXXX, but agree to:
   1. Verbally agree to pay 25% less than face value of lease
   2. Verbally agree to charge client a lower management fee to make the 25% reduction more attractive
   3. Keep the verbal agreement in place as long as its working for everyone
4. Property Manager comes back and says, to protect my employee (who knowingly and willingly engaged in the fraud in collusion with licensed property manager) we need an addendum to the lease reflecting the lower rent

Obviously, there are several potential legal and ethical violations with this proposed scenario.

1. Willing participation in what could be deemed mortgage fraud
2. Knowingly creating a false "shell" lease, where the provisions of the lease were never meant to be enforced as written, but to appear legally binding.
3. Attempting to aid an employee at the expense of the paying client (owner of the property)
4. Constructing a fraudulent contract

What are the potential consequences from the above scenario to the licensed property manager (and employee) with regard to real estate licensing? Would executing such a lease be deemed mortgage fraud? Would license be suspended? Revoked? Are there potential other consequences? Would lease be considered valid if all engaged knowingly, fraudulently and willingly?

Thanks in advance!