He started of small, pocketing client settlements by not informing them instead of only contingency fees, such as in Daniels case. then the schemes get larger and larger.

Generally at settlement or the application process you will have to sign something about where the money comes from and whether there are any side deals the bank should know about.I am not going to sign anything that can send me to jail for bank fraud.

Providing a bundled utility (electrical or communications) with the rent of a unit does not constitute "knowingly enabling" criminal activity ... if it did, you would see very different behaviour from the hotel industry.It is possible that, in the land where spilling coffee on your lap nets you a milling dollar civil settlement, there may be a level of {frivolous?}

More often it's just a train-wreck waiting to happen.The biggest hurdle (other than the potential liability, including defense costs when things go south, regardless of what the seller would sign off on prior to or at settlement) is the requirement that HOI (hazard insurance) continues to protect the lender and owner. 

So finally we reach the settlement day, title sent us the ALTA, and my jaw drops.The ALTA settlement sheet says the seller has to pay money.

Maybe @Brandon Turner could run through the real-life numbers (settlement statement) of his most recent multi-family purchase for all of the "extra" costs beyond the downpayment.