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Phillip E. Hill Sr. (born 1956) was the ringleader of the largest mortgage fraud scheme ever prosecuted in the State of Georgia.
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Phillip E. Hill Sr. (born 1956) was the ringleader of the largest mortgage fraud scheme ever prosecuted in the State of Georgia.
During his trial, prosecutors identified Hill as the ringleader in three interlocking mortgage fraud schemes built on metro-Atlanta real estate sales that, between 2001 and 2003, bilked lenders out of more than $40 million. According to the evidence at trial, Hill was the owner and operator of "We Build Atlanta, Inc.," "The Estate Firm, Inc.," "Estate Artistians of Georgia, Inc.," "Estates Atlanta, Inc.," and numerous other Georgia corporations. Hill controlled the affairs of each such corporation. Hill held himself out to be a real estate developer, and either individually or through one or more of the corporations he controlled, purchased and sold numerous residential properties in the Atlanta area. Hill oversaw the conspiracy, loan fraud, wire and mail fraud and money laundering activity related to mortgages obtained in the sale of over 50 homes and over 250 condominiums in eight Atlanta-area condominium complexes. These properties were all owned at one time by one of the Hill entities. Each property was sold at an inflated price to a "straw purchaser" who applied for a mortgage loan based upon the inflated price. The straw purchasers who participated in these mortgage flips were paid a kick-back out of the excess loan proceeds for the use of their name and credit. The victim-lenders granted the loans based upon numerous false representations and documents regarding the credit qualifications of the straw purchaser, as well as false representations that the straw purchaser had paid a down payment, would reside in the home, and would be responsible for the loan payment. In addition, the lenders were induced to make the loans based on fraudulently inflated appraisals. Some of the properties were "flipped" more than one time.
After a five-year investigation, a federal grand jury in 2005 charged Hill and 24 co-defendants, including real estate appraisers, closing attorneys, mortgage brokers, loan officers and straw purchasers, in an expanding indictment that eventually included 187 counts of mail fraud, wire fraud, bank fraud, bank credit fraud, money-laundering, bribery of a bank official and criminal conspiracy.
According to Assistant U.S. Attorney Barbara E. Nelan, the fraud ring's property schemes were based on the unlawful "flipping" of residential real estate. Illegal real property flipping is a fraud for profit scheme whereby recently acquired real property is resold for a considerable profit with an artificially inflated value. The real property is resold within a short time frame, often after making only cosmetic improvements to the real property. Illegal property flipping usually often involves collusion between a real estate appraiser, a mortgage originator and a closing agent. The cooperation of a real estate appraiser is necessary since a false and artificially inflated appraisal report is required. The buyer (ultimate borrower) may or may not be aware of the situation. This type of fraud is one of the most costly for lenders because the loss is always large.
One of the three fraud schemes involved sales of more than 50 luxury estates in several of metro Atlanta's "country club" subdivisions and more than 250 condominiums in eight complexes in Dunwoody, Buckhead, Midtown and downtown Atlanta.
A second scheme focused on sales at grossly inflated prices of 27 lots in the Cascade Oaks subdivision in southwest Atlanta. Centrum Financial Services Inc., which financed the $1.3 million deal, and was a victim of the scheme, eventually was forced to foreclose on those properties.
The third scheme—in which Hill joined with a former bank officer who has already been sentenced for his role—defrauded Charter Bank & Trust Co. in Marietta, Georgia of $170,000.
United States Attorney David Nahmias said, "The negative impact on our neighborhoods of this multimillion dollar fraud scheme extends far beyond the financial loss to the victim lenders. The Phillip Hill mortgage fraud scheme charged in this indictment is the most extensive this office and federal investigative agencies have uncovered to date in the Atlanta area. This indictment is a major step forward in this office's commitment to expose and eradicate mortgage fraud schemes in our community."
Co-defendants who were also found guilty of multiple felony charges include Marcus Alcindor, a/k/a Christopher Alcindor of St. Lucia; Barbara Brown, a/k/a Barbara Eubanks, a real estate appraiser from Marietta, Georgia; Fred Farmer, a real estate appraiser from Roswell, Georgia; Christine Laudermill; Robert Powers of Cumming, Georgia; David Thomas of Hammond, Louisiana; and Dean Thomas and David Van Mersbergen, both of Atlanta, Georgia.
In addition to the defendants found guilty at trial, several other individuals pleaded guilty to mortgage fraud charges related to the same scheme before trial. These defendants include William Chavis of Atlanta, Georgia; Michael Flake of Stone Mountain, Georgia; Wesley Golden of Atlanta, Georgia; Christopher Halcomb, a former closing attorney from Cumming, Georgia who was disbarred by the State Bar of Georgia; Cortney Jackson of Detroit, Michigan; Wayne Jenkins, a mortgage broker from Atlanta, Georgia; Rashid Muhammad of Syracuse, New York; Julian Perez, a/k/a Tony Perez, a real estate appraiser from Roswell, Georgia; Brant Petree of Marietta, Marietta, Georgia; Theodore Tagalakis a mortgage broker from Atlanta, Georgia; and Andrew Wolf of Alpharetta, Georgia, a former closing attorney who voluntarily surrendered his license to the State Bar of Georgia on October 29, 2007 in lieu of disbarment.
According to the U.S. Attorney's Office and the information presented in court, Leslie Rector was Hill's right-hand man. U.S. District Judge Thomas W. Thrash Jr. sentenced Leslie Rector to seven years in federal prison followed by three years of supervised release for his participation in the massive mortgage fraud scheme that targeted the Atlanta area housing and condo market from 2000 through part of 2003. Judge Thrash also ordered Rector to pay $40.2 million in restitution.
Hill was found guilty of 168 counts of fraud and money laundering on March 14, 2007 in the Northern District of Georgia. On September 21, 2007, U.S. District Judge Thomas W. Thrash Jr. sentenced Hill to prison for 28 years. Hill is currently incarcerated in the Federal Correctional Institution in Marianna, Florida, a medium security facility housing male inmates. His projected release date is August 2, 2031.
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A straw purchase or nominee purchase is any purchase wherein an agent agrees to acquire a good or service for someone who is often unable or unwilling to purchase the good or service themselves, and the agent transfers the goods or services to that person after purchasing them. In general, straw purchases are legal except in cases where the ultimate receiver of goods or services uses those goods or services in the commission of a crime with the prior knowledge of the straw purchaser, or if the ultimate possessor is not legally able to purchase the goods or services.
Title insurance is a form of indemnity insurance predominantly found in the United States and Canada which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. Unlike some land registration systems in countries outside the United States, US states' recorders of deeds generally do not guarantee indefeasible title to those recorded titles. Title insurance will defend against a lawsuit attacking the title or reimburse the insured for the actual monetary loss incurred up to the dollar amount of insurance provided by the policy.
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
A bridge loan is a type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing. It is usually called a bridging loan in the United Kingdom, also known as a "caveat loan," and also known in some applications as a swing loan. In South African usage, the term bridging finance is more common, but is used in a more restricted sense than is common elsewhere.
Predatory lending refers to unethical practices conducted by lending organizations during a loan origination process that are unfair, deceptive, or fraudulent. While there are no internationally agreed legal definitions for predatory lending, a 2006 audit report from the office of inspector general of the US Federal Deposit Insurance Corporation (FDIC) broadly defines predatory lending as "imposing unfair and abusive loan terms on borrowers", though "unfair" and "abusive" were not specifically defined. Though there are laws against some of the specific practices commonly identified as predatory, various federal agencies use the phrase as a catch-all term for many specific illegal activities in the loan industry. Predatory lending should not be confused with predatory mortgage servicing which is mortgage practices described by critics as unfair, deceptive, or fraudulent practices during the loan or mortgage servicing process, post loan origination.
Flipping is a term used to describe purchasing a asset and quickly reselling it for profit.
A hard money loan is a specific type of asset-based loan: a financing instrument through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies. Interest rates are typically higher than conventional commercial or residential property loans because of the higher risk and shorter duration of the loan.
An appraised value or mortgage valuation (Australia) pertains to the assessed value of real property in the opinion of a qualified appraiser or valuer. It is usually a pre-qualification & risk-based pricing factor related to the issuance of mortgage loans by a financial institution.
Mortgage fraud refers to an intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property.
Casey Konstantin Serin is an Uzbekistan-born American blogger, mortgage broker, and real estate investor. In a newspaper article, USA Today called him the "poster child for everything that went wrong in the real estate boom". Born in Tashkent, Uzbekistan, Serin immigrated to the United States in 1994. After graduating from high school, Serin bounced from job to job, generally working in website design. However, in his early twenties, Serin decided to quit working full-time in order to pursue a career in house flipping as a means of earning an income and building wealth. In an eight-month period beginning in October 2005, Serin purchased eight houses in four southwest U.S. states, and then began blogging about the foreclosure process on the properties he was unable to resell. In time, five of the eight properties foreclosed. The dubious nature of Serin's real estate transactions, coupled with his subsequent blogging about the affair, have led to Serin's name becoming strongly associated with the subprime mortgage crisis.
A mortgage loan or simply mortgage, in civil law jurisdictions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit (loan)".
Matthew Bevan "Matt" Cox is an American former mortgage broker and admitted mortgage fraudster. Cox, also a true crime author, wrote an unpublished manuscript entitled The Associates in which the main character traveled the country to perpetrate a mortgage fraud scheme similar to the one Cox ran.
Beazer Homes USA, Inc. is a home construction company based in Atlanta, Georgia. In 2016, the company was the 11th largest home builder in the United States based on the number of homes closed. The company operates in 13 states.
Castle Grande was a real estate development in Arkansas about 10 miles south of Little Rock. It came into National news as a result of the Whitewater investigations. The project was a 1,050-acre (4.2 km2) lot where Jim McDougal hoped to build a microbrewery, shopping center, a trailer park and other future projects in 1985. The land was scrub pine forest that had failed already as an industrial development. The sales price was $1.75 million. State regulations prohibited Jim McDougal from investing more than 6% of his Madison Guaranty S&L assets. So, he put in $600,000 of Madison money and then for the difference had Seth Ward put in the remaining $1.15 million. This money Ward borrowed from Madison Guaranty on non-recourse, no personal obligation to repay. If federal regulators found out, McDougal's S&L could be shut down, since it had already been operating under orders to correct its lending practices.
Isaac Robert Toussie is a Brooklyn, New York real estate developer convicted of fraudulently obtaining mortgages from the Department of Housing and Urban Development. On December 23, 2008, Toussie was granted a pardon by President George W. Bush; however, this pardon was revoked the following day, amid controversy over its apparent impropriety.
Lend America was a national mortgage banking organization based on Melville, New York. The company used cable television infomercials and toll-free numbers to promote its services which include refinancing of mortgages with fixed-rate loans guaranteed by the Federal Housing Administration.
John M. McNamara is an American convicted felon and former businessman. McNamara was convicted of a Ponzi scheme fraud through gaining loans to a value of $6 billion from General Motors financing arm GMAC, to develop a $400M car sales and property development business.
Broadway Federal Bank was a community focused bank founded in 1946 and based in Los Angeles. As of 2020, it had three traditional branches and one loan production office.
Allen Howard Weisselberg is an American businessman and convicted felon who was the chief financial officer (CFO) of the Trump Organization. Weisselberg served as a co-trustee of a trust set up in 2017 by Donald Trump before Trump's inauguration as president of the United States. In 2022, Weisselberg pleaded guilty to 15 criminal charges including grand larceny, criminal tax fraud and falsifying business records. In January 2023, he began serving a five-month jail sentence and was released the following April.