Arizona Feds Indict Pair In Alleged Scheme Using Homeowners Facing Foreclosure, Abusing HUD "Short Sale" Program To Pocket Illegal Profits

From the Office of the United States Attorney (Arizona):

• A federal grand jury in Phoenix returned a 19-count indictment [Wednesday] against Kenneth D. Perkins, 51, and Robert Lee Burdiak, 66, both of Gilbert, Ariz. , alleging wire fraud and false statements to the government and to financial institutions. The indictment alleges that from May 2003 through June 4, 2004, Perkins and Burdiak defrauded the Department of Housing and Urban Development (HUD).

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• Perkins, operating through Virtual Realty Funding Corporation and Virtual Realty Company, found homeowners in default and arranged for their participation in the [HUD Pre-Foreclosure Sale Program] as their realtor. But instead of marketing their properties, he purchased them at a discount of as much as 82% of their appraised value utilizing Burdiak as a straw-buyer. The homes were then sold for a profit, sometimes on the same day. Perkins and Burdiak concealed from the lending institutions, and thus HUD, the fact that the properties had not been marketed by submitting false documents to them. Perkins acquired approximately 20 properties at a discount which resulted in HUD paying an additional sum of a substantial amount to lenders in order to cover the shortfall in the mortgage balances.

For the entire U.S. Attorney press release, see Foreclosure-Rescue Schemers Indicted.

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In an unrelated story from the U.S. Attorney's Office in Arizona:

• On April 8, 2009, Dustin Michael Thompson, 30, and Sean Paul McLaughlin, 29, were indicted on four counts of Wire Fraud and one count of Conspiracy to Commit Wire Fraud as a result of their involvement in a cash back mortgage fraud scheme. Thompson and McLaughlin submitted mortgage loan applications on behalf of buyers, that included friends and family members, containing false information. Following the funding of the loans, Thompson and McLaughlin received cash back that they used for personal expenses and to perpetuate the scheme. Most of the homes purchased during the conspiracy have foreclosed.

For the entire press release, see Real Estate Investor And Loan Officer Indicted For Mortgage Fraud.