Sunday, March 11, 2012

Ex-Home Flipping King Describes Massive C. Fla. Mortgage Fraud In Effort To Belly Up To Feds, Throw Dozens Under The Bus, Cut Himself Sweet Plea Deal

In Tampa, Florida, the Sarasota Herald Tribune reports:

  • At the height of the real estate boom, Craig Adams was a wealthy man. [...] But Adams' wealth was all built on illegal real estate flips and millions upon millions of borrowed money. When banks stopped lending with a precipitous drop in real estate during late 2006 and early 2007, everything Adams had once viewed as an asset soon became a liability.

  • Desperate to come up with cash to make interest payments of more than $100,000 per month, he turned from cheating banks out of money to cheating his friends and longtime business associates.

  • "The time had come when it was every man for himself," Adams testified this week in U.S. District Court, where he has been recounting his role as the mastermind of one of the largest and longest-lasting flipping fraud cases in Florida history. "I had to protect my mother and my aunt. I had to protect my interests."

  • Adams began borrowing heavily from a long list of financial backers and business associates, [...]. At the same time, he refused to distribute about $200,000 to his protégé and chief co-conspirator, Rich Bobka, and he drafted bogus investment documents to defraud a friend of 20 years — David Oriente — out of nearly $500,000. While the cash he raised allowed him to delay the inevitable for a few months, the consequences of his actions are still being felt today in Southwest Florida.

  • If he had not cheated Oriente, there is at least the possibility that Adams would not have been indicted. There also is the possibility that the extent of his crimes and the involvement of at least 90 of his friends and business associates might have remained at least partially hidden.

  • But when Oriente threatened to go to police, Adams turned himself in and began to help the government round up the participants in his 11-year crime spree.(1)

  • So far, 15 have been indicted and pleaded guilty, while three others [...] have opted to go to trial. This week, during their trial, there also were strong indications that the government is not done with the case, and that other co-conspirators may yet be indicted.

  • During his three days on the stand, Adams has named 70 people who he said were involved in the scheme — a number that includes 14 loan officers, four title agents, four attorneys and a smattering of other key real estate, investment and accounting professionals. Adams explained how he and these dozens of others inflated real estate prices by flipping properties to one another. He recounted how that allowed them to get larger loans than they could have otherwise by lying about their income and assets on loan applications.(2)

For more, see Adams describes turning on co-conspirators in flip fraud.

(1) "When a conspiracy is exposed by an arrest or execution of search warrants, soon-to-be defendants know that the first one to "belly up" and tell what he knows receives the best deal. The pressure is to bargain and bargain early, even if an indictment has not been filed." United States v. Moody, 206 F.3d 609, 617 (6th Cir. 2000) (Wiseman, J., concurring) (referring to the not-uncommon 'race to the prosecutor's office' that breaks out among participants in an 'about-to-fall-apart' criminal conspiracy).

(2) Another example of a squealing schemer abandoning a conspiracy, not unlike a filthy rat jumping off a sinking ship, winning the race to the prosecutor's office and taking down fellow co-conspirators by 'throwing them under the bus' to score a better break on a plea deal. Vrooooom!!!

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