Tuesday, July 10, 2012

Duo Plead Guilty To Duping Unsophisticated, Financially Drained Home Sellers Out Of $600K In Sale Proceeds In Scam Purporting To Give F'closure Relief

From the Office of the New Jersey Attorney General:

  • Attorney General Jeffrey S. Chiesa announced that a Ewing couple who ran a real estate firm pleaded guilty to stealing from home sellers by diverting proceeds from home sales, and also defrauding mortgage companies by falsifying the earnings of loan applicants.

  • An investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau revealed that the couple, using their real estate firm, S&B Property Management and Maintenance LLC of Trenton, stole over $600,000 from sellers in connection with 11 home sales, and defrauded mortgage companies of a total of $641,800 in proceeds of three home loans.

  • Joann Smith, 47, and her boyfriend, Wayne Betha, 42, each pleaded guilty on Friday afternoon (June 29) to second-degree theft by deception and third-degree failure to file tax returns before Superior Court Judge Mark J. Fleming in Mercer County. Under their plea agreements, they will each face a sentence of five to 10 years in state prison and will be required to enter a consent judgment to pay restitution to the home sellers, as well as the mortgage lenders, to the extent that the lenders have sustained losses.
  • The state’s investigation revealed that between August 2006 and February 2008, the couple stole more than $600,000 from clients who agreed to have Smith sell their homes. Smith and Betha allegedly diverted proceeds of the sales into their own bank accounts for their personal use, deceiving the sellers into believing they were not entitled to all of the profits from their homes.
  • The couple used a variety of schemes to fraudulently divert proceeds from the home sales into bank accounts maintained by Smith and S&B. They represented to sellers and title companies that monies were owed to them for expenses, including property renovations and repairs that were never done and exorbitant consultant fees that they claimed the sellers had authorized.

  • Many of the checks issued by the title companies handling the property sales were written to the home sellers, but Smith convinced the sellers to sign the checks over to her for payment of business expenses and fees. In several instances, the defendants falsely indicated on HUD forms and tax forms that the sellers directly received all of the profits from the home sales. They also omitted to tell sellers that they were agreeing in mortgage closing documents to pay large, unauthorized “seller’s concessions or seller’s assists” to the buyers.

  • The victims were not financially sophisticated. They did not understand the details of the property closings and, because of their financial woes, were anxious to be free of the obligation of paying mortgages they could no longer afford. Smith and Betha took advantage of these facts to steal the victims’ profits from the home sales.
For the NJ AG press release, see Ewing Couple and Their Real Estate Firm Plead Guilty to Stealing from Home Sellers and Mortgage Lenders (Face state prison sentences in investigation by Division of Criminal Justice).

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