Tampa Federal Jury Convicts Trio In Short Sale "Flopping" Racket That Targeted Financially Distressed Houses & Duped Unwitting Homeowners Into Participating

From the Office of the U.S. Attorney (Tampa, Florida):

• U.S. Attorney Robert E. O'Neill announces that a federal jury [] found John Lebron (33, Tampa), Patricia Lebron (36, Tampa), and Paul Gogolewski (31, Tampa) guilty of conspiracy to commit wire fraud and wire fraud. John Lebron was also found guilty of making false statements to financial institutions. All three individuals face a maximum penalty of 30 years imprisonment. Their sentencings are scheduled for January 18, 2013.
  
  According to the testimony and evidence presented at trial, the individuals conspired together to "flop" houses. "Flopping" is a form of short sale fraud involving conducting a short sale on a property and then "flipping" the property in a non-arms' length transaction.
  
  John Lebron was a Florida-licensed realtor and worked as a loan officer. Patricia Lebron is a Florida-licensed realtor. Paul Gogolewski was the President of Synergy Solutions.
  
  Together, they targeted unsophisticated, low income homeowners, who were in financial distress and convinced them to sell their houses to a straw purchaser, in a non-arms' length transaction.(1)
  
  For a brief period of time, the conspirators would pay the mortgage payments but then stopped. They then arranged a short sale of the property from the straw purchaser to one of the conspirators. In that short sale, the lender to the straw purchaser suffered an immediate loss of approximately 80% of the original loan.
  
  Then, six days later but using deeds recorded simultaneously, the properties were re-sold to another straw purchaser for approximately 350% more than the short sale amount.
  
  In these deals, the conspirators pocketed the money that should have gone to the original distressed home owner,(2) received the mortgage broker commission for arranging the first straw purchaser's loan, and got the difference between the short sale amount and the new loan. The straw purchasers were all paid $5,000 for their role. In all, this case involved at $1.5 million dollars in loans.

For the U.S. Attorney press release, see Federal Jury Convicts Three Of Mortgage Fraud "Flopping".

(1) I suspect that, in this non-arm's length transaction, the homeowners may have been duped into participating in the ripoff with promises that they could save their homes from foreclosure by engaging in a purported sale leaseback arrangement.

(2) Ibid.