This is a former student of mine so I have taken his name out of the article. But I suspect this is a common occurrence so watch out. The attorney has been suspended by the bar and may be disbarred. The article is from the US Attorneys Office.
Modesto Real Estate Attorney Convicted of Fraud in a Short Sale Scheme
FRESNO, Calif. — Mr. ———, 53, of Modesto, was convicted today of three counts of wire fraud in connection with a fraudulent short-sale scheme, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Mr. ——-, an attorney specializing in real estate law and the current President of the ———- Bar Association, owned two properties in Modesto with substantial mortgage loans. By early 2010, Mr. ——- was in default and received foreclosure notices for the two properties. In order to keep the properties and avoid foreclosure, Mr. —— formed an entity called “Dignitas LLC” to purchase the properties. Mr. ——– controlled Dignitas, but listed a friend’s name on the paperwork as a nominal manager because he knew the bank would not sell the property to a related party. Mr. ——– then submitted short sale offers to the bank that serviced the loans on both properties listing Dignitas and the nominee manager as the purchaser. Mr. ——- misrepresented his relationship to Dignitas to induce the bank to approve the short sale. Because the servicing bank did not know of the true relationship, it went forward and completed one of the short sales. The short sale on the second party was stopped after law enforcement informed the bank of Mr. ——-‘s scheme.
This case is the product of an investigation by the Federal Housing Finance Agency–Office of Inspector General, the Federal Bureau of Investigation, and the Stanislaus County District Attorney’s Office. Assistant U.S. Attorneys Michael G. Tierney and Shelley D. Weger are prosecuting the case.
Mr. ——– is scheduled to be sentenced on February 12, 2018, by U.S. District Judge Lawrence J. O’Neill. Mr. ——— faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.