It’s Real Estate Fraud Week at L.A. Land, Day 3: Hey, Who Took My Cash Back at Closing?
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We’ll warn you in advance, this one is big, messy and may not fit the legal definition of fraud. As the illustration at right indicates, law enforcement has been investigating it for months, and no one’s been charged.
What are we talking about? An alleged scheme that preyed on older, middle-class investors who overpaid for more than 100 ‘investment properties’ in Riverside and Temecula, believing the extra cash was being wisely invested on their behalf, only to see the cash disappear. Click here to see a very elaborate website run by the alleged victims.
Now houses are piling up in forelcosure and so are the lawsuits. Reporter Chris Bagley at the North County Times has been all over this story: ‘Nurses and other middle-class investors bought more than 100 Murrieta-area houses in 2004 and 2005 through Stonewood Consulting Inc., a Murrieta mortgage brokerage that the California Department of Real Estate is now seeking to bar from the industry.’
More: ‘The first of those houses fell into the foreclosure process last fall, and the owners began filing lawsuits in January. Stonewood clients often paid far more for their houses than did buyers of comparable houses nearby and, according to numerous neighbors and real estate agents who followed the purchases, $50,000 to $120,000 more than the original asking prices -- a pattern that raised eyebrows in the slackening market.’
Investors now allege Stonewood, and a bunch of other companies, courted them with religious come-ons, pressured them to sign incomplete loan applications that were later falsified, arranged for inflated appraisals, and then pocketed millions of dollars from excess mortgage payouts. An attorney for Stonewood calls those allegations ‘just plain untrue.’
Law enforcement’s take? The Riverside County district attorney’s office has been investigating for months but says it’s a complicated case.
Your thoughts? Comments?
Illustration Credit: Core Clients Against Fraud