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Pacific NW attorney convicted in Mortage fraud scheme


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Came across this on a real estate forum I subscribe to:


Bothell resident, former Kirkland attorney convicted of mortgage fraud scheme

Apr 02 2010, 1:20 PM

Bothell's Robert Ernest Brandt, 42, a former Kirkland attorney and escrow officer, was convicted in U.S. District Court in Seattle April 1 of conspiracy and four counts of wire fraud.

The jury deliberated approximately one day following an eight-day trial. When sentenced by U.S. District Judge Richard A. Jones on June 25, Brandt faces up to 20 years in prison and a $250,000 fine.

The Washington State Bar Association disbarred Brandt in 2006 after concluding he had allowed the improper use of his client trust account in the mortgage fraud scheme, and had improperly engaged in transactions in which he had a conflict of interest.

The federal case was indicted in June of 2008, as part of "Operation Malicious Mortgage," and the overall investigation was conducted jointly with the Washington State Department of Financial Institutions, the King County Prosecuting Attorney’s Office and the Kirkland Police Department.

According to records in the case and testimony at trial, more than a dozen people, including Brandt, were linked to an extensive mortgage fraud scheme operating in 2004 and 2005. Those who have already pleaded guilty in the scheme include a former bank employee, mortgage brokers, as well as the owner of shell companies involved in “flipping” dozens of properties as part of the fraud.

Ten members of the scheme were charged, six in federal and four in state court. All of the charged defendants pleaded guilty, except for Brandt. A number of the charged co-conspirators testified at trial.

The conspirators would identify houses and would use shell companies or third parties to purchase the homes, again according to records and testimony. At the same time, they recruited “straw buyers” who would enter into a purchase agreement to buy the same home from the conspirators at an inflated price (a “flip”). The conspirators assisted the straw buyers with phony paperwork for the home loans, making it appear that they were qualified for the mortgage loans and planned to occupy the houses. Members of the conspiracy allegedly falsified numerous documents including appraisals, verifications of deposits, employment verification and closing documents. The conspirators split the proceeds from the fraudulent mortgages, and the straw buyers defaulted on the loans after pocketing as much as $20,000 for their fee. The homes were foreclosed and financial institutions and mortgage lenders suffered substantial losses, estimated to exceed $7 million dollars.

For his part, according to records and testimony, Brandt ran a company called “Escrow Authority,” which closed all of the sales of the flipped properties. He permitted other members of the scheme to use money out of his lawyer’s trust account to acquire properties. The same properties were then quickly resold to straw buyers for significantly higher prices, and fraudulent loans were obtained to finance the fictitious resales. Brandt also helped create shell companies used as part of the scheme, and signed off on fraudulent settlement statements (HUD forms) provided to lenders that failed to disclose the fraudulent nature of the transactions.

Check the comment below as well...currently the only one. WOW, is all I've to say about it.

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