Posted Oct 12, 2007 04:13 pm CDT
A Georgia lawyer who has pleaded guilty for taking part in a mortgage fraud ring will testify in a trial of one of the alleged members that got under way this week.
Prosecutors say lawyer James Stovall III of Marietta, Ga., was supposed to represent lenders, but instead he prepared documents that misled his clients about the nature of home sales involving straw buyers, according to the Fulton County Daily Report.
Stovall closed up to 50 fraudulent loans as part of a scheme that cost banks some $20 million, the newspaper says. He could face up to five years in prison when he is sentenced at the end of the trial.
Prosecutors described the scheme this way: Homes were purchased then quickly resold for inflated prices to straw buyers. The straw buyers, who were paid to lend their names to to the deals, believed the mortgages would be paid by a relocation company. Mortgage money secured for the properties was used to pay the original owners, and the remainder was split among those participating in the fraud ring. When the mortgages weren’t paid, lenders and real estate title companies were left holding the bag.
See ABAJournal.com’s previous coverage.