Lawyer Pleads in $20 M Mortgage Scam
A Georgia real estate attorney has pleaded guilty in a $20 million federal mortgage fraud case involving some 50 Atlanta area properties that a client company purchased and resold to straw buyers between 2000 and 2001.
The company “would acquire properties and on the same day resell or ‘flip’ them to straw borrowers, who were paid for participating in the transactions,” reports the Atlanta Business Chronicle. Meanwhile, attorney James F. Stovall III “closed nearly all of the same-day fraudulent flips,” without informing the lenders, who were also his clients, the article continues.
Stovall also prepared false closing documents that were submitted to these lenders “and moved the proceeds of the scheme through his escrow account and to offshore bank accounts,” the Chronicle article continues. Through this scheme, the parties involved obtained more than $20 million in fraudulent mortgages, reports the Atlanta Journal-Constitution.
Stovall, 56, pleaded guilty to multiple fraud-related counts. When sentenced, he faces a maximum five-year prison sentence and a $250,000 fine on each count.
Said U.S. Attorney David Nahmias: “We unfortunately continue to see some real estate professionals, such as attorneys and appraisers, who serve as gatekeepers of the system, instead ignoring their professional duty to participate in mortgage fraud schemes. Given the well-known troubles in the mortgage industry and related financial markets, we will continue to aggressively investigate and prosecute such professionals who, out of pure greed, are willing to promote such fraud schemes in North Georgia.”
As discussed in earlier ABAJournal.com posts, massive mortgage fraud in Atlanta in recent years has helped make Atlanta one of the foreclosure capitals of the country.
Although news reports on Stovall’s plea discuss the 28-year sentence given to Phillip Hill in a $112 million Atlanta-area mortgage fraud case that was also prosecuted by Nahmias, that case is unrelated to Stovall’s, according to the Associated Press.