Another gentleman (?) and myself purchased an old rundown motel located directly on the ocean in 2000. The original plan was to convert the property into a few condos. After carefully examining several sets of plans we concluded that the best way to convert this property was into just 2 large condo units, which we did.
My partners purpose was to flip his condo for profit, mine was to live in it as my main residence and enjoy the rest of my future with the ocean as my backyard. After completion and moving in, my partner found much difficulty in finding a buyer for the price he was asking, about $ 2,500,000. After a year or so, with no success, my partner and his attorney approached me and ended up pleading with me to purchase his unit for $1,600,000. At that point he was desporate because his short term baloon mortgage of $1,500,000 was about to mature and he had no way to pay it other than selling the condo and using the proceeds of that sale. I did not take him up on his offer.
About 1 month after that he produced a contract from an interested buyer for the amount of $2,200,000. When the condo docks were drawn up the right of 1st refusal was part of the docks. Both he and his attorney approached me and tried to persuade me to excersize my right of 1st refusal, which indicated that this deal was somehow tainted. As the only other member of the condo association, the contract for the sale had to be presented to me for approval, which I subsequently gave. The deal proceeded and the new owner moved in.
About a month later, a friend of mine who lived in the same area told me the sale of the condo was recorded in the county records at the price of $2,975,000. I was very surprised and I secured a copy of the contract from the county courthouse and sure enough the selling price was listed at $2,975,000. Both the original contract that was presented to me and the official one on file were identical, including all officers of the regional bank that gave the mortgage, both attorneys, the seller and buyer, the real estate agents--all parties signed off on both contracts. The only difference, besides the amount of the sale, on the contract and all related documents, was the appraisal value, which had to be increased in order for the bank to loan the much increased amount of the deal.
After a lot of research, I discovered some very interesting facts. The seller, my original partner, gave a second short term mortgage for $400,000 which was used as the major source of the buyers down payment. All of the above facts are documented and copies of both contract are in my possession. There were also 2 additional mortgages issued by friends of the buyer. In reality, the buyer ended up walking away with cash from the deal, the seller ending up with additional funds from the sale, and all others involved who signed off on both related documents (although not proved at this point) better off financially.
I ended up notifying the bank and the buyer and seller of the knowledge of the mortgage fraud that I has uncovered and documented. I went so far as to hire a recently retired FBI, mortgage fraud expert who filled out the FBI forms and sent them to the FBI.
The respone from the FBI, after every follow-up call I made, was that they were understaffed and they could not even guess when they would get to the case.
The response from the fraud department of the regional bank was that "they determine when fraud had been committed, and no one else and that it was none of my business. They would not even listen to the facts after I identified the property and the mortgage number.
You must be asking yourself why I was so concerned? Some of the reasons were as follows; the buyer was twice convicted for trafficing cocain. In addition he was convicted of assult and had another conviction of burglary with assult. He almost never spent time at the condo but when he did it was with working girls coming and going and other events which followed what one would imagine a person with his previous actions could project.
As a matter of fact, the D.E.A. along with the drug enforcement division of the sheriff's department recruited me to work with them to help in identifying the new owners actions which they informed me he was suspected of. I worked with them for a couple of months and when the time came, where it was obvious he was "on a run" after loading up his vehicle, the BSO officer started to go after him only the have the DEA officer to tell him to let him go and not pull him over. The BSO officer called me the next day to apologize for their actions and TOLD me that I cannot reveal what had transpired. I neglected to tell you that the new owner served only 3 years of a 14 yr sentence, and that was just for the cocain convictions. I speculated that he must of cut a deal and turned some people in and therefore there might be a good chance people were not very happy with his actions and might come after him. Remember there are only 2 condos here and I did not need that extra worry of retaliation on this property.
In addition, within 5 yrs of being released from prison, he had accumulated a real estate portfolio of about 38 properties, most of them located in ghetto areas, many on the same blocks, and all grossly overvalued on his financial statements.
Within 2 years, the condo went into foreclosure. He has made almost no payments and had his unit up for sale for $4,000,000. I went to the foreclosure sale and the bank was the only bidder and they purchased the unit with a $2,500,000 bid.
The bank put the unit up for sale for $1,800,000. After several months Regions bank notified the condo association that they had an offer that they were going to accept for $1,000,000. By that time I had my own unit listed for about $2,600,000. My unit has a 2 bed, 2 bath guest house of 1,200 sq.ft and also the right to build on the roof. But also by that time the real estate market had collapsed, I was therefore fighting a unit next to my that was up for sale as a foreclosure, with large ugly signs proclaiming foreclosure sale, which it was not, it had already gone through the foreclosure sale, and a soft market. I had the right of 1st refusal so I excersized that right and bought the other unit for the $1,000,000 offer because the unit was absolutely worth well in excess of that and it would give me more options as what to do with the property. I could sell it as a single residence, I could sell either one of the units, or I could rent either one of the units and live in the other.
What options do I have? Criminal and/or civil? Can all the parties involved in the fraudulent first sale walk away, as they have so far, with no criminal actions be brought against them even though there are 2 contracts, the one officially filed with the county for just under $800,000 more than the contract presented to the condo association? Etc., etc.
