Crime Stories From The Trenches

Remember Paul Manafort. Yes, that Paul Manafort, the one-time campaign manager for one DJT – I still can’t say that name, let alone type it – who was pardoned by you-know-who. The pardon absolved him of his federal crimes, to which he pleaded guilty. But he was indicted in New York on state charges related to mortgage fraud, among other things.

The Empire State said huckster Manafort faced 16 charges stemming from a year-long scheme in which he allegedly falsified business records to reap millions. “No one is beyond the law in New York,” former DA Cyrus Vance said when the indictment was handed down.

The case was eventually dismissed; the court ruling that it violated the state’s double jeopardy law because it too closely mirrored the federal case against him. So DJT’s buddy was able to skate again. Nevertheless, it is worth noting here, largely because this kind of thing happens too often in the mortgage business.

Fraud Finds Its Way

This is one of the more famous cases, the end to which was under-reported. But if CoreLogic is on the money, there were – and will be – many more. The company said shifting lending volumes and borrower misinformation in the second quarter drove fraud risk to its highest level since the beginning of 2019. The probability of application fraud – that’s what Manafort was accused of – rose 10.5 percent quarterly and 37.2 percent year-over-year.

The recent case in Connecticut, where a former attorney pleaded guilty in late August to fraud – after already being convicted twice before on fraud charges – is a, no pun intended, case in point. According to court documents, this swindler conned an investor out of more $1 million in a scam that centered around buying mortgages. But he never did, instead keeping the money for himself and a co-conspirator.

Sometimes, though, the crime comes from within. Consider the case of Shirene Hernandez, who worked as a sale rep for Fannie Mae in its Irvine, Calif., office. She was convicted of partaking in a multimillion-dollar scheme involving kickbacks from real estate brokers.

According to the U.S. Attorney’s Office, Hernandez, using intermediaries and alter egos, bought at least one Fannie Mae-owned property in Sonoma for herself at a below-market price. She ensured that multiple offers higher than her own below-market price were rejected. She then paid for the property using a duffel bag filled with $286,450 in cash, which she gave to her sister-in-law to bring to the closing.

That, alone, is suspicious. But Hernandez also helped family members become Fannie Mae-approved brokers, and then steered nearly $80 million in Fannie Mae listings to them, resulting in nearly $2 million in commissions in less than three years.

“In total, Hernandez received more than $1 million in benefits, including the cash kickbacks and rent that she collected and equity that she built in the Fannie-Mae property she bought for herself,” the DA’s office said.

A Little Leeway

Her conviction – and 76-month prison sentence plus an order to pay Fannie Mae $982,516 in restitution – was upheld on appeal. A Minnesota couple running a market and asset management real estate firm got off more lightly for their part in another long-lasting kickback scam.

Jeffrey Detloff was sentenced to 16 months in the pen plus two years of supervised release for his part in an illegal bidding and kickback dodge in connection with foreclosed properties, while his wife and business partner, Lori, received seven months in jail plus a year or supervised release for aiding and abetting the crime. Their firm also was ordered to pay a $593,000 fine as well as restitution to the Detloff’s victims.

According to court documents, the pair conspired to defraud lenders and guarantors who hired him to oversee maintenance and repairs on foreclosed homes. He was charged with steering maintenance and repairs contracts to companies that would kickback part of their fees to his company. He also included kickbacks within his bids and invoices sent to lenders, and she was responsible for ensuring the kickbacks were paid.

States Of Error

In Louisiana, meanwhile, a 47-year-old woman has been arrested on forgery charges after a real estate agent notified police of what appeared to be falsified documents. Pamela Chandler, aka Pamela Goldwyn, was charged with two counts of forgery after attempting to buy a million-dollar home in Benton. The sharp-eyed agent noticed something was amiss and informed local authorities.

Through the course of the investigation, the Bossier Parish Financial Crimes Task Force found that Chandler altered a letter from an attorney in an attempt convince the agent she had access to sufficient funds to purchase the home. As it turned out, she also was wanted in warrants in Texas on assorted charges, including fraud.

And in West Chester County, N.Y., a man was arrested after allegedly posing as a real estate agent to collect rental fees from unsuspecting tenants. On four separate occasions – at least the four the authorities know about – he supposedly charged his marks substantial real estate broker and application fees after posting fraudulent listings on popular websites.

Let’s not forget about organized crime, either. The New York City District Council of Carpenters hasn’t. In a bold step, it has expanded its authority to bring charges against members suspected of mob membership or ties to the mob. Or, as a court order filed on behalf of the union stated, “knowingly associating with any member or associate of any La Cosa Nostra crime family or any other criminal group.”

According to press reports, the union has been under court supervision since 1994 and, in the last few years, has fallen under renewed pressure to fight against any association with organized crime after a member made headlines for renting out a Queens apartment to a mafia social club run by mobster “Bobby Glasses.” You can’t make this stuff up, even in the movies. 

Hard Time

These cases all involved fiscal losses. Sometimes the crimes result in physical losses, as many real estate agents can attest. Indeed, of all the professions involved in housing, being a realty agent is the most dangerous, at least on a personal level. The peril bound up in selling houses doesn’t stack up to that faced by taxi drivers, which the Bureau of Labor Statistics says is the most dangerous job going. But as many agents can attest, it is nonetheless fraught with risk.

Surely we all have heard or read of the headline cases where an agent or some other professional involved in the sale of a property has lost his or her life. Just a few months ago, for example, a home inspector on assignment in Huntington Beach, Calif., was shot and killed. Police have charged a man who was involved in a family dispute over whether to sell the house left to four siblings by their father.

Or maybe you are familiar with the recent murder of a West Omaha agent, who was found dead inside a house that was for sale. But did you hear – or read – about the Nebraska man who was arrested last December in connection with the suspected homicide of a real estate agent? The agent had recently purchased the property and was showing it to the alleged killer as a possible tenant.

Or the North Ridgefield, Ohio, agent who was attacked outside a house for sale? Though traumatized, she fared much better than those mentioned above when she was attacked by two men with knives who tried to pull her inside the house. She managed to escape and locked herself in her car.

How about the Utah agent who found herself at the business end of a rifle by a man who told her and her client to leave his property? The guy locked himself in the house before being taken into custody. Similarly, a Tennessee agent was opening a lockbox to show a place when he was approached by a gun-wielding 18-year-old man who demanded that he run. The agent threw his car keys, fled the scene and the gunman subsequently stole his car.

And who can forget the poor, befuddled Black real estate agent in Wyoming, Mich., who was showing a home to a client when police arrived on the scene and placed both of them in handcuffs – in front of the client’s 15-year-old son. Police were responding to a neighbor’s 911 call. “The level of the response and the aggressiveness of the response was definitely a take back, it really threw me back,” Brown told local media. “Am I just automatically the criminal? Because that’s pretty much how we were treated in that situation.”

That incident made the national nightly news. But you probably never heard about the Black realty agent – a former U.S. Capital Police officer -- who was waiting in his car to photograph a client’s house in Arlington, Va,, when several police cars showed up and asked him for identification. “They have three cop cars out here for me,” said the agent, who called the incident demeaning. “I am an agent and a photographer and this is what we get in this climate. It’s ridiculous.”

Agents Provacateur

Sometimes, though, as in the financing sector, agents are the perpetrators, not the victims. And sometimes they are their own worst enemies. In Los Angeles, a Beverly Hills real estate agent has been charged with serving as an accomplice for a thief who posed as an agent and stole more than 2,000 items from houses the rich and famous had listed for sale.

And who can forget Jenna Ryan, the Texas real estate agent who stormed the Capitol in January and stopped to pose for pictures she later posted on social media to plug her real estate business. In case you missed it, she has pleaded guilty to demonstrating inside the building, a misdemeanor that comes with a $500 fine and up to six months in the hoosgow. She was one of two agents – the other was former Olympic medalist Klete Keller – charged with knowingly entering a restricted building to impede an official government function, disorderly conduct and obstructing law officers.

Then there is a whole category of realty agents who commit deeds that, while not necessarily crimes, are no less reprehensible. Surely you’ve heard of the Arizona agent who shouted racial slurs at two people outside his home, for example? A video of his rant went viral.

But do you know about the Brooklyn agent who went on a racist screed when a gym manager asked him to wear a mask? Or the California agent who was caught on video hurling insults at an Asian-American woman in Brentwood? Or the New York City agent whose insensitive behavior toward homeless people – he was tossing empty beer bottles at them -- also was captured on video. Or the agent who, too, was seen on a video flipping off a neighbor and destroying the “Biden For President” signs she had placed in her yard.

To their employers’ credit, these agents were all summarily dismissed by their respective brokerages. “The way in which our agents represent their communities is of utmost importance to us,” said one firm. Another, a major chain, said it “does not condone or tolerate racism or discrimination. The immediate manner in which this matter was addressed by our franchise office represents that our core values have been upheld.”

All-in-all, the housing business can be a dangerous one. The flimflam men – and sometimes women – are out there, ready to take your money or someone else’s in an instant. Or perhaps your life. And so, too, are the racists and bigots among us who come out from under the rocks to show their true colors when they think nobody is looking. Or when they hope everyone IS watching.

So I leave you with one Sgt. Phil Esterhaus, who kicked off every episode of Hills Street Blues, the long running 1980s TV cop drama, with these immortal words: “Let’s be careful out there.”