Thursday, October 16, 2003

2 plead guilty in 'flipping' case


Title agents agree to aid real estate investigation

By Ken Alltucker
The Cincinnati Enquirer

Two title company agents have agreed to plead guilty to charges of signing false loan papers in a sophisticated mortgage scheme that federal prosecutors believe is widespread in many of Cincinnati's poor and working-class neighborhoods.

As part of the plea deals filed Wednesday in U.S. District Court in Cincinnati, Charlene Bold and Kristie Neff agreed to cooperate with investigators in a wider mortgage fraud investigation. Federal prosecutors believe at least two dozen individuals are involved in an illegal practice known as property flipping.

The scam involves the practice of artificially inflating the value of a home, taking out a mortgage that far exceeds the real value and pocketing the difference. Flipping often results in foreclosure when the buyer is unable or unwilling to make payments on a junk property.

Community leaders have complained that many such properties, often abandoned and blighted, are clustered in Cincinnati neighborhoods.

The plea agreements contend that, as settlement agents for title companies, Neff and Bold played key roles in the fraud by signing loan papers that included false information. Neither Neff nor Bold could be reached for comment Wednesday.

Bold, who managed Global Title Agency in Sharonville, signed a false loan document involving the sale of a West Price Hill property in May 2002, according to the plea agreement. Lockwood Real Estate purchased the house at 1601 Minion Ave. in February 2002 for $37,000. Three-and-a-half months later, Lockwood sold the house to another investor, Michael Gruber, for $80,000. Bold helped complete the deal by signing loan papers indicating Gruber furnished a down payment of $11,228. The down payment really came from DS Real Estate Holdings LLC, but lender ABN Amro approved a loan believing that Gruber had provided his own down payment.

In the plea agreement entered against Bold by Assistant U.S. Attorney Amul Thapar, David Lockwood is described as a "leader" in alleged illegal property flipping. Lockwood, who owns Lockwood Real Estate and is part owner of DS Real Estate Holdings, has not been charged in the ongoing flipping investigation. Lockwood didn't return a phone call Wednesday.

Neff's plea agreement also indicates she signed loan papers falsely stating a buyer provided a down payment involving the sale of a Northside home. Thomas Goodwin sold the house at 3911 Apple St. to Robert Gans for $68,000 in January 2002. Working as a settlement agent for Premier Land Title, Neff signed loan papers indicating that Gans provided a down payment of $8,639 to purchase the home.

However, Lockwood's company, DS Real Estate Holdings, really provided the down payment money, according to the plea agreement. Based on the false information, the buyer was able to get a loan for the property from lender ABN Amro, the plea agreement states.

Neither plea agreement clearly explains the role of the property buyers.

The charges against Bold and Neff carry a maximum penalty of 30 years in prison and a $1 million fine. In exchange for full cooperation in the flipping investigation, federal prosecutors said they may recommend a lighter sentence.

The plea agreements come nearly three months after the FBI raided Premier Land Title and Global Title Agency. The FBI also has executed search warrants at Charter First Banc and Oaktree Financial in Fairfield and Airline Union's Mortgage in Springdale.

Federal prosecutors have vowed to cast a wider net in the investigation. They said they believe at least 500 property sales involved flips during the past few years.

An Enquirer investigation in August found that flipping has contributed to Hamilton County's record foreclosure rate. Foreclosures in 55 of 97 Hamilton County communities exceed national rates. Residents in Over-the-Rhine, South Fairmount, Lower Price Hill and East Westwood were most likely to lose their homes. African-American communities were hit hardest, accounting for 13 of 15 communities with the highest loan default rates.

E-mail kalltucker@enquirer.com




TALL STACKS
Photo gallery of Day 1
Water taxi is scenic route to Tall Stacks
Bell magicians do it again
Copter takes the high tour
Latin flavor spices up the night
Of white gloves and shady characters
Music doesn't end when festival closes
Underground Railroad alive at Sawyer Town
Admission a bargain, but extras do add up
Running low on cash stack at Tall Stacks? Check deals
McCoury Band bluegrass masters
Daily schedule
What you can do, see elsewhere around town
Tall Stacks gives push to ailing hotel business
Party Scene
Volunteer's journey to past

TOP STORIES
City Hall assailed over Chinese slur
2 plead guilty in 'flipping' case
Ads alert Ohioans to $500M decision

IN THE TRISTATE
UC breast cancer researchers to explore nongenetic causes
Fire department reinstates chaplain
Construction begins on Evendale surgery center
High school football coach suing to get job back
Ex-Elder principal Kuhn charged in Montgomery Co.
Diverse group to guide UC future
Regional Report

ENQUIRER COLUMNISTS
Pulfer: Many pitching in - but it's not enough
Howard: Good Things Happening

BUTLER, WARREN, CLERMONT
Passenger guilty in crash that killed four teens
Township rejected in appeal on firing
Blackwell enters Warren Co. fray
School board, council candidates see critical growth, funding issues
Hamilton now owns hospital property
Modular classrooms ace test
Councilman quits over series of closed meetings
Culverts blamed in sudden floods
Trustees move on storage policy

OBITUARIES
F. Begnoche took pride in construction
Lloyd Ryan, 80, drove city buses for 44 years
Breathitt recalled as bold governor
Kentucky obituaries

OHIO
Ballot language OK'd for tax increase repeal
Toledo Zoo sends one of two elephants packing
Senate: Let voters decide on video slot machines
Museum to chronicle history of funerals
Community joins to help reap late farmer's 90 acres
Ohio Moments

KENTUCKY
N.Ky. residents urged to sign up for flu shots
Fletcher distances himself from GOP attack commercial
Mentoring program plants seeds of success
Trial begins in death of woman
Kentucky News Briefs