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.


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