Atlanta bank executives sentenced for foreclosure fraud
A few months ago, we wrote that mortgage lenders are becoming more focused on the appearance of bank-owned homes, performing renovations and aesthetic updates in order to move through their ever-increasing supply of foreclosed properties. Now, banks in Georgia and throughout the country are reportedly spending an average of $3,000 per home, replacing windows, refinishing floors, painting the interior and exterior walls, and making other fixes and improvements.
However, this practice has landed several former executives of an Atlanta bank in trouble with federal authorities. Five people have now been sentences in related to an alleged foreclosure fraud scheme, in which the now-failed Omni National Bank in Atlanta accepted bribes and kickbacks from contractors in exchange for awarding bank-funded renovation contracts on foreclosed homes.
Most recently, a 34-year-old Atlanta man was sentenced by a federal judge after pleading guilty in January. The man will spend 21 months in prison followed by five years of supervised release for taking several hundred thousand dollars in bribes in exchange for awarding bank-funded renovation contracts on foreclosed properties. He must also pay over $600,000 in restitution. Earlier, a bank founder who also pleaded guilty to fraud was sentenced to five years in prison for allegedly falsifying the bank’s financial records to hide the illegal activity.
According to court documents, the bank made loans to ineligible borrowers, who would then “flip” and resell the homes. One such borrower was indicted for his role in the scheme, and was sentenced to 14 years in prison for his offenses. Another borrower was sentenced to 39 months in prison for making false statements to the FDIC.
Source: The Atlanta Journal-Constitution, “Ex-Omni Bank exec gets 21 months in prison,” David Markiewicz, 2 June 2011