Straw buying is when an individual makes a purchase on behalf of someone who otherwise would be unable to make the purchase. More specifically in this example, straw buyer mortgage fraud is a type of fraud scheme in which someone purchases a home under false pretenses. Because a financial institution is being defrauded, a straw buyer mortgage scheme can lead to federal bank fraud charges among other criminal penalties.
A business customer walks into a bank looking for a mortgage on a high-end residential property to house out-of-town clients while he woos them into buying his product. The business also requests a line of credit from the bank. Eventually the business defaults on the line of credit, causing the bank to pursue foreclosure on the mortgaged property. Upon visiting the property, the bank discovers the property is being lived in by its previous owners. This kicks off an investigation that DIG discovers is much, much larger.
Not only is the business customer part of a straw buyer mortgage scheme, but the tenants have already been convicted of Medicare fraud to the tune of $170M and have possibly committed PPP loan fraud (twice). The customer drives around in very high-end vehicles and his “multimillion-dollar business” is nowhere to be found. Tax returns and financial statements used in applying for the mortgage were not proper. This scheme spidered out to many properties, businesses, and people, and because it involved a financial institution, it became a federal case.
