December 8, 2009 / 10:19 PM / 10 years ago

Five accused of preying on distressed homeowners

A sign offering bank owned homes for sale is seen in a subdivision in Maricopa, Arizona in this file REUTERS/Joshua Lott/Files

PHILADELPHIA (Reuters) - A federal grand jury on Tuesday accused five people of preying on homeowners faced with foreclosure by providing them with fraudulent new mortgages and pocketing the proceeds.

The defendants advertised “Foreclosure Relief Services” for distressed homeowners and falsely promised to find an “investor” who would take out a new mortgage for them with affordable payments so they could remain in their homes.

Instead, the defendants arranged for the home to be transferred to a straw purchaser, used false documents to obtain a mortgage in the name of the straw purchaser, and took equity from the sales for themselves, according to the indictment in the Eastern District of Pennsylvania.

The defendants, two of whom are attorneys, also concealed from mortgage lenders that the distressed homeowners were going to remain in their homes. They are charged with conspiracy to commit wire and mail fraud, and money laundering, and face up to 385 years in prison and $4 million in fines.

“The downturn in the economy has given rise to unscrupulous predators looking to cash in on the misfortune of others,” Michael Levy, the chief federal prosecutor for the region, said in a statement.

The scheme obtained at least 35 fraudulent mortgages worth about $14.6 million, the statement said.

Reporting by Jon Hurdle; Editing by Daniel Trotta

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