U.S. v. Ms. G (DMC No. 14158) – Federal Felony Mortgage Fraud ($1,100,000), Federal Felony Bank and Wire Fraud, Felony Fraudulent Schemes, and Felony Forgery – Not Charged – Large National Bank Investigated.
Ms. G and her husband were going to purchase a large house for approx. $1,000,000. The appraisal information was sent from the loan originator, and the loan originator specifically asked if any funds were going to be pulled from a retirement account, to which Ms. G and her husband said “no.” Ultimately, discrepancies were found in the closing documents, and in order to close on the house, Ms. G had the house purchased in her husband’s name only. This was accomplished through a Special Warranty Deed signed by the husband “as a married man as his sole and separate property.” Ms. G signed a Disclaimer Deed disclaiming any interest in the property. Also, they both signed a Warranty Deed conveying property from husband’s sole and separate property to husband and wife.
The potential problem was that the Disclaimer Deed signed by Ms. G indicated that none of her assets or community assets were used in the purchase of the home. This is not accurate as a joint check was used for the purchase. In addition, the intent was always to use community assets to buy the home. After the closing, the bank discovered discrepancies and began investigating. A potential concern was that Forgery was committed, along with allegations of Fraudulent Schemes, and Mortgage Fraud per Arizona Revised Statue 13-2320. Lastly, a potential for Federal Bank and Wire Fraud was also possible due to the federal loan documents which were signed.
We were able to show although Ms. G did not sign the document indicating the property was purchased with separate funds of the spouse, that it must be read in conjunction with the other documents signed by Ms. G at the same time. Specifically, that Mr. G. received title through the Special Warranty Deed the day before the Disclaimer Deed, and that he signed the Warranty Deed at the same time as the Disclaimer Deed, thereby suggesting that they were meant to function together to promote the buyers’ intent (as outlined in both the purchase contract and the loan pre-qualification form).
We were able to show that none of the documents were indicative of any intent to defraud. The only real issue had to do with community property issues down the road should they become divorced. Initially, Ms. G was facing the potential of multiple years in prison, but we were able to convince the bank not to turn this into a criminal matter and get the authorities involved.