It may come as little surprise, but attorneys can, and often do, commit business fraud. Unfortunately, in the wake of the financial meltdown in 2008, numerous “mortgage attorneys” have found themselves at the center of controversy, and in some cases, behind bars. A recent example is the case of Arizona Attorney Jeffrey Greenberg, who, together with Coronado businessman Courtland Gettel, was charged with extensive fraudulent activity involving home loans, fake San Diego lien releases, and fraudulent Arizona rehab loans.
Greenberg and Gettel pleaded guilty in a San Diego federal court on May 17th to charges of conspiracy and wire fraud conspiracy. In reaching their deal, both defendants agreed to forego profits from fraudulent land deals they made and to pay restitution.
Greenberg used his legal knowledge and real estate experience to help his co-conspirators gain access to loans (mortgages) against multi-million dollar properties in La Jolla and Delmar, California. How did he do this? He and his co-conspirators filed bogus lien releases with the San Diego County’s Recorder’s Office that made it look like the properties were free and clear of prior loans. He then helped his “clients” apply for new loans against the same property from new lenders. Then, they put the funds received from the lenders in their pockets and defaulted on the loans, leaving the lenders to fight amongst themselves to seize the collateral. Another co-conspirator was a notary public who notarized fraudulent documents, recorded them in her book, then reported the book stolen to the state of California.
The fraud in Arizona began with co-defendant Gettel, who had a real estate investment company in that State. Using that company, co-defendant Greenberg helped other co-defendants apply for real estate rehabilitation loans. They never used the money for that purpose, of course. The money went towards the co-defendants’ personal expenses.
This fraudulent activity went on for more than a year and involved 8 multi-million dollar loans. Altogether, the co-defendants’ business fraud resulted in losses of $33.6. To make matters worse, Attorney Greenberg used his client trust account for these fraudulent deals, which of course violates the State Bar Rules of Professional Responsibility.
There are some important takeaways from this story. First, please note that attorneys involved in business fraud (mortgage or otherwise) are a small number of bad apples in the barrel…they aren’t the whole barrel!
Second, it is really difficult for people like Greenberg and Gettel to get away with business fraud in the area of real property. Real property transactions are matters of permanent public record, because real estate sales transactions are recorded in the County Recorder’s office. Critical pieces of evidence are available for all eyes to see, for all time. In other words, you can run but you cannot hide from recorded transactions, and they typically provide detectives and prosecutors with important initial evidence upon which to build a case. When prosecutors are diligent, they’re usually going to bust the bad guys on these deals. That certainly happened in this case.
Further details of portions of this story are available in the San Diego Reader article entitled “Real Estate Fraudsters Stole More Than 30 Million.”
To talk more about real estate fraud, business fraud, or any related wrongdoing, please do not hesitate to contact Stephen Hammers at hammers-law.com.