Muncie Real Estate Scam
According to a piece in the Star Press, Indiana attorney Bruce McLaren was sentenced to a five month term in prison for running a real estate scam that left mortgage lenders holding almost worthless paper. The scam was summarized as follows:
According to federal authorities, McLaren, real estate agent Cindy Hickey, 45, and appraiser Danny R. King, 37, conducted 25 fraudulent real estate transactions between 1998 and July 2001. Most of the homes involved were on Muncie’s south side, investigators said. McLaren bought homes at low cost to resell. Then he and Hickey provided mortgage lenders false information about buyers’ assets in order to get the buyers to qualify for mortgages. King allegedly provided numerous appraisals that corroborated the grossly inflated sales prices to mortgage lenders. Based on the bogus information, the buyers obtained loans that were sometimes twice as much as McLaren had paid for the houses, investigators said. McLaren and Hickey shared the profits from the transactions, authorities alleged, and paid King a fee for his appraisals. In most instances, the buyers defaulted on their mortgages, prompting loan companies to foreclose on the properties.
I wish this type of scam was rare, but it has become increasingly common in some form or another. What is rare is the prosecution.
