90k loss Real estate & mortgage scam

90k loss Real estate & mortgage scam

Los Angeles, CA · Member since 2012 · 50 posts · 6 votes

My cousin got defrauded 90k. Ill make the story short. 

My cousin Andy was looking at a property in California which he found back in Feb. It was going to be his first property. He needed an agent. So He contacted Bill, who is an agent who was an uncle of a close friend of his. He trusted Bill the way he trusted his friend. He thought Bill was going to be his mentor. BILL had him sign multiple agreements. -Offers. -agency agreements,-loan agreements. Once they executed the forms. Bill said they were in contract. Bill Had all the financing figured out and would need to fund escrow soon. So Andy funded the account 90,000 which was 20% down. Bill said they were in contract and just waiting for inspections. Months pass by and he asked bill why is the deal taking so long. Bill had excuse after excuse. Come June he googles the property and finds out it has been sold. And He ask bill about it. Bill says it was just a change of title between the investors of the property. Andy ask for the money back. Bill says it'll take 30 days. After they submit the cancellation contract. 30 days past and Bill still hasn't been able to produce the money. 

We start investigating Bill and we discover, Bill never even made the offer. Setup a company along with bank accounts which the funds went into. No longer has money in that account. Has multiple bankruptcy, has a home(approx 950k)  with numerous liens approx (700k), been in multiple lawsuits. Owes 200k in state sales tax from a previous business. Was with multiple brokerages in his real estate career. Was with a brokerage at the time.

My cousin is in some deep poop with his wife and our whole family. AS he did borrow some from us. They are going through a lot of stress.

Anyone been in a similar situation? Advice? Is this criminal or civil? Both? Any experience on this matter is helpful to our family.

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Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
11y

I think you're going to want to go to: 

http://www.dre.ca.gov/

Click that you are a consumer and want to file a complaint. I would do that as well as call them once you have done that and see what your options are. 

http://www.dre.ca.gov/Consumers/ConsumerRecoveryAc...

^If you win they will typically go after the Broker/Individual to recover the money they had to pay you. This is why as a Realtor we do our 110% best to operate above board. 

Ps: Still talk to an attorney as this is a legal matter dealing with a decent chunk of change.

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  • Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
    11y

    I would go after the brokerage that held Bill's license. Most states have an agent Fraud fund. He's not going to recover 90k but something is better than nothing. I would also talk to a lawyer with the $$$ at play it could be worth his time. 

    This is why you ALWAYS complete your due diligence PRIOR to money changing hands.

  • Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    11y
    Originally posted by @Ryan Dossey:

    I would go after the brokerage that held Bill's license. 

     how could you go after the brokerage?

  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    11y

    Contact your state real estate commission. Most states have some sort of fraud fund to get you back at least part of your money. This situation has both criminal and civil consequences. The faster you act now though the better things will be. 

  • Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
    11y

    I think you're going to want to go to: 

    http://www.dre.ca.gov/

    Click that you are a consumer and want to file a complaint. I would do that as well as call them once you have done that and see what your options are. 

    http://www.dre.ca.gov/Consumers/ConsumerRecoveryAc...

    ^If you win they will typically go after the Broker/Individual to recover the money they had to pay you. This is why as a Realtor we do our 110% best to operate above board. 

    Ps: Still talk to an attorney as this is a legal matter dealing with a decent chunk of change.

  • Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    11y
    Originally posted by @Russell Brazil:

    Contact your state real estate commission. Most states have some sort of fraud fund to get you back at least part of your money. This situation has both criminal and civil consequences. The faster you act now though the better things will be. 

     I believe you're right the dre does have a victims fund. It is only utilized as a last resort after civil or criminal charges are handed out. 

  • Attorney · Shawnee, OK · Member since 2013 · 350 posts · 230 votes
    11y

    It shouldn't be discharged in a bankruptcy but you need to do your best to advance the criminal and civil complaints. The key word is fraud. Most likely you will never collect on the guy but he should be stuck with it. Talk to an attorney ASAP. 

  • Business Owner/Investor · Millersville, MD · Member since 2015 · 191 posts · 71 votes
    11y

    Capital One offers Escrow Service. I highly recommend it to you, and others, for future reference. 

  • Coppell, TX · Member since 2013 · 37 posts · 14 votes
    11y

    Your cousin may have options, contact the State Real Estate Commission, and usually the Broker carry some kind of insurance to protect the consumers against errors and omissions, not sure if it applies here, because it is not an error, but he should go after the Broker. Try to find out what affiliations the broker has, NAR, mls board and also fill a complain there. Contact the Broker, he is the one who is responsible for his associates. Talk to a lawyer.

  • Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
    11y

    OUCH, Truly sorry to hear about this ordeal. Wow, I'm at a loss for words, smdh. Did your cousin file a police report and contact the California Real Estate Commission as well as Bill's broker?  You can't let them get away with it without even trying to get justice.

    Kudos,

    Mary

  • Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    11y
    Originally posted by @Ryan Dossey:

    I think you're going to want to go to: 

    http://www.dre.ca.gov/

    Click that you are a consumer and want to file a complaint. I would do that as well as call them once you have done that and see what your options are. 

    http://www.dre.ca.gov/Consumers/ConsumerRecoveryAc...

    ^If you win they will typically go after the Broker/Individual to recover the money they had to pay you. This is why as a Realtor we do our 110% best to operate above board. 

    Ps: Still talk to an attorney as this is a legal matter dealing with a decent chunk of change.

     We just read the consumer recovery account page, They only pay a maximum of 50,000 per transaction. And you have to win in court first. Seems like an lawyers going to be necessary regardless.

    "In general, the requirements for payment from the Consumer Recovery Account include obtaining a final civil judgment or arbitration award, or a criminal restitution order against a licensee. The judgment, award or order must be based on intentional fraud or conversion of trust funds in connection with a transaction requiring a real estate license. The victim must make a reasonable search for the licensee's assets, and, if any, a reasonable effort to collect on the judgment, arbitration award or restitution order from those assets to satisfy the judgment."

  • Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    11y
    Originally posted by @Logan Hicks:

    Capital One offers Escrow Service. I highly recommend it to you, and others, for future reference. 

     I think a valuable lesson here is to do due diligence on all parties and have advisors from outside the transaction. 

  • Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    11y
    Originally posted by @Mary B.:

    OUCH, Truly sorry to hear about this ordeal. Wow, I'm at a loss for words, smdh. Did your cousin file a police report and contact the California Real Estate Commission as well as Bill's broker?  You can't let them get away with it without even trying to get justice.

    Kudos,

    Mary

     A police report has been filed and the sergeant investigator seemed really eager to accept the case. The CAREC has not been contacted yet. The broker tried to distance himself from Bill as expected. 

  • Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    11y

    Any Brokers on here know if the brokers insurance covers fraud or misappropriation of funds like this?

  • Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
    11y
    Originally posted by @Gerald L.:
    Originally posted by @Ryan Dossey:

    I think you're going to want to go to: 

    http://www.dre.ca.gov/

    Click that you are a consumer and want to file a complaint. I would do that as well as call them once you have done that and see what your options are. 

    http://www.dre.ca.gov/Consumers/ConsumerRecoveryAc...

    ^If you win they will typically go after the Broker/Individual to recover the money they had to pay you. This is why as a Realtor we do our 110% best to operate above board. 

    Ps: Still talk to an attorney as this is a legal matter dealing with a decent chunk of change.

     We just read the consumer recovery account page, They only pay a maximum of 50,000 per transaction. And you have to win in court first. Seems like an lawyers going to be necessary regardless.

    "In general, the requirements for payment from the Consumer Recovery Account include obtaining a final civil judgment or arbitration award, or a criminal restitution order against a licensee. The judgment, award or order must be based on intentional fraud or conversion of trust funds in connection with a transaction requiring a real estate license. The victim must make a reasonable search for the licensee's assets, and, if any, a reasonable effort to collect on the judgment, arbitration award or restitution order from those assets to satisfy the judgment."

     Correct. That's why I told you he's not going to recover the full 90k through that avenue. But something is better than nothing! 

  • NYC, NY · Member since 2013 · 50 posts · 22 votes
    11y
    Good luck man. There's enough money in the business to be made honestly. It's sad to see people pull one over like this. Best of luck in recovering your money. I'm cheering for you.
  • Coppell, TX · Member since 2013 · 37 posts · 14 votes
    11y

    @Gerald L. It depends, does your cousin have copy of everything? if he never made the offer, no contract was executed, I'm not sure.

    I always see the charge of the insurance after we close on the transaction. But I'm assuming it should be something to protect the Broker for cases like this, because the one who is responsible is the Broker, and I imagine this is not the first case, so they should have some umbrella policy to protect them. 

  • Wholesaler And Coach · Springfield, VA · Member since 2011 · 169 posts · 75 votes
    11y

    sorry to hear that. I hope it works out for you. 

  • Investor · West Los Angeles, CA · Member since 2014 · 230 posts · 239 votes
    11y
    Ok so I was defrauded in a similar manner and I will try and give you as much info as I can but feel free to pm message me if you need additional info. First of all the outlook isn't good. I doubt if he'll recover money since this guy owes everyone plus he has liens against his property and multiple lawsuits. Lawsuits are first come first serve in other words if someone got a judgement before him they get all thier money first before your friend gets a dime. The brokerage is liable but not financially, file a report with the dre to get thier license revoked. Insurance will not cover fraud but you may want to look into E and O insurance. An attorney is a good option is your friend had money and the criminal has money. If you get a judgment and he can't pay what's the point. As for me I was out 350k. I hired an attorney that cost $100k to get my money back. I got an emergency order to freeze all his assets and put a Liz pendants on his properties. I could have asked for punitive damages court costs etc and won. However I dropped the case because I knew the FBI was involved and once the government steps in good luck seeing any money. He was recently arrested by the FBI and they froze all his assets. I've recovered all my losses from investments I've made since then. The main advice I can give is change your mindset and move forward. All investors lose money it's part of the game. Learn from it and figure out how to make even more money. And definitely have him arrested if at all possible as he will continue to victimize others if he isn't stopped. Finally never ever give your money to anyone other than escrow in any real estate transactions. Good luck
  • Linda WeygantPro Member
    Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
    11y

    @Gerald L.

    What does your cousin's friend have to say about the whole thing?  You know, the one who is Bill's nephew?  

    Makes me wonder if he doesn't feed marks to his uncle in exchange for a cut....

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    E & O insurance does Not cover fraud.  HoweverI would certainly have your attorney look to the Broker, as it seems this guy has a history the broker should have been aware of.

  • Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    11y
    Originally posted by @Linda Weygant:

    @Gerald L.

    What does your cousin's friend have to say about the whole thing?  You know, the one who is Bill's nephew?  

    Makes me wonder if he doesn't feed marks to his uncle in exchange for a cut....

     initially he said he would testify against his uncle and appeared to be helpful, but that momentum has died down.

  • Los Angeles, CA · Member since 2012 · 50 posts · 6 votes
    11y
    Originally posted by @Wayne Brooks:

    E & O insurance does Not cover fraud.  HoweverI would certainly have your attorney look to the Broker, as it seems this guy has a history the broker should have been aware of.

     As e & o doesn't cover fraud, any idea what grounds should the lawsuit be filed under?

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    11y

    It's still fraud, even though their E & O won't cover it, but the Broker likely has some liability.  Have you talked to an attorney yet?

  • Investor · Corona, CA · Member since 2014 · 746 posts · 372 votes
    11y

    Wow, very sorry to hear. All people should be vetted prior to working with them even if family/friends. Get an attorney ASAP. Report the agent to the broker and then report the broker and agent to your state's real estate commission/consumer protection agency.

  • Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
    11y

    Wow, I can't believe things like that can even happen...

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