A Roswell, Ga., real estate attorney on Thursday pleaded guilty to conspiracy to commit bank, mail and wire fraud, bank loan application fraud, money laundering and wire fraud in a $20 million mortgage fraud scheme.
James F. Stovall III, 56, participated in scheme involving property flips orchestrated by one of his clients, "Reti Relocation Services Inc." From April 2000 to June 2001, Reti flipped some 50 properties in metro Atlanta in subdivisions such as Brookstone in Acworth; Windward and Seven Oaks in Alpharetta; and Towne Lake in Woodstock.
Reti would acquire properties and on the same day resell or "flip" them to straw borrowers, who were paid for participating in the transactions. Reti paid recruiters for locating straw borrowers, loan officers for preparing and submitting false loan applications and false qualifying documents, and appraisers for preparing fraudulent appraisals with inflated values submitted to lenders. Stovall closed nearly all of the same day fraudulent flips and failed to advise his clients, the lenders, of those flips, prepared false HUD-1 settlement statements that were submitted to the lenders, and moved the proceeds of the scheme through his escrow account and to off-shore bank accounts.
The fraudulent scheme involved the submission of false qualifying information and documents through the mails and the wire transfer of scheme proceeds. In the overall scheme, financial institutions and lenders were fraudulently induced to make loans totaling more than $20 million.
Stovall pleaded guilty to one count of conspiracy to commit bank, mail, and wire fraud, bank loan application fraud, and money laundering, and one count of wire fraud. He faces a maximum sentence of five years in prison and a fine of up to $250,000 on each count.
Sentencing has not been scheduled. Stovall will be sentenced by U.S. District Judge Thomas Thrash.
"We unfortunately continue to see some real estate professionals, such as attorneys and appraisers, who serve as gatekeepers of the system, instead ignoring their professional duty to participate in mortgage fraud schemes," said U.S. Attorney David E. Nahmias. "Given the well-known troubles in the mortgage industry and related financial markets, we will continue to aggressively investigate and prosecute such professionals who, out of pure greed, are willing to promote such fraud schemes in North Georgia."
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