All 18 Palm Coast homes linked to the alleged mortgage fraud scheme have finally moved through foreclosure and have new owners. Linda Kasper’s case is still wending its way through the courts.
Palm Coast, FL – June 13, 2014 – In March 2011, local real estate agent Linda Kasper and 14 others from outside the area were charged with one count of Criminal Racketeering and one count of Conspiracy to Commit Racketeering, both first-degree felonies. The charges stemmed from an investigation triggered when GoToby.com identified 18 suspicious home sales to authorities in early 2008. Kasper represented the buyers in 17 of the transactions.
The announcement issued by FDLE at the time states; "The two-year investigation, named “Operation Fast Cash Kickback,” focused on a complex scheme involving home buyers, realtors, appraisers, and mortgage brokers. Investigators allege the charged individuals artificially raised home prices, falsified appraisals, and pocketed large amounts of cash by facilitating a series of fraudulent home sales. The scam involved using “straw buyers” to purchase a home. The straw buyer’s realtor then asked the seller to raise the price of the home in order for the difference to be provided back to the straw buyer for alleged “renovations.” The appraiser would then inflate the price of the home to meet the contract sales price. At closing, a designated third party individual or shell company received the proceeds for “renovations,” which ranged from $25,000 to $320,000 for each sale. The third party recipient then returned a majority of the funds back to the straw buyer via check or wire transfer. No renovations were ever conducted on the homes and each of the properties foreclosed a short time after the sale. The estimated loss to date is approximately $9 million."
The 54-page Probable Cause Affidavit, FDLE case #ST-11-0016, describes the scam, which allegedly occurred from February 2006 to June 2007:
- The sales prices of the properties were significantly higher than the original listing price.
- The sales contracts were modified to include an addendum which directs payment to the buyer.
- A large amount of the seller's proceeds were directed to the straw buyer for "renovations." A third party individual or shell company received the proceeds, which ranged from $25,000 to $320,000. The third party recipient returned a majority of the funds back to the buyer. No renovations were ever conducted.
- The appraisals were inflated to match the sales price.
- The straw buyers overstated their income on the Uniform Loan Application (1003 Form)
- A majority of the closings were conducted via mail (mail away closing).
- The Title Company required the seller to sign "hold harmless" agreements to ensure that the seller would not sue them for disbursing the seller's proceeds to a third-party.
- All the homes have since been foreclosed by the lenders.
- Most of the loans obtained were 100% financed by the lender.
- On some occasions, the straw buyers purchased two properties in the same time period so that the lenders were not aware of the other pending real estate transaction.
GoToby.com’s frustration in getting law enforcement to look at the case is documented in Flagler Beach Real Estate Agent Linda Kasper Charged in $9M Real Estate Fraud. It took only a few months to identify the 18 suspicious transactions from MLS and public records, but getting the attention of authorities was problematic. In the following (nearly) three years, Florida Department of Law Enforcement (FDLE) documented an additional five.
I understand that building a case that can be successfully prosecuted is much more complex and time consuming than gathering evidence. All real estate transactions are paperwork intensive and many cross jurisdictional, geographic and regulatory boundaries. The charging affidavit details countless financial transactions, sales contracts, HUD closing statements and sworn testimonies. These items are not public record and can be compelled only by sworn officers.
Kasper’s arrest was 39 months ago. During that time, public records of the case show 150 Case Dockets and 20 events. Each of the several defendants has their respective lawyers. (Now there’s a recipe for delay.) Upcoming, Kasper has a hearing scheduled for July 9, 2014. A Pre-Trial meeting is scheduled for several of the defendants on August 6, 2014.
Florida is a Judicial Foreclosure state, meaning that foreclosures go through the court system for final judgment. That’s one reason why Florida is among the states taking the longest time to complete foreclosures. And the robo-signing documentation crisis did not help a state already flooded with foreclosures.
Eighteen foreclosures resulting from the suspicious transactions were filed within 12 to 25-months following each sale; the first filing being July 3, 2007. The average time from closing to foreclosure filing was 17 months. The average time between foreclosure filing and foreclosure completion for the 18 properties was 38 months.
May 5, 2014, 38 Russo Drive, joined its predecessors as title to the last of the 18 foreclosed homes went back to the lender. All 18 had been “sentenced” to foreclosure for their passive role in the scheme. Now, sentences completed, they are moving on to become productive members of our community. All, but the latest foreclosure completion are in the hands of new owners. Ten of the homes are homesteaded.
Meanwhile, Linda Kasper remains where she was in 2006, working as a licensed real estate agent at Tavolacci Realty, Inc., in Flagler Beach. Her fate remains unknown.