Former Trump Campaign Manager Faces Additional Charges

Manhattan District Attorney Cyrus Vance charged Paul Manafort, who is already facing federal prison time for unrelated charges, with over a dozen counts of mortgage fraud. How does his case shed light on fraud prosecutions in Cobb County?

According to prosecutors, Manafort made false statements on loan applications between 2015 and 2017. The applications concerned properties in Lower Manhattan, Long Island, and Brooklyn Heights. Manafort could be imprisoned for up to 25 years if he is convicted on all charges. Court documents claim that Manafort made millions of dollars from these crimes, which mostly involved false statements on mortgage loan applications.

Many observers believe that the indictments were an end-run around a potential Presidential pardon for Manafort. He was recently sentenced to four years in prison on charges stemming from fraud in the 2016 Presidential election. Donald Trump could pardon Manafort for those crimes, but not for fraud charged in New York State. However, Vance brushed off that suggestion and painted the Manafort fraud charged in black and white terms. “No one is beyond the law in New York,” he proclaimed. Moreover, his office uncovered “serious criminal charged for which the defendant has not been held accountable,” he added.

Mortgage Fraud Cases in Georgia: An Overview

During the Great Recession, mortgage fraud cases were quite rare, simply because banks did not loan very much money. But there has been an uptick recently. According to some estimates, roughly 1 percent of mortgage applications involve some type of fraud. That proportion may seem insignificant, but considering the thousands of mortgages that go through every month in Cobb County, that’s a significant number.

Although Vance’s office released no details about the Manafort indictments, he probably made false statements regarding income or residency. Statistically, that’s where most mortgage fraud originates. Many banks do not ask too many questions about sources of income. There is no legal requirement to do so, as ling as the party provides some minimal paperwork.

Residency statements are even harder to verify. Typically, there’s no evidence in the application other than the owner’s statements. Once again, there is no requirement to show utility bills or other proof, at least in most cases.

Typically, mortgage fraud is a crime of desperation. Everyone often feels extreme pressure to get the deal done. The homeowner may stretch the truth on a refinance application to get out of an unaffordable loan. Or, the appraiser needs the business or the broker needs to get the deal done, so they take shortcuts.

Residential mortgage fraud is not only common and a seemingly victimless crime. There are many different forms, such as:

• Lying about employment status or income amount,
• Misstatements about the size of, or especially the source of, a down payment,
• Claiming an investment property will be owner-occupied property,
• Wrongfully inflating the property’s value, and
• Using a “straw buyer” with good credit.

In all these instances, prosecutors must establish every element of the offense beyond a reasonable doubt, as outlined below.

Elements of the Offense

The Georgia Residential Mortgage Fraud Act applies to all parties at all stages of the process. That includes “solicitation, application or origination, negotiation of terms, third-party provider services, underwriting, signing and closing, and funding of the loan.” The basic elements of this offense are:

• Knowingly Making: Knowledge is the lowest mental standard in Georgia criminal law. The only defense is that the misstatement was accidental. Depending on things like the complexity of the documents, the defendant’s education level or English skills, and the pressure from the broker, appraiser, and any other parties in the transaction, lack of knowledge is sometimes a decent defense.
• Material Misstatement: There is some dispute as to what makes a statement “material.” But generally, if the transaction would not have gone forward without the misstatement, it was probably material. Furthermore, a misstatement could also be an omission or pretty much anything else that’s less than 100 percent true.
• Intent to Rely: This part of Georgia’s law is different from the federal offense. The federal law requires that the other party actually rely on the misstatement. Georgia law only requires the defendant to hope for such a result.

Because the Georgia law is easier to prove, it’s popular with local prosecutors. So, state law charged are common. Furthermore, many federal prosecutors have a “small potatoes” mentality. Unless the defendant is someone like Paul Manafort who allegedly stole millions of dollars, federal prosecutors often are not very interested in the case.

Peachtree State mortgage fraud law

The Peachtree State mortgage fraud law is also very tough. Any material misstatement could mean up to ten years in prison and/or a $5,000 fine. Considering that fraud indictments often include multiple counts, that could be a very, very significant penalty.

Additionally, the state Racketeer Influenced and Corrupt Organizations Act (RICO) includes mortgage fraud. RICO violations mean up to twenty years in prison and/or a fine of three times the amount of pecuniary loss. Ouch.

Furthermore, fraud is always misrepresentation of current facts. If Janice, who recently graduated from medical school, tells a loan officer she has a thriving practice, she probably committed fraud. But if she says she’ll have such as practice soon, even if she knows that will not happen, Janice probably did not commit fraud.

Other Types of Fraud in Cobb County

Mortgage fraud is almost always a felony, no matter how innocuous the “misstatement” was. Other types of fraud, however, could be misdemeanors or felonies largely depending on how much money the defendant allegedly stole:

• Bad Checks: Once upon a time, hot check cases dominated misdemeanor court dockets in Cobb County. But these cases are rather rare now. Most merchants don’t take checks anymore because of the risk of hot checks.
• Charity Fraud: Most Americans are very generous. Many people take advantage of that fact. They invent charities or pose as representatives from legitimate charities.
• Identity Theft: State level identity theft cases are mostly either dumpster-divers or the aforementioned crime of desperation. The waitress who served you the morning special every Saturday for a year might etch your credit card number.

Fraud is always a crime of moral turpitude, even if it’s a misdemeanor hot check case. These convictions could have significant consequences, especially with regard to deportation, in later months, years, and decades.

Contact a Tenacious Lawyer

If you face serious mortgage or other fraud charges, you need aggressive representation. For a free consultation with an experienced criminal defense attorney in Marietta, contact The Phillips Law Firm, LLC. Home and jail visits are available.