Two men from Kirkland and Bothell were sentenced Thursday to prison for a mortgage fraud scheme that caused $2.5 million in losses to lenders and collapsed with the downturn in the real estate market.
Anthony Waldron of Kirkland, 49, was sentenced by U.S District Court Judge Thomas Zilly to 3.5 years in prison and Robert Strong of Bothell, 48, was sentenced to four years.
During their sentencing, Zilly told the men that they knew what they were doing was “false and fraudulent” and that they their “motivation was money and profit,” according to a press release by the U.S. Attorney’s Office for Western Washington.
According to court records, between 2005 and 2008 the two men recruited “straw buyers" with good credit to fraudulently buy homes, paying them as much as $18,000 for use of their identify and credit scores to obtain financing. The pair would then fraudulently sell the home to another phony straw buyer to claim the additional mortgage funds. In one case they claimed a woman straw buyer made $22,000 per month working for an entity they created and controlled.
Furthermore, according to prosecutors, Waldron and Strong also rented the houses on “rent-to-own” plans, asking the renters to pay an option, ranging from $400-$7000, to purchase the home later at an increased price. The men also falsely claimed repairs were made and increased the value of the homes based on those repairs, then pocketed the money.
The case involved 30 homes that were ultimately sold at a loss or foreclosed upon by lenders.
Emily Langlie, a spokeswoman for the U.S Attorney’s Office said the case took so long to be prosecuted and decided because of the complicated paper trail. “It takes a long time to follow the paper trail particularly in a case like this with foreclosures,” she said.
Exactly how much money the pair pocketed is uncertain. Langlie said one of the men used the proceeds from the scheme to pay his living expenses while the other was employed and use the pocketed money to augment his income.
The amount of restitution the men owe is still being calculated and will be considered by Judge Zilly at a future hearing.
Both men pleaded guilty. Prosecutors asked for prison time, writing the court that, “Over the course of two years, Messrs. Waldron and Strong repeatedly made false representations on loan applications. Moreover, Mr. Waldron took the extra step of actually verifying this false information when called by individuals seeking to confirm the soundness of the application.
"In addition, over nearly a year long period, Messrs. Waldron and Strong created and submitted eleven fraudulent invoices so that they could obtain an additional $400,000 in loan proceeds. Messrs. Waldron and Strong’s actions affected approximately 30 properties, each of which was sold at a decreased price or foreclosed upon, thus causing a loss to each of the lenders, and damage to the neighborhoods.”
Spokeswoman Langlie said the two men will remain free until being given a report date by the U.S. Bureau of Prisons, a process that takes four to six weeks.