A California man formed an entity to purchase two properties and avoid foreclosure
A California attorney specializing in real estate law has been sentenced to two years in prison after he was found guilty of a fraudulent short-sale scheme, according to US Attorney’s Office for the Eastern District of California.
Robert Farrace owned two properties with substantial mortgage loans, according to court documents. Early in 2010, he became in default and received foreclosure notices for both properties. To avoid foreclosure and retain the properties, Farrace formed an entity called Dignitas LLC, which would purchase the properties.
Although Farrace controlled Dignitas, he listed a friend’s name on the paperwork as a nominal manager because he knew the bank would not sell the property to a related party. In the short sale offers he submitted to the bank that serviced the loans on both properties, Farrace listed Dignitas and the nominee manager as the purchaser.
Farrace induced the bank to approve the short sale by misrepresenting his relationship to Dignitas. The servicing bank, not knowing the true relationship, proceeded to complete one of the short sales. However, law enforcement informed the bank of the scheme before the short sale on the second property could be completed.
In November, a jury found Farrace guilty of three counts of wire fraud in connection with the scheme.
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