A former real estate appraiser who pleaded guilty to charges from a real estate flipping scheme was sentenced in Minneapolis last week to 10 months’ confinement.
Michael Aihe was also ordered to pay $1,000 to a crime victim fund, according to the Minneapolis Star Tribune. He also must share responsibility with his brother-in-law, Olusoji Michael Agboola, for restitution of $335,9900 to 18 victims.
Agboola controlled Advance Mortgage Corp., as well as AG Properties and AGM investment. Both dealt with real estate. Aihe controlled Lakeland Appraisals in Golden Valley.
Many real estate fraud schemes play out in much the same way. Sophisticated rings of loan brokers, appraisers, closing agents, attorneys and real estate agents conspire to obtain fraudulent loans and bilk lenders out of millions of dollars. Technology has enabled the crimes to spread, as fraudsters find easier ways to fabricate tax records, employment information, false appraisal reports, and to steal people’s identities.
Flipping occurs when a property is repeatedly bought and sold by the same party in an attempt to boost its value. However, that value often outstrips the property’s appraised worth after several sales, with subsequent buyers paying an inflated price as the result.
The two men were named defendants in a 44-count indictment that included the 10 Aihe pleaded guilty to in January 2003. The 10 were conspiracy, two counts of mail fraud, three counts of wire fraud, three counts of money laundering and one count of obstructing justice.
Agboola was given a nine-year sentence last December after pleading guilty or no contest to all 44.
Based on statistics on real estate fraud investigations for fiscal years 2001, 2002 and 2003, the IRS found the most common mortgage fraud schemes were fraudulent property flipping, fraudulent qualifications and two sets of settlement statements.
More mortgage fraud cases have come to the surface in recent years. The IRS reports the number of case initiations has increased from 107 in 2001 to 215 in 2003 and the number of indictments has increased from 67 in 2001 to 94 in 2003. The number of convictions decreased from 85 in 2001 to 81 in 2003 and the number of sentencings fell from 103 in 2001 to 65 in 2003. For the partial fiscal year 2004, there have been 159 case initiations, 69 indictments, 67 convictions and 64 sentencings.
Perpetrators who are caught engaging in fraudulent loan schemes usually end up with mail fraud, wire fraud or money laundering charges. Investigations can be as complex as the schemes themselves and can take as long as two years to conduct.
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