During the housing crisis "flipping" homes became an increasingly popular investment opportunity. The number of foreclosed homes skyrocketed and suddenly there was a mass of bank-owned properties listed at below-market prices in an already depressed housing market. As lucrative as flipping houses can be, others took advantage of the situation at the expense of others.
A former used-car salesman built up a real estate investment scheme involving flipping homes at below-market value in Florida and across the entire United States. By the time he was caught five years later, he had defrauded investors out of $200 million.
The 37-year-old man was arrested in August 2010. This week he pleaded guilty in federal court, admitting that the entire operation had been a scam. Many of the investors that had lost their money in the scheme were a part of his Orthodox Jewish community. The man had exploited the trust of those in the tight-knit group of people.
During the hearing and the admission of guilt, the man responded in the affirmative under oath that at the time he promised quick profit on homes that in some cases didn't even exist, he knew that his representations were false. The man had promised the "sound investments" and claimed that charitable donations were even being made. Instead, he had spent the money on fancy cars, jewelry and lavish trips in which he gambled much of it away.
Creditors have already filed a number of court judgments seeking millions. One real-estate tycoon from Miami said that the man had defrauded him out of at least $80 million.
Source: nj.com, "Lakewood man pleads guilty in global real estate investment scheme," Ryan Hutchins, Jan. 3, 2013
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