What’s the Chance Casey Serin Will Be Prosecuted for His Mortgage Fraud?
Posted on June 25, 2007
Filed Under Fraud |
Not very likely. As in a confirmation of Big Foot, extraterrestrial aliens landing on the south lawn of the Whitehouse and me winning the lottery combined have a higher chance of happening than Casey facing any criminal charges due to his mortgage fraud. And, since I don’t play the lottery… well, you get my drift.
I am writing this post in response to a comment from my post earlier today, where RH said:
Excellent post about Casey! Balanced and fair I thought.
I only two issues with the post:
1. You spent a lot of time talking about Casey’s original mistakes without mentioning his mortgage fraud. I did not see the words “Fraud”, “crime” or” lies” anywhere in your post.
Casey wasn’t just gullible and he didn’t just have the misfortune to enter the market at the peak - he also commited fraud. To make matters worse, he knew even as he was committing this crime of mortgage fraud (over and over again) that what he was doing was illegal.
That’s worth repeating - Casey knew what he was doing was illegal, but he did it anyway.
Why am I so convinced Casey won’t face charges? We’ll get to that in a minute but first let’s look at some of the crimes many claim he committed. In fairness, Casey has admitted to some of these.
The most prevalent is he committed fraud by lying about his income on the 1003. But, things aren’t as cut and dried and some appear to believe.
For what it is worth, Casey has admitted he committed this fraud on many occasions. Ironically, the more he admits it the more those who despise him seem to wail and gnash their teeth.
No documentation loans are not new and they didn’t start with the rise of the sub-prime fiasco and they certainly didn’t start with Casey. They have been around for decades. They used to be for the self-employed who had great incomes but were hard pressed to supply the type of proof underwriters typically required, like W2s. These types of loans were available to a borrower who was able to put 20% or more down on a house when buying to live in it. The lenders recognized that even asking for the borrower to supply copies of their tax returns was not all that reliable.
Enter IRS form 4506. That form gave the lender the ability to get copies of the borrower’s tax returns to verify their income claims on the application. It could be used before or after closing and was a pretty effective way to verify income for the self-employed. But, it had a drawback that meant the lenders usually only used it after closing to audit a loan, not as part of the underwriting process. Today, things are different. Most lenders ask the borrower to sign IRS form 4506-T which allows the lender to get a transcript of the return, on-line, rather than a full paper copy of the return. Today, smart lenders are pulling the transcript before closing.
I go through all of this because if the borrower lies about their income and the lender doesn’t take the necessary steps to validate the income claimed it is almost impossible to prosecute the borrower because you can’t separate the culpability between the negligent lender and the fraudulent borrower.
The net effect is it is “rare” to “not gonna happen” to see anyone prosecuted on this type of fraud alone.
Another claim is he committed fraud by lying and saying he was going to live in the property.
I don’t think Casey has admitted to this and the only way to really know is to see the actual application signed by Casey. But, let’s assume for a moment he did that on all eight of his houses…
If Robert G. Allen wasn’t prosecuted for doing that on hundreds of applications in the 1980’s, you can forget about Casey being prosecuted for eight across several jurisdictions.
Another claim is he illegally got cash back at closing.
This is another of those “maybe, maybe not” scenarios. I know C. Robert Simpson claimed Casey got cash back after it being funneled through a bogus company controlled by a third party in his article in the Scotsman Guide. He also claimed money was funneled to Casey by way of the seller. But, he doesn’t give any proof and the only way to actually prove that would be to get all of the HUD1 forms for the six sales in question and all of the bank records of all parties involved. Mr. Simpson doesn’t tell us why he thinks the money flowed that way but if it did then the closing agent and sellers have much more to worry about than Casey. By the way, it is not illegal to receive cash at closing when buying a property. As long as the transaction is accurately recorded on the HUD1, no laws are broken. A lender may refuse to underwrite a loan if the buyer is getting cash back at closing but that does not make it illegal.
I’m sure there are lots and lots of other theories of how Casey committed this or that crime. But, at the end of the day, it is not about what a prosecutor “knows” but what they can prove in court. Couple that with tight budgets and the possibility of a sympathetic jury thinking it is pretty cool that Casey stuck it to the man and it is very unlikely any prosecutor would risk the political capital needed to pursue this case.
And in the end, even if they convicted him and sent him off to prison for the rest of his natural life it would have absolutely no effect. There are hundreds of thousands of Caseys in this country and as long as the lenders continue to make themselves willing victims there will be mortgage fraud that goes unpunished.
So that is why I left out the discussion of Casey’s various alleged and admitted crimes. It just doesn’t matter as much as using him as an example of how not to invest in real estate. He should be the poster boy for anyone wanting to hold the gurus accountable for taking money from people like Casey and filling their heads with incorrect and negligent garbage and turning them loose on the world.
The real story to me isn’t Casey, it is how Casey fell for the bogus get rich quick claims of the gurus he fawned over.
The real story is what happened before he started posting on his blog. The real story is about the gurus who “made” Casey into what he is, the failed speculator with incomplete and incorrect knowledge, poor social skills, a desire for easy passive income and a total lack of overall drive who eventually became the world’s most hated blogger.
But, blogging in still a new medium and it is unlikely Casey will retain that particular title for very long.
Comments
12 Responses to “What’s the Chance Casey Serin Will Be Prosecuted for His Mortgage Fraud?”
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You need to better read up on KC’s story. You obviously lack the full information out there. Listen to the famous book tapes. EVERYTHING is laid out there with all the details of the fraud:
- Lying on his income knowingly
- Owner occupy the mortgages without ANY intention of doing so
- Cashback at closing ranging from $5K to $50K with one of the main intentions of getting the cashback to float his other properties (he makes fun of one cashback he used to live on and only made 2-3 loan payments before stopping)
Until you do some fact-finding please refrain from posting this kind of BS and make any assumptions about him going to jail or not. You obviously have no idea what you are talking about…….
I guess you didn’t really read my post.
I have done the fact checking.
Go back and read what I actually wrote instead of what you think or wish I did.
Let’s stipulate he did the things you claim, he still will not be prosecuted for his alleged or admitted mortgage fraud.
Perhaps, oh anonymous one, you are the one needing to do a little research.
Also, words actually mean things. I didn’t make any assumptions about him going to jail or not. You might want to crack open an English language book too. It might help you as you try to find an instance where anyone has been prosecuted for Casey’s alleged crimes when no straw buyer was involved.
That, my anonymous friend, is one well certified clue. Do with it as you please.
Tim,
I’m not as supportive of this post as I was of your last one. I see what you are saying with emphasizing the role of gurus in Casey’s adventures. I still think emphasizing this minimizes the role of CASEY in Casey’s adventures. You don’t need to read too many of Casey’s entries in his blog to see that Casey has a get-rich-quick mentality. I suspect if it wasn’t the real estate gurus that got him it would have been some other get-rich passive income scheme.
I don’t agree with the emphasis on this current post of Casey not facing charges. The discussion of whether or not Casey will face charges is one that people can argue back and forth and it is a relevant issue, but in my opinion, this discussion misses the point. Whether Casey is ever prosecuted or not, the fact is that he did break the law in some instances and in other cases acted in ways which most people would say were unethical.
Reading your emphasis on the “Casey will never be prosecuted argument” it made it sound to me like you are making the argument “If he doesn’t get caught then it must not have been wrong”. I don’t think that is what you meant, but you seemed to bordering on that argument
I also question some of the statements you make in regards to Casey not breaking the law. You acknowledge that even Casey admits he broke the law on the stated income loans, but you say you are not sure Casey broke the law on the cash-back and on living in the houses he purchased.
On the cash-back matter, you state that is not against the law to get cash-back. I’m not real estate expert by any means. Obviously, its true that its not against the law to get cash-back, but from what gather reading other sources (which may or may not be accurate) it is against the law to not inform your lender you are receiving cash-back and there are limits which vary state by state on the amount of money (as a % of the house purchase price) which can be received as cash-back. Apparently Casey never informed his lenders of the cash-back on of the 5 deals in which he got cash-back and he also, apparently exceeded the % limits on some of those deals.
You’re a real estate investor – is it true that there are % limits to the amount of cash-back you can get and is it true that the lender must be informed of cash-back?
In regards to Casey’s not living in the houses he purchased you say “I don’t think Casey has admitted to this and the only way to really know is to see the actual application signed by Casey.” And then you mention that Casey will never be prosecuted because Robert Allen was never prosecuted. And far as the second part goes – again, even if Casey is never prosecuted, it doesn’t mean what he did was not illegal or unethical.
As for the first part he’s what Casey says about living in the houses on the IAFF entry from Sept. 24:
“I was told that if somebody ever questions it I can say that I “intended” to occupy the property but later changed my mind.
I did have intent.”
I suspect Casey, in some dark region of his mind, really did think he was going to live in the houses. Reading Casey’s blog you see that he has an incredible ability to not think logically or not think too deeply into things. I can see how, in his own mind, he thought he could actually live in all these houses.
The fact is though, there is no way, regardless of his intentions, he could have lived in all of these houses. He purchased 8 houses in 4 different states during an 8 month period. In order to live in all 8 houses he would have to have been moving at least every other month and have only lived in each house a few weeks or a month or two at the most. Given the timing of his house purchases, he would definately have had to live in a few of those houses less than one month.
Its almost ludicrous to think that any reasonable person could have purchased 8 houses in 4 different states in a span of less than 8 months and had any serious intent to live in all 8 houses.
I also wonder though if there isn’t more to the “primary residence” laws than you just live in the house for one day and that’s it. I suspect (but don’t know) that there are some sort of residency requirements involved. You probably have to actually live in the house for a set period of time, say 30 or 90 days, to be considered as occupying the house. If this is the case then it only emphases, even more, how unrealistic it was for Casey to think he was going live in all 8 houses.
Nevertheless, if its true that “intent” is all you need to be legal then yes, Casey may well be acting legally here because it is impossible to read his mind and find out what his true “intent” was in regards to living in these houses.
My opinion is that this falls into the category of not necessary illegal, but clearly unethical. I sincerely doubt the reason the law was written to include language about intent (if that is in fact the way the law was written), was to allow speculators to purchase multiple homes without living in them. I suspect if the law is written this way it is to give an out to persons who purchase a house and then for employment, medical, family, or other reasons, can not occupy the house and must put the house on the market without ever occupying it.
So in this instance Casey may have not broken the letter of the law, but he violated the spirit of the law- i.e. –not illegal, but most would agree, unethical.
With all this said, I still want to commend you on your posts. There is lot of Casey discussion out there on the net these days. Your posts two posts have been two of the better ones in my opinion.
Tim:
While you are certainly entitled to opinion, I don’t believe you’re considering the deeper issues. I am one of few who’ve actually worked closely with Casey, who has repeatedly admitted to me he knew expressly what he was doing when falsifying the subject 1003s. Moreover I am in contact presently with two of Casey’s mortgage fraud victims, lender investigators whom would also disagree with your perspectives.
Under more common situations I would agree with your position, the likelihood of prosecution in such cases is generally remote (almost in the far extreme). But in the case of Serin his are hardly common instances of mortgage fraud, in that he has well publicized his dealings to the point of flaunting his present freedom. And knowing the mentality of lender operational V.P.’s correlated against Serin’s current objective to romanticize his exploits, while profiting at the expense of his lenders makes for a handsome target. Put it this way, said from personal knowledge… Casey has already pissed off too many of the wrong people!
Wheels in such matters turn a tad slower than you may think, but that doesn’t mean they aren’t a-turning in the direction of prosecution. Thus I encourage you to continue following this story, whereas Casey’s lack of prosecution thus far may only appear a stagnant point. But it only appears that way.
~Mark
On the cash back at closing issue, the reason I say I am not sure he broke the law is because I don’t have the facts and unless one has inside knowledge like copies of the HUD1s and bank records it is really just guessing and speculation even with the admissions Casey has made. He is a documented liar, nothing he says can be taken at face value.
RH,
You asked if there was a limit on the % you can receive as cash back at closing and whether the lender is required to be notified of any cash back.
There is no law that prevents or limits the amount of money you can receive as cash back at closing provided the entire transaction is correctly recorded on the HUD1 by the closing agent. If you conceal the fact you are getting cash back from the lender that can be fraud but if it is on the HUD1 and the closing agent still closes the loan then the lender knows about it OR the closing agent committed the fraud.
On the occupancy issue all of the examples you gave further reinforces my suspicion of the very bad advice he got from the gurus. If you check the box on the 1003 stating you intend to occupy the home, you had damn well better mean it. The protection of intent won’t fly, but again, no one has been criminally prosecuted for this. Notes have been called due because of it and foreclosures have happened because of it.
But, the lenders share culpability here, especially after the first one. Apparently, none of them questioned this even though new mortgages were showing up on his credit report and his address had not changed. This is why it would be hard to get a conviction on this alone.
Also, don’t confuse a criminal act with a civil tort.
I don’t mean to give anyone the impression I think what Casey did is okay, I don’t. I encourage anyone and everyone I talk to about investing in real estate to have the highest ethics.
But, I am a pragmatist too and while Casey is going to be used as a learning example by me at the Real Estate Field Guide for a long time I see no purpose in obsessing about trying to get him prosecuted.
As they say here in the south, I don’t have a dog in that fight.
Mark,
While your information is interesting getting the lenders interested in going after Casey is only the tip of the iceberg because a good attorney will argue the lenders lack of “clean hands” in many of these transactions with Casey.
I by no means claim any kind of inside information and if Casey is charged for MORTGAGE FRAUD I will gladly proclaim my error right here on this blog.
Interestingly, no one has asked if I think he will be charged with anything.
“As in a confirmation of Big Foot, extraterrestrial aliens landing on the south lawn of the Whitehouse and me winning the lottery combined have a higher chance of happening than Casey facing any criminal charges due to his mortgage fraud”
“I by no means claim any kind of inside information and if Casey is charged for MORTGAGE FRAUD I will gladly proclaim my error right here on this blog.”
Care to comment based on Casey’s recent admission that he is currently under FBI investigation?
Come back when he is charged with mortgage fraud…He is being investigated, but my feeling is that he will likely be used as a pawn to take down the people who helped him and likely others to defraud lenders. I.e. mortgage guy, appraiser, title company, RE agent…
He will more likely be charged with wire fraud. And possibly nothing at all if he cooperates.
RH,
I am not trying to be flippant so please don’t take this that way…
Under investigation for what? Exactly?
However, I stand by what I said, if Casey is convicted of mortgage fraud I will boldly state I was wrong, if he is even charged with mortgage fraud, I will state I was wrong. If he is charged with wire fraud in connection with the mortgage fraud instead of mortgage fraud directly, we’ll call it “close enough” and I will boldly state I was wrong.
But, so far, all we know is Casey says he is under investigation by the FBI.
I will say it is my understanding it is highly unusual for any law enforcement to acknowledge to an investigative subject that they are in fact under investigation.
Not saying it isn’t true, but, we might have to wait for the indictments, arrests and other due process formalities before we really know what is happening or has happened.
The other interesting thing is apparently he and Mark Villasenor have settled their lawsuit and Casey has sold his blog.
Not to be flippant either Tim, but it doesn’t take much imagination to guess what he is under investigation for.
I’m thinking its not homicide, gun-running, or kidnapping.
Obviously the investigation is related to his self-admitted mortgage fraud. Does it really matter whether it is specififcally “mortgage fraud” or “wire fraud”?
Why do you consistently shift blame for Casey’s actions away from Casey???
You seem to have taken the stance that Casey is a dupe who fell for garbage spouted by slimy real estate gurus. Your belief that he will not be prosecuted for his crimes is part of that (i.e.- what he did lots of others have done, and, law enforcement won’t expend the effort to prosecute poor saps who fell for scams).
If Casey really was a poor sap who fell for a scam then I would agree with you. In fact if that were case I would not want him presecuted myself.
This is not the case with Caey though. Yes Casey did many of the things the gurus taught in their courses and gurus do play a role here. But did gurus play a role in Casey:
1. thinking he could broker a casino deal;
2. purchasing a sub-penny gold stock;
3. sending Ramit from “I will teach you to be a millionaire” a letter promising a guarenteed % monthly return if only he would invest money with Casey;
4. Casey’s alleged teenage mail pyramid scheme;
5. Casey begging for money on a “Beg-a-thon” by saying he needed the money to pay CashCall and then, weeks later, admitting that, despite his promises, he actually did not pay a single dime of what he made on the “Beg-a-thon” to CashCall?
This list could go on and on Tim.
Remove the gurus entirely from the equation and you still get the picture of a person with a huge sense of entitlement who does not want to work to get what he feels he deserves but has no problem at all lieing, making false promises, and skirting the law, to try to get what he feels he is entitled to.
In fact, I would guess that it was exactly this mentality which made Casey such easy prey for the Gurus.
In any case, its not all, or even mostly the gurus who are to blame for Casey’s situation.
The vast majority of the blame lies with Casey and Casey’s own actions.
As I said in a previous post - If it wasn’t real estate gurus that got Casey, it would have been some other get-rich -quick scam.
With or without the gurus, Casey was, because of his get-rich-quick mindset, heading for scams, cons and criminality - one way or another.
I’m really getting the feeling you don’t want to acknowledge this (”this” being that one way or another Casey was headed for scams, cons and criiminality).
It seems like you would rather view Casey as a dishonest , shady, individual who, depsite being dishonest and shady, would likely have avoided overt scams, cons and criminality had it not been for the gurus?
Am I correct or am I incorrect?
RH, your comments were so special my responses required a separate post…
You can read it here.