Real Estate Fraud Laws in California
People don't realize that when they are trying to apply for a loan and trying to get a mortgage and a refinance related to a home, when the mortgage companies are having you fill those forms out and asking you questions, if you commit a material lie related to getting a loan having to do with a mortgage in Los Angeles, you can be prosecuted for that and it's a very serious violation. Mortgage fraud is described under California Penal Code Section 532f.
The crime of real estate fraud in California occurs when an individual commits a type of fraud crime that involves purchasing, selling, or the financing of real estate property.
This type of fraud crime could be filed by a prosecutor under California state and federal laws and the penalties for a conviction include huge fines, jail time, and restitution.
The term “real estate fraud” actually includes a wide range of illegal activity directly connected to home or business mortgages, rental properties, flipping properties, straw buyer schemes, and predatory loans.
Real estate fraud can occur during several points in a transaction, such as foreclosure proceedings, the appraisal, or at closing.
While the state of California does not have one specific statute for real estate fraud charges, there are a wide range of related laws used by prosecutors, such as:
- Penal Code 532 PC – theft by false pretenses,
- Penal Code 115 PC – filing forged documents,
- Penal Code 487 PC – grand theft,
- Civil Code 2945.4 – foreclosure fraud.
Most real estate charges are a “wobbler” that can a prosecutor can fie as either a misdemeanor or felony crime.
What is Real Estate Fraud in California?
Fraud in real estate happens after somebody commits a dishonest act that ends up financially benefiting them during a real estate transaction.
As stated, real estate fraud is a very broad term describing various types of illegal activity related to real estate transactions, such as:
- Mortgage fraud such as equity skimming and unlawfully getting a mortgage loan with false information or fake identification;
- Foreclosure fraud is a common unlawful scheme that takes advantage of individuals who are facing property foreclosure;
- Rent skimming is another common illegal act when somebody embezzles tenants rent money, who are then evicted for not paying rent;
- Straw buyer schemes are when someone purchases a home for another person because they were not qualified, such as bad credit;
- Predatory lending occurs when a mortgage broker gets a home loan by use of overly excessive and unnecessary fees to pad their commissions.
Other forms real estate fraud includes property flipping, filing forged documents, and elder fraud, which is a fraudulent real estate scheme that takes advantage of elderly victims.
Providing False Information
A lot of times when you lie on those documents, it's very easy for the government/prosecutors to prove the case against you because you have put it in writing and signed it. A lot of times you have had it notarized under penalty to perjury and you've lied.
The biggest thing that bothers me about these mortgage fraud cases in Los Angeles, California is a lot of times it is really not necessarily completely the fault of the defendant who is charged with mortgage fraud. A lot of times the company or the bank who are helping you with the loan, are really encouraging you to sign these documents, to put certain things in there.
They're basically trying to protect themselves and get so much documentation that you have all these assets and you can pay the loan back that they encourage you to commit mortgage fraud. They encourage you to say and sign things, but the reality is, they aren't going to be the ones in trouble when things go awry and you're all of a sudden charged with mortgage fraud.
They're going to say we told them to tell the truth. Of course, they're going to protect themselves, so you have to make sure when you fill out these documents that you fill them out honestly and completely because if you don't, you're going to be subject to a big problem.
The reality though is, if you're reading this post you're probably charged with mortgage fraud and it's too late. You've already filled the documents out. The prosecutors are people too. They live in society and they know that these mortgage companies and loan people will say and do anything they can to get these loans effectuated.
So, if we can really mount a strong argument that you weren't trying to do anything unlawful or unfair and that they encouraged you to do this, you will be in a much better position to try to avoid a mortgage fraud conviction in Los Angeles and either get the case dismissed or get some sort of a lesser charge – maybe some sort of a diversionary problem.
California Laws for Real Estate Fraud
As stated above, California has different laws for real estate fraud charges depending on the details of the case, including:
Grand Theft Penal Code 487 PC is used when somebody is alleged to have commit fraud on property with a value exceeding $950. PC 487 is frequently used in mortgage fraud allegations connected to theft by false pretenses. A conviction for grand theft could result in either jail or state prison for up to one year for a misdemeanor and three years for a felony.
Filing Forged Documents Penal Code 115 PC is used to file charges against somebody for submitting to a government office false or forged real estate documents connected to property ownership or forged mortgage loan contracts. PC 115 is always a felony punishable by up to three years in jail and a fine up to $10,000.
Rent Skimming Civil Code 890 is used by prosecutors to charge someone in a situation where they rent out a home they are pretending to live during the first year of the mortgage and don't to apply their rent towards the cost of the mortgage. This crime can also occur when an individual falsely claims they own a property and then rents it out to someone.
Foreclosure Fraud Civil Code 2945.4 is used in a variety of situations such as someone claiming to help a homeowner, but charges them excessive fees, or attempts gain an interest in a foreclosed property. Foreclosure fraud is a wobbler that can be charged as a misdemeanor or felony with the same penalties as grand theft.
In some cases, real estate fraud could end up in federal criminal charges due to the fact they sometimes involve federally insured banks.
What Factors Are Prosecutors Looking At?
Real estate fraud is running rampant now throughout Los Angeles county. I've handled hundreds of cases defending my clients over a 30-year career.
Real estate fraud can involve millions of dollars, somebody's home, somebody's business and it can involve other charges, like perjury and other fraudulent-related offenses that can really put you behind the eight-ball if you get convicted.
And absolutely, you're facing prison and jail if you're charged with real estate fraud.
The types of things that prosecutors are going to look at when deciding to try to send you to jail or prison is:
- how many victims were involved?
- how much money was involved?
- what your criminal record looks like?
- what sort of sophistication is involved with the real estate fraud allegations?
These are the things that we really need to focus on. First and foremost, do they have the evidence to prove that you were involved in any type of real estate fraud or is it a weak case against you?
Defending Real Estate Fraud Charges
If we can determine that it's a weak case and they can't prove the case against you, you may well have a defense. But, if on the other hand, they've got the evidence, let's not lie to each other.
Let's not do what a lot of my brethren and their employees do when you call them up on the internet and they paint some rosy picture of other cases that they've done when they know nothing about your case.
If the authorities have the evidence against you, you're not going to be able to beat the case. Just accept that and move forward.
If on the other hand, you're innocent and didn't commit the crime or are not involved with real estate fraud, you've come to the right place because I've done over 250 jury trials.
I know how to fight cases, but the first thing we need to do is evaluate whether or not they've got a good case against you.
If they do, then let's handle the case the right way from the beginning. Let's set up our game plan. Let me give you an idea of what you're facing.
Let me give you an idea of what you can do to help me when it comes to a real estate fraud situation.
For example, if you are accused and the authorities can prove that you stole thousands of dollars' worth of real estate, we need to figure out how we're going to make that better from the other person's perspective.
Because if we can do that, then we have a chance to avoid a prison sentence for you, and we have a chance to avoid some of the bad consequences that come along with a real estate fraud conviction.
Fighting Charges vs Mitigation
So, the first thing we need to do is figure out how we're going to handle the real estate fraud case — whether we're going to:
- fight the charges though the criminal court process, or
- mitigate it through negotiation with prosecutor, and
- the next thing we need to do is figure out what steps need to be taken; and
- what type of a road map we need to get you the best possible result.
That's not the same in every single case because your history is different than other people's history; what you did is different; how much loss is involved is different; how much sophistication is involved. These are all factors that judges and prosecutors are looking at.
Evaluation of the Game Plan for Best Result
So, when we sit down, we're going to sit down and say, I'm going to tell you, here's what they're looking at.
Here's what they're concerned about, and now, here's some of the things that we can do to make a difference. Can you do these things?
And we will evaluate whether you can do these things and whether or not doing them is the best move for you and will get you the best result.
So, the first step is to pick up the phone. Ask for a meeting with Ron Hedding if you've got a real estate fraud related offense in Los Angeles.
We'll sit down and meet. I'll answer all of your questions. I'll give you an idea of what you're facing, and then finally, and probably most important, I'll give you an idea of how we can end up with the best result for you, such as:
- How we can protect your future;
- how we can protect your freedom;
- how we can keep you out of jail;
- how we can keep you out of prison; and
- how we can get you the best possible result based on the circumstances you face.
Hedding Law Firm is located in Los Angeles County at 16000 Ventura Blvd #1208 Encino, CA 91436. Call us for a free consultation at (213) 542-0979.