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Fed's mortgage scam net passes over fishy deals in Hernando Beach

When are they going to catch some big fish in Hernando Beach?

I'm not talking about tarpon, which its waters are famous for, but the main players behind its infamous mortgage fraud.

Or apparent mortgage fraud, I should say, because three years after the FBI began looking into a series of suspicious deals on the beach, nobody has been convicted — or even charged.

I ask this now because, in November, the U.S. Attorney's Office in Tampa named more than 100 people in fraud cases in Florida's Middle District, which includes the devastated markets of Tampa, Orlando, Jacksonville and Fort Myers.

And especially because my colleague Michael Van Sickler recently took a closer look at the 29 people charged in the Tampa Bay area. He found plenty of mullet and a definite shortage of goliath grouper — several borrowers accused of lying about their income on loan applications, for example, but zero lenders, builders or appraisers.

Absent from the charging documents was the name of Sang-Min Kim, the owner of a Tampa tattoo parlor who during the boom bought and sold about 90 houses, many of which immediately slid into foreclosure. Asked about this, a U.S. Attorney Office spokesman said to "stay tuned."

If major players from major markets are under scrutiny, when will federal investigators get around to the somewhat smaller fry responsible for deals in a place like Hernando Beach?

Of course, investigators have no choice but to pick and choose.

Fraud was everywhere during the boom, and prosecuting it is complicated. And if investigators do ultimately arrest a prominent figure in Tampa or St. Petersburg, they send their central message — You will not get away with this! — to a much larger population of Realtors, appraisers and lenders with access to much greater pools of funds.

Also, though FBI spokesman David Couvertier declined to comment whether the bureau is actively looking into transactions in Hernando Beach, he did say the 10-month-old "surge'' of investigating real estate crimes — a surge that has enlisted the help of local, state and federal agencies — is going strong. And no market is off limits.

So why do I worry? Well, three years is a long time, even for a fraud investigation. And, by local standards, the transactions in Hernando Beach were a big deal. Inflated values and neglected properties, two main symptoms of mortgage fraud, were a major reason the real estate market there froze months before it did in the rest of the county.

In a 2008 story, the St. Petersburg Times identified nine deals with at least two instances of what the FBI calls "indicators" of mortgage fraud in Hernando Beach. Repeated transactions on four of them were suspicious from beginning to end. All these homes eventually sold for more than $500,000, and, in the listing and closing documents, the names of the same individuals and now-defunct companies appeared over and over: a Spring Hill investor named Kathy Schmidt; her firms, Soni Homes Inc. and Gulf Coast Instant Equity Inc.; and several folks associated with a Tampa company called Real Estate Exchange Partners Inc.

It's possible some big fish will be charged soon. But until they are, the message is one I'm sure investigators don't want to send: Maybe it's okay to cheat.

Fed's mortgage scam net passes over fishy deals in Hernando Beach 01/12/10 [Last modified: Tuesday, January 12, 2010 8:27pm]
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