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Florida sues over $37-million mortgage fraud

Lori Polin, 49, is not named as a defendant because real estate agents are exempt from the Florida Deceptive and Unfair Trade Practices Act.

Lori Polin, 49, is not named as a defendant because real estate agents are exempt from the Florida Deceptive and Unfair Trade Practices Act.

Last year, Re/Max International honored Lori Polin of Tampa as one of an elite group of real estate agents with gross commissions of at least $500,000.

Now, Florida's attorney general says, approximately $165,250 of Polin's commissions came from her role in a major mortgage fraud scheme that bilked lenders out of more than $37-million and ultimately caused some 50 homes throughout Central Florida to go into foreclosure.

In a lawsuit filed Wednesday in Orlando, prosecutors sued 10 companies and 15 individuals, including Allen Boyarsky, a lawyer with a history of drug arrests who was involved with Polin in several suspect real estate transactions first reported in the St. Petersburg Times in November.

Polin, 49, is not named as a defendant because real estate agents are exempt from the Florida Deceptive and Unfair Trade Practices Act, the law that Boyarsky and others are accused of violating.

But the lawsuit alleges that Polin was one of three agents who conspired with Boyarsky and two other men to artificially inflate the purchase prices of homes so the defendants could obtain bigger loans.

"After the biased article you wrote, I will not make any comments to you,'' Polin, now with a Re/Max office in Tampa, told a reporter Wednesday. Boyarsky, who lives in Palm Harbor, could not be reached.

While working for American Heritage Mortgage in Tampa in 2006, Boyarsky, company president Marcus Habeeb and Aziz Mohammed recruited "straw buyers'' with good credit and paid them to apply for loans on houses sold at inflated prices. The men received "large amounts of cash at closing,'' but failed to pay the mortgages, thereby "enabling them and their respective companies to profit from the fraudulently obtained mortgages,'' the lawsuit says.

In all, the lawsuit says, the three men and their co-defendants siphoned off more than $6-million of loan proceeds from at least 60 house sales.

Polin told the Times last year that she first met Boyarsky when she sold him her home in Oldsmar, with Habeeb co-signing the loan. According to Wednesday's suit, Boyarsky asked Polin to inflate the asking prices of properties listed for sale with the now-defunct Re/Max office in Clearwater where she worked.

In one case, the lawsuit says, Polin listed an Oldsmar home for $699,000 in December 2005 and reduced it by $50,000 in January 2006. However, after being approached by Boyarsky and/or Habeeb about the property, Polin raised the price to $725,000. Within two days the house was under contract to Jeanette Lugo, a young Orange County woman who had been paid $10,000 to be the straw buyer.

The sellers did not receive the increased sales price, which instead went to a trucking company whose owner, defendant Stephen Mahadeo, received $100,000 from the loan proceeds at closing.

The lawsuit says Boyarsky and Habeeb prepared a loan application for Lugo that falsely indicated she made $17,800 a month as a "senior executive partner" for an investment firm. Lugo, also a defendant in the suit, actually worked for Sprint as a customer service representative.

The Oldsmar house went into foreclosure in January and is now on the market for $351,900 — $373,000 less than it sold for two years ago.

Polin served as the seller's Realtor for five separate purchases by Lugo, and eight transactions in all.

"In some cases,'' the lawsuit says, "the listed properties had languished on the market for months and the prices had been substantially reduced before Polin convinced the sellers to raise the prices significantly for purchase by Boyarsky's and Habeeb's straw buyers.''

Another real estate agent, Dawn St. Hillaire, allegedly inflated the prices on five houses, allowing her and/or her firm, an ERA affiliate in Lake County, to collect $148,346 in commissions. A third agent, Heather Showalter of Pinellas, bought four houses herself, though the lawsuit does not say who allegedly profited from those transactions.

Other alleged straw buyers include Kimberly Gleaton, who was shown on loan documents as the $15,500-a-month operations manager for an Orlando construction company. In fact, Gleaton, who is not listed as a defendant, had been with the company only three months and made $17 an hour as a part-time assistant.

Among the lenders affected by the alleged fraud scheme was IndyMac, a California-based bank that was seized by federal regulators in July as one of the many casualties of the subprime mortgage crisis that has threatened the entire U.S. financial system. Wednesday's lawsuit comes the same week that Lehman Bros. went bankrupt, Merrill Lynch was sold in a shotgun sale to Bank of America and the federal government bailed out insurance giant A.I.G.

"In this particular situation,'' Attorney General Bill McCollum said of the Florida scheme, "the economy is the victim. This group of individuals systematically defrauded banks and mortgage lenders, stealing millions for their own personal use and leaving a gaping hole in the system.''

The lawsuit seeks damages for the lenders and civil penalties of $10,000 for each violation of the deceptive practices act. Florida's Department of Business and Professional Regulation, which regulates the real estate industry, would not comment on whether there is any investigation of Polin and the other two agents mentioned in the lawsuit.

However, the Florida Department of Law Enforcement "has been working with the Attorney General's Office and the Pinellas County Sheriff's Office for several months concerning the case,'' FDLE spokesperson Trena Reddick said. "Our investigation continues and there may be arrests in the future.''

The Times was unable to reach most of the defendants, including Mohammed, who may have fled to Trinidad, and Habeeb, the mortgage company president. Habeeb, who lives in New York, told the Times last year that he had closed his Florida offices because mortgage fraud had become so rampant. "The whole of Florida, all the transactions are funny,'' Habeeb said at the time. "All you got is fraud going on.''

Contact Susan Taylor Martin at susan@sptimes.com.

Florida sues over $37-million mortgage fraud 09/17/08 [Last modified: Friday, September 19, 2008 8:32pm]
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