Banks that loaned $37-million in 2006 without verifying borrowers' income are partly to blame for what "probably is the most dramatic mortgage fraud case that we have filed so far," Florida Attorney General Bill McCollum said Thursday.
"That was a very lax period of time for accepting loans," McCollum said the day after his office sued 10 companies and 15 individuals, including several in the Tampa Bay area, for allegedly bilking lenders in 61 home sales.
"Somebody that works at a car rental place was claiming they made $17,000 a month," he said, "but the bank never checked that out."
The suit, filed under the Florida Deceptive and Unfair Trade Practices act, alleges that lawyer Allen Boyarsky and two other "ringleaders" conspired with real estate agents Lori Polin, Heather Showalter and Dawn St. Hillaire to artificially inflate prices on home sales so Boyarsky and his co-defendants could get bigger loan amounts.
Polin collected $165,250 in commissions on the loans, while St. Hillaire got as much as $148,000, the suit says.
As the St. Petersburg Times reported in November, Polin was involved in several suspect deals on homes sold in Pinellas County for unusually high prices despite a slumping real estate market.
Polin was not named as a defendant because real estate agents are exempt from lawsuits under the deceptive practices act.
"I don't know why they should be exempt," McCollum said. "That's a good example to bring up to the next session" of the Florida Legislature.
Agents, brokers and others licensed by the Florida Real Estate Commission are subject to penalties under other state laws. The commission can suspend or revoke licenses and impose fines of up to $5,000 per offense.
In addition, anyone who wins a suit against a licensed professional can collect from a state fund if the licensee fails to pay.
"There are sufficient remedies that don't rely on a Cabinet officer (like McCollum) bringing a lawsuit," said Trey Goldman, legislative counsel for the Florida Association of Realtors. "I think what we have is far more comprehensive and protects consumers far better."
Polin's license is listed as "current, active" and she is working in a Tampa Re/Max office.
McCollum said his office began investigating after getting an anonymous tip — apparently the same one that formed the basis for the Times' story. The letter alleged that Polin, then working for a Re/Max agency in Clearwater, had contributed to "fraudulent activity that has distorted property values and undermined neighborhoods."
Polin denied the allegation, but the suit says she participated in eight fraudulent transactions. In all, the defendants siphoned off more than $6-million in loan proceeds, some of which was sent to banks as far as Australia, McCollum said. Those funds may never be recovered, but the state still hopes to recoup some money as the 50 houses now in foreclosure are sold.
The Florida Department of Law Enforcement and Pinellas County Sheriff's Office are also investigating the defendants, some of whom have records for offenses that include car theft, driving-under-the-influence manslaughter and cocaine possession. Polin has no criminal record.
"This is a major criminal enterprise," McCollum said.
Susan Taylor Martin can be contacted at firstname.lastname@example.org.