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BREAKING: 14 indicted on 44 counts in Sarasota real estate flipping fraud investigation
In a press conference, U.S. Attorney Robert E. O'Neil detailed how former real estate agent Craig Adams and a group of associates defrauded banks out of as much as $42 million by flipping properties for inflated prices and fooling lenders into writing inflated mortgage loans.
The list of those indicted include some of Sarasota's highest-flying real estate professionals people who got rich during the real estate boom only to lose it all when the market crashed. In the end, the flipping circle defaulted on a combined $100 million in mortgages, a 2009 Herald-Tribune investigation found.
Law enforcement officials indicated Friday that their investigation continues. More indictments against prominent real estate players, attorneys, mortgage brokers and other lenders in Sarasota are expected in the months to come.
Federal court documents unsealed Friday show that those already indicted face a combined 44 charges, including charges of wire fraud and conspiracy to make false statements. The charges stem from $42 million in property deals involving 22 homes.
Those charged include:
Adams, the former Sarasota real estate agent who organized a ring of about two dozen property flippers.
Jonathan Glucker, a mortgage broker who socialized with Adams and helped him qualify for mortgages.
Heather Kabobel, Glucker's husband and a real estate appraiser, who provided appraisals for members of the Adams flipping circle.
Lisa Rotolo, one of several title agents used extensively by Adams and his associates in their real estate deals. Rotolo had been arrested by the FBI last April for her role in the flipping and was cooperating with investigators.
Richard Bobka, described by some as Adams' protege. Bobka, who worked with Craig Adams at Re/Max Properties and at Paradigm Group in Sarasota, was involved in five deals with Adams or his associates and went on to flip properties with his own buyers, including his brother and sister-in-law.
George Cavallo, George Bobka, Sr. and Paula Hornberger Rich Bobka's family members who bought and sold properties among themselves or Adams' associates.
Others named in the indictment include Bonnie Katz, Derek Luther, Jeffrey Berghorn, Thomas Brustad and Joseph Dirocco.
Sarasota County Sheriff Tom Knight, whose investigators are working with federal authorities on the case, said he expects more charges.
"These 14 are not the end of it. I can assure you there are other investigations going."
The indictments follow a 2009 investigative series by the Herald-Tribune, in which the newspaper exposed tens of millions of dollars in questionable real estate deals by Adams and a circle of associates.
The Herald-Tribune named Adams as the most prolific property flipper in Sarasota as part of a six-day series.
On the surface, Adams' real estate deals seemed like legitimate sales pushed by a booming real estate market. But a closer look at the parties involved in the deals showed that Adams rarely sold properties on the open market.
Instead, a house bought by one Adams associate would be sold to another Adams associate, and sometimes to a third and a fourth. Those associates might be Adams' family members and friends or business partners who bought multiple houses.
Adams sold properties to his elderly mother, and used his aunt to borrow several million dollars in her name. On real estate documents, the aunt's signatures do not match, suggesting her name was forged. Those questionable documents were signed by a BB&T Bank official who signed off on more than 20 loans to Adams' associates.
In Adams' case, title agent Lisa Rotolo was a critical player.
A criminal complaint stemming from her 2009 arrest states that Rotolo created fake closing documents when Adams needed to sell a house to someone outside of his network.
The ongoing criminal investigation into local mortgage fraud involves the Middle District of Florida's U.S. Attorney's Office, the FBI, the Federal Deposit Insurance Corp. and the Sarasota County Sheriff's Office.
By cultivating a stable of buyers and sellers who worked with him along with title agents, appraisers, mortgage brokers and attorneys Adams was able to control and manipulate every aspect of his real estate deals. That allowed prices to be manipulated and banks into loaning too much money.
A house at Cove Terrace on Sarasota Bay illustrates how Adams and his associates drove up the price of real estate.
After the original seller, who was not a member of Adams' network, reluctantly lowered his asking price when his house would not sell, Adams associate Steven Wexler bought the house in 1999 for $600,000.
Just a few weeks later, Wexler sold it to John Keyworth, another Adams associate, for $725,000, who sold it a year later to Adams for $1.1 million.
Later that same year, Adams sold the house to John and Kelly West in a sale that again involved people he already knew. And in 2004, the Wests sold it to Charles Scott Abel, yet another Adams associate.
Sales records available to real estate agents showed that every time the Cove Terrace house was sold since 1999, Adams represented both the buyer and seller, something one local real estate agent called very suspicious.
Washington Mutual foreclosed on the Cove Terrace house in 2007, with Abel owing the bank more than $2 million. The property was auctioned off in 2008 for $910,000.
Such deals were not confined to the circle of investors organized by Adams or to Sarasota.
The Herald-Tribune spent a year investigating real estate fraud across the state. A computerized review of 19 million sales over a decade identified $10 billion in likely flipping fraud. Thousands of deals occurred in nearly every community in Florida where prices spiked far above what could be expected based on market forces alone.
The investigation found that the deals were enabled by real estate professionals of all stripes. Title agents, real estate agents and lawyers were all aware of suspicious deals but did not stop them.
The plan worked while the real estate market was hot and banks kept making fresh loans. But when the market soured, the loans stopped and Adams and his associates wound up defaulting en masse.
http://www.heraldtribune.com/article...tc=pgall&tc=ar
In a press conference, U.S. Attorney Robert E. O'Neil detailed how former real estate agent Craig Adams and a group of associates defrauded banks out of as much as $42 million by flipping properties for inflated prices and fooling lenders into writing inflated mortgage loans.
The list of those indicted include some of Sarasota's highest-flying real estate professionals people who got rich during the real estate boom only to lose it all when the market crashed. In the end, the flipping circle defaulted on a combined $100 million in mortgages, a 2009 Herald-Tribune investigation found.
Law enforcement officials indicated Friday that their investigation continues. More indictments against prominent real estate players, attorneys, mortgage brokers and other lenders in Sarasota are expected in the months to come.
Federal court documents unsealed Friday show that those already indicted face a combined 44 charges, including charges of wire fraud and conspiracy to make false statements. The charges stem from $42 million in property deals involving 22 homes.
Those charged include:
Adams, the former Sarasota real estate agent who organized a ring of about two dozen property flippers.
Jonathan Glucker, a mortgage broker who socialized with Adams and helped him qualify for mortgages.
Heather Kabobel, Glucker's husband and a real estate appraiser, who provided appraisals for members of the Adams flipping circle.
Lisa Rotolo, one of several title agents used extensively by Adams and his associates in their real estate deals. Rotolo had been arrested by the FBI last April for her role in the flipping and was cooperating with investigators.
Richard Bobka, described by some as Adams' protege. Bobka, who worked with Craig Adams at Re/Max Properties and at Paradigm Group in Sarasota, was involved in five deals with Adams or his associates and went on to flip properties with his own buyers, including his brother and sister-in-law.
George Cavallo, George Bobka, Sr. and Paula Hornberger Rich Bobka's family members who bought and sold properties among themselves or Adams' associates.
Others named in the indictment include Bonnie Katz, Derek Luther, Jeffrey Berghorn, Thomas Brustad and Joseph Dirocco.
Sarasota County Sheriff Tom Knight, whose investigators are working with federal authorities on the case, said he expects more charges.
"These 14 are not the end of it. I can assure you there are other investigations going."
The indictments follow a 2009 investigative series by the Herald-Tribune, in which the newspaper exposed tens of millions of dollars in questionable real estate deals by Adams and a circle of associates.
The Herald-Tribune named Adams as the most prolific property flipper in Sarasota as part of a six-day series.
On the surface, Adams' real estate deals seemed like legitimate sales pushed by a booming real estate market. But a closer look at the parties involved in the deals showed that Adams rarely sold properties on the open market.
Instead, a house bought by one Adams associate would be sold to another Adams associate, and sometimes to a third and a fourth. Those associates might be Adams' family members and friends or business partners who bought multiple houses.
Adams sold properties to his elderly mother, and used his aunt to borrow several million dollars in her name. On real estate documents, the aunt's signatures do not match, suggesting her name was forged. Those questionable documents were signed by a BB&T Bank official who signed off on more than 20 loans to Adams' associates.
In Adams' case, title agent Lisa Rotolo was a critical player.
A criminal complaint stemming from her 2009 arrest states that Rotolo created fake closing documents when Adams needed to sell a house to someone outside of his network.
The ongoing criminal investigation into local mortgage fraud involves the Middle District of Florida's U.S. Attorney's Office, the FBI, the Federal Deposit Insurance Corp. and the Sarasota County Sheriff's Office.
By cultivating a stable of buyers and sellers who worked with him along with title agents, appraisers, mortgage brokers and attorneys Adams was able to control and manipulate every aspect of his real estate deals. That allowed prices to be manipulated and banks into loaning too much money.
A house at Cove Terrace on Sarasota Bay illustrates how Adams and his associates drove up the price of real estate.
After the original seller, who was not a member of Adams' network, reluctantly lowered his asking price when his house would not sell, Adams associate Steven Wexler bought the house in 1999 for $600,000.
Just a few weeks later, Wexler sold it to John Keyworth, another Adams associate, for $725,000, who sold it a year later to Adams for $1.1 million.
Later that same year, Adams sold the house to John and Kelly West in a sale that again involved people he already knew. And in 2004, the Wests sold it to Charles Scott Abel, yet another Adams associate.
Sales records available to real estate agents showed that every time the Cove Terrace house was sold since 1999, Adams represented both the buyer and seller, something one local real estate agent called very suspicious.
Washington Mutual foreclosed on the Cove Terrace house in 2007, with Abel owing the bank more than $2 million. The property was auctioned off in 2008 for $910,000.
Such deals were not confined to the circle of investors organized by Adams or to Sarasota.
The Herald-Tribune spent a year investigating real estate fraud across the state. A computerized review of 19 million sales over a decade identified $10 billion in likely flipping fraud. Thousands of deals occurred in nearly every community in Florida where prices spiked far above what could be expected based on market forces alone.
The investigation found that the deals were enabled by real estate professionals of all stripes. Title agents, real estate agents and lawyers were all aware of suspicious deals but did not stop them.
The plan worked while the real estate market was hot and banks kept making fresh loans. But when the market soured, the loans stopped and Adams and his associates wound up defaulting en masse.
http://www.heraldtribune.com/article...tc=pgall&tc=ar
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