Geoffrey Montani, 36, of Portland, Ore., was sentenced March 15, 2013 by U.S. District Judge Robert E. Jones to 15 months in prison for wire fraud in connection with a mortgage fraud scheme. Montani’s co-conspirator, Kenneth Jones, 50, also of Portland, received the same sentence on March 7, 2013 in a separate hearing. In addition to the prison term, each was ordered to pay over $1.4 million in restitution.
One other participant in the scheme who provided “straw buyers” for Montani and Jones, Marty Folwick, was convicted and sentenced to 63 months in prison in 2008
Montani and Jones bought and resold residential houses in the Portland metropolitan area from mid-2005 through April 2007. Instead of attempting to sell these houses to legitimate buyers, they chose to sell to the “straw buyers” who were promised a cut of the profits for the use of their name and good credit records.
The scheme, in essence, worked as follows: Montani and Jones purchased residential houses in the Portland area with money provided by Montani’s father, Stephen Montani, and other “hard money” investors. In some cases, remodeling was done on the house after purchase. Rather than listing the house for resale through a realtor or other traditional means, Montani and Jones contacted Folwick, told him they had a property for sale at a set price and solicited him to produce a straw-buyer for the property in exchange for a kickback following closing. These straw-buyers had no intent to live in the property or pay the monthly mortgage, but they allowed (or were duped into allowing) their name and credit score to be used on the mortgage application, on the false promise that they would become successful real estate investors. Once a straw-buyer was identified, a mortgage application was prepared by Montani and Jones or their associates for the straw-buyer to sign.
Montani and Jones knew that each application contained false information and would be submitted to a lender for approval based on the false information in the application. In a number of cases, Montani and Jones created false supporting documentation for inclusion with the application. Once the mortgage loan was approved, the property was sold to the straw-buyer; thereafter Montani and Jones paid off the hard money loan and divided the significant profits between themselves and others. In every case, the property subsequently fell into foreclosure, causing losses to the mortgage lender. The losses on the 37 properties identified by the government for prosecution totaled $1.9 million dollars.
Sources: Oregon Live.com USAO press release