GA Broker Pleads Guilty to Mortgage Fraud

Acting United States Attorney for the Northern District of Georgia announced in a press release on November 5th that Edward William Farley had pleaded guilty to mortgage fraud and bankruptcy fraud.

Mr. Farley, 47 from Hoschton, Georgia pleaded guilty to scamming over one hundred and fifty victims in his Ponzi scam.

Mr. Farley operated under several companies that include Creative Home Search, Southern Land Partners, Alliance Resource Management, Georgia Land Group and Global Mortgage. Flipping was his method of choice in the scams and included residential properties in Buford, College Park, Cumming, Conyers, Grayson, Dacula, Lithonia, Lawrenceville, Norcross, Marietta, Roswell, Snellville and Suwannee.

Mr. Farley admitted he compensated a property appraiser to inflate values of residential properties by fifty thousand dollars and some as high as one hundred thousand dollars. Mr. Farley also recruited straw buyers and so called investors to purchase the properties from his companies.

The mortgage applications from the straw buyers and investors were fraudulently completed to show that straw buyer or the investor had significant income to support the income, employment, and assets implied on the mortgage applications. Supporting documentation such as bank statements, pay stubs , W2’s and lease agreements were submitted to lenders to ensure the requests for mortgage loans would go through.

Mr. Farley often did not purchase the residential properties he was selling until after the fraudulent mortgage loans were obtained. He would then purchase the properties for less than what was requested on the first fraudulent mortgage application. He then would schedule for mortgage closings on the same days to ensure the distribution of funds thereby causing mortgage lenders to lose millions of dollars.

Mr. Farley used Alliance Resource Management to conduct the Ponzi scheme he ran out of Lawrenceville, Georgia. He used the company to disguise his new source of income from the victim he left in his trail of deceit. Alliance Resource Management was represented as a business that purchased residential properties to renovate and sell for a profit; however the company never had the resources to do so. Mr. Farley enticed real estate investors, lenders, private investors, and banks to believe that their investments were sound and secured by first lien on the properties involved. Investors were often told they would receive at least fourteen percent if not sixty percent on their return.  Mr. Farley actually used the same property in on many occasions to sell to multiple investors and provided fraudulent promissory notes in regard to investor returns. The losses attributed to Mr. Farley’s Ponzi scheme have resulted in over twenty million dollars. Repayments that Mr. Farley did provide to some investors were from new investors coming into Mr. Farley’s scheme to defraud.

Mr. Farley pleaded guilty to a check kiting scheme as well that involved Washington Mutual Bank. The scheme allowed him to obtain over one million two hundred thousand dollars. He did this by transferring funds from Alliance Resource Management accounts with fraudulent deposits and then withdrawing proceeds before the checks could be returned as insufficient funds. In an attempt to fix the issue in the check scheme he used four hundred thousand dollars in investor funds.

Mr. Farley by this time was filing bankruptcy and did not disclose to the United States Bankruptcy court and other Alliance Resource Management Creditors that he had diverted assets from the Alliance Resource Management accounts to his personal accounts.

Mr. Farley was indicted on October 15 of this year with bank fraud, Mortgage fraud and on conspiracy.

Mr. Farley is scheduled to appear for sentencing on February 3, 2010 at 10:30 a.m in front of United States District Court Judge Timothy Batten, Sr. . Judge Batten can sentence Mr. Farley to up to sixty years in prison and fines up to two million dollars plus restitution according to the maximum United States Sentencing Guidelines.

The case against Mr. Farley was investigated by Special Agents of the Federal Bureau of Investigation and by the Office of the United States Trustee.

The prosecutor of the case is Assistant United States Attorney Gale McKenzie.