Georgia Mortgage Fraud Conspirators Sentenced

Edward Williams Farley, age 47 from Hoschton, Georgia was sentenced May 4th on charges of bank fraud and conspiracy involving mortgage fraud. Mr. Farley was the mastermind behind the twenty four million dollar Ponzi scheme that defrauded investors and financial institutions.

Mr. Farley was sentenced to twenty five years in prison and was ordered to pay restitution of over twenty four million dollars. Mr. Farley pleaded guilty to the charges against him on November 5th of last year.

United States Attorney Sally Quillian Yates stated that the Mr. Farley operated his schemes through various companies which include, Creative Home Search, Southern Land Partners, Georgia Land Group and Globel Mortgage which were based in Dunwoody and Norcross, Georgia. She further stated that Mr. Farley used these companies to defraud financial institutions and investors using same day flips. The same day flips were conducted on properties located in Buford, College Park, Conyers, Cumming, Dacula, Grayson, Lawrenceville, Lithonia, Norcross, Marietta, Roswell, Snellville and Suwanee, Georgia.

Mr. Farley was not alone in his conspiracy to defraud investors. William Julius Herman, age 41, from Dunwoody, Georgia has also been sentenced for his actions in the scheme. Mr. Herman was sentenced to two years in prison on bank fraud involving real estate appraisals.

Mr. Herman according to court documents was paid by Mr. Farley to inflate property values by over fifty thousand dollars and in some cases over one hundred thousand dollars. Mr. Herman also recruited unqualified investors and borrowers to purchase the properties.

The loan applications that were submitted to financial institutions from Mr. Farley were completed with fraudulent employment, income, and asset information in order to obtain the approval from the financial institutions for the loans.

Mr. Farley rarely purchased the properties he sold to investors or borrowers until after he acquired funds from a second purchase on the property. Mr. Farley’s first purchase would acquire the property for thousands of dollars less than of the mortgage loans were was obtaining on the second purchase. The purchases would take place on the same day. He would close on the second purchase first and then close on the first purchase costing mortgage lenders millions of dollars in losses. The financial institutions on the second purchases all believed they had first lien status on the properties.

Mr. Farley’s additional Ponzi scheme according to the United States Department of Justice was operated under the company Alliance Resource Management, based in Lawrenceville, Georgia. Mr. Farley used this company to conceal his identity from prior victims of his scheme.

Mr. Farley represented Alliance Resource Management as a business that purchased residential properties that were currently being renovated or sold at a profit. Alliance Resource Management had neither the equity nor the income to make such a claim. Real Estate Investors which included Lenders, private investors, corporate lenders, and banks were all unknowingly participates in Mr. Farley’s scheme. They were told that the investments were backed by fully secured mortgage loans that carried first lien positions on the properties and that all carried title insurance along with his personal guarantee.

Mr. Farley often produced fraudulent promissory notes to reassure investors and promised investors a return rate of over fourteen to sixty percent of their investment. Mr. Farley often used the same property on multiple investors and lenders. Mr. Farley did pay some investors however those investors were paid by new investors buying into Mr. Farley’s investment scheme.

Mr. Farley also engaged in a check kiting scheme in which he defrauded Washington Mutual Bank of over one million dollars. He used the accounts for Alliance Resource Management. He would transfer funds he didn’t have into the accounts and withdrawal them before the funds would come back as insufficient. He used the funds he obtained through the Ponzi scheme in an attempt to address the issue.

Mr. Farley also diverted assets from Alliance Resource Management to himself after declaring bankruptcy for Alliance Resource Management in an attempt to conceal fund from the United States Bankruptcy court and Alliance Resource Management investors.

Trent Edward Wright, age 38 from Cumming, Georgia was sentenced for his actions in the scheme. Mr. Wright was a real estate attorney and issued title polities for Mr. Farley without paying off the prior security holders. Mr. Wright pleaded guilty to mail fraud on December 17th of 2009 and was sentenced on March 12, of this year. He was sentenced to one year and nine months with three years of supervised release. He was also ordered to pay restitution in the amount of two million four hundred thousand dollars.

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