Matthew Cox | Inside True Crime Podcast - How I made $100k In Mortgage Fraud

Episode Date: February 7, 2024

How I made $100k In Mortgage Fraud

For a limited time at McDonald's, enjoy the tasty breakfast trio. Your choice of chicken or sausage McMuffin or McGrittles with a hash brown and a small iced coffee for $5.00 plus tax. Available until 11 a.m. at participating McDonald's restaurants. Price excludes flavored iced coffee and delivery. So the lender thinks that his check was deposited for $45,000 when in fact it was my check that was deposited for $45,000. Hey, this is Matt Cox. And I wanted to do like a quick story so about real estate. It's basically about a real estate transaction.

And I'm only mentioning this because I have a buddy who is a pilot with, should I, yeah, okay, with Spirit Airlines. I was going to, I don't want to say his name. He might get upset. Anyway, so he came, he flew into town the other day and we went and had lunch, right? And we were driving by a property that I used. used to own. And so I told him this story about the, I was like, oh, yeah, it's funny. It's funny because the property's not there. They actually bulldozed. It was a vacant lot. And I was

telling him, I said, hey, I said that vacant lot over there. I said, I used to own a house on that that I rehabbed and flipped it. And he said, oh, who did you sell to? I said, I sold it to a lawyer. And I started explaining the whole thing. Well, when I was done with the explanation of how I got the house and the whole thing, he, when I finished up, he goes, bro, you need to tell that story. He said, that's actually super interesting. And I went, are you serious? Like, I don't, I didn't really think it was interesting. I was like, really? He's like, yeah, bro. It's like, it's

how this worked and that worked. I think it'd be interesting the way you structure that whole deal. He's actually pretty cool. He was actually pretty interesting. So I'm going to go ahead and tell that story real quick. And here's what happened. This would have been back in, gosh. So this is in Tampa, Florida, in an area of town that was next to the cross town expressway and you don't know Tampa but that that's that's an important detail so on one side of cross town expressway with cross town expressway is essentially it's an interstate it's a private

interstate you know it's a payroll pay uh uh a railroad but a toll road what am i saying a toll road anyway so on one side of it is an area called old hide park which houses that let's say a 2,000 square foot house or shoot a thousand square foot house they're appraising for three 400,000 You get a thousand square foot house, which is tiny, and it can appraise for $400,000. You get $2,000 might be going for half a million, or I'm sorry, it might be going for $800,000 or $1,000, and shoot, the closer you get to the Bay, because this is wedged in between the interstate that the Cross Town Expressway and the actual, the actual Bay area, the actual Bay. The closer you get to the Bay, these things are going for $2, $3, $4, $5 million. But my point is that I, this is back in 2000. 2002, I would say, and I was, at that time, I owned a mortgage company. I was flipping houses and I was, gosh, I was doing all kinds of stuff. I mean, I'm running real estate scams. I'm doing just, it's, I mean, it's just a nightmare. Anyway, I was just being just complete knucklehead. So what ended up happening was this. I'm flipping properties. I also borrow, I would borrow money from hard money lenders, which I actually have a video about hard money lenders. And I would borrow money from hard money lenders because I don't want to buy a property for a hundred or two.

200 or 50 or whatever and then put my own money into it. I don't want to put my own money into it. I'd rather borrow the money. If something goes wrong, it's his problem. So here's, and it frees up your liquidity to do things with, to do other things with your, your money. Here's what happened is we used to borrow money from this guy all the time named Larry Baylon.

It was Baylon lending and he used to invest money for a, this is a pension fund that I believe was conunded. connected to his law firm. He worked for some large law firm. And that was one of the ways that they invested their pension money. So Baylon, we had borrowed, I'd borrowed a ton of money from him. So one day, bailin calls up. He talks to one of my, he ends up talking to one of my partners. And he, and my partner didn't want to do whatever Baylon was talking about. And I heard him tell bailin he wasn't interested. I said, well, what did Balin want? He goes, oh, he's got these two houses for sale. And so I call it bailin and I said, well, you just called up Robert. And he said he

wasn't interested in the houses, what's going on? And he goes, look, I foreclosed on these two properties. I want $40,000 for each property. And I said, well, where are they? He gave me the addresses. And I said, oh, man, let me go look at them. So I drove by and I looked at both of them. One of the properties was wedged up right against the interstate, right against the Cross Town Expressway. And I mean wedged up, like literally the dirt that comes off, the mound that comes off of the Cross Town, like ended right at this house. I mean, you could hear the cars whipping by, but it was on the right the correct side of

an old hide park and it was only about 1,200 1,300 square feet tiny he wants 40 grand for it listen the fleas in this place were so bad when I walked into the house with my blue jeans it looked like I had I when I walked in

and came back out it actually looked like I had been walking in mud that's how bad the flea infestation of this house was it was disgusting So, I mean, I'm literally, you're just, bam, just knocking off fleas, just thick with fleas. I don't know where you live if you have a flea problem, but fleas are bad in Florida. So I beat off my pants and I get in my car and I call bail in.

And then I go look at the other house. And the other house is actually pretty good size. It was actually probably the main house was probably, I don't know, I want to say it was probably 1,800 square feet, a decent size house. And it had a little upstairs too that. was like 200 square feet, 300 square feet, a little tiny one bedroom. It was really an efficiency, more like an efficiency,

that it had a kitchen, bathroom, and a bedroom. So there's really an efficiency, not a one bedroom. And you got to it, it was basically a duplex, a top and bottom duplex. I looked at a place,

and it was on the other side of the interstate. So I was like, okay, okay. But both of these properties were within quarter of a mile to half a mile from all that, from houses in old high park so i go up call up bail and i said listen man i said i'll take the houses but the one next right up against the interstate i i won't pay 40 for it i'll do 30 000

and you have to finance it 100 he says no problem i said the other one i'll give you 44 because it's worth 40 and i said okay he said okay so he says i'll give you the uh i said you got to finance it 100 percent he said no problem and he was like do you need money for the rehab i said no i have money for the rehab. So, because he actually didn't believe that the properties were worth very much at all. So he didn't really want to lend me much on the rehab. So I said, I got my own rehab money. So we go to, I go to closing. It's funny because the way, the way the taxes, property taxes are paid in Florida. They're paid in arrears. And so when I actually went to closing, I actually walked away with a check. I bring nothing to closing. I signed the papers. And then I walk away with a check for

several hundred dollars for the taxes because a full tax year will be due in a few months so they give me the the overage for those taxes and of course I owe it at the I would in three or four months I would owe the rest of the money for the whole year so I walk away with a few hundred bucks and I immediately take the house for $30,000 I call a real estate friend of mine up and I said look I need you to list this house for 40 grand on MLS I'll give you a thousand dollars he has no problem a couple of days later i got a phone call from a realtor i'm sorry from an investor and he says you want 40 grand for that house i said that's right i said but you got to close in 10 days he was no problem he said i'll buy it for 40 000 i said great we go to the closing whatever a week later

now i've actually only owned this house about 10 days at this point never made a payment walked at closing i walked away with a check so he buys the house for 40 grand the realtor gets a thousand dollars closing costs or maybe a thousand dollars Bailen gets his $30,000 back. I walked away with a check for, I want to say $7,000, $8,000. So I walk away with check for $8,000. It was 10 days.

And, okay, fine. So I make $8,000 in 10 days. Only went in the house one time. Disgusting. So that was great. But the other house, I felt like I could probably make some money on this house. Like $8,000. I'm not saying $8,000 is nothing.

That's decent money for an $8. eight, eight days. That's not bad. But, eh. So the other house, I definitely felt like there was some money here, even though the interstate was in the way. So that here's the, so anyway, the interstate was bought between Old High Park and the interstate. Well, I go to that house and I immediately refinance the house. So I get an appraiser to come in. Well, first thing I had to do was like, first thing I did with the house was I cleaned up the house. It looked like trash. I had a couple of guys come out, clean up the yard, mow the yard, throw away a bunch of crap in the backyard and the front yard. You know, the grass is grown up. It's ridiculous. It's horrible. I put a new roof

on the house and I had the outside of the house painted. I had the porch painted. Now, and there was a bunch of slats and wood damage and stuff that I had. So I put, I put probably five grand to five to ten grand in the house within a month. So now, but now it looks pretty good from the outside. So I get an appraiser to come in and appraise the house. He comes in, he looks at the house. He says, okay, he walks in sizes. He says, man, this place is trashed. I said, yeah, you know, bro, I know it's trashed, but I need you to say on the appraisal that it's good, that it looks good, that's in fair condition. And of course, this is a guy who does a lot of appraisals for me. So we're cool. He kind of, I don't know. What was his name? I forget the guy's name.

nice guy anyway he's like and you're going to fix it up of course i'm going to bro come on you can trust me i'm going to fix it up and i did fix it up so he gives me this appraisal for the property of like i forget what he gave it to me for like a hundred and something thousand dollars okay well what ends up happening is i so i refinanced the property i pull out some money and i pay off balin so balin literally i haven't made one payment to balin yet so before his first payments due I had already refinanced the house and bailing out all his money back. I've now got maybe $100,000 on the house.

I probably walked away with maybe $50 or $60,000. So I put $50 or $60 grand in the house. I throw a little bit more money into the house. I clean out the entire house. I put in hardwood floors. I fixed the windows. You know, it was in an area that was, it was an area that was mixed use.

So it was, there was some commercial buildings, but there were still residential buildings. Well, the house gets cleaned up pretty good. And it took a few months for me to do this. I probably worked on that house for about three months. Well, after the house is renovated, I have a guy, a realtor who's actually still a real estate agent in Tampa. So I'm not going to mention his name.

But he comes in and he says, he says, Matt, you want to sell that house, right? I was like, yeah, he said, I got a guy. I got this guy who's a lawyer who wants to buy the house. And I went, okay, he said he just graduated, just graduated with his law degree, just past the bar. He was actually working for like a law firm, but he just became a lawyer, like just past the bar. He was working as an intern or something. I don't know. Super nice guy.

So we go, we walk through the whole place and he says, look, I'm going to use this, this property as my law firm. And I went, okay. And he said, I said, look, you know, he goes, what do you want? want for it. I think I said I wanted, I forget what I said, I just remember we made like a hundred grand on the house. I want to say I sold it for $280,000. So I told him that I wanted, that I wanted to make like one, no wait, I'm sorry, that I wanted to make like, like, I was supposed to walk away with like 200 and like 230 grand because that way I was still making like a hundred thousand dollars something like that so I was like look I need to walk away with this much

money he goes okay he said listen here's the problem he goes I don't have a down payment like I have very little money I'm starting my own business he said but I have good credit I went okay okay so he said in the real estate agent my real the realtor was there he's like yeah bro I know you can fix it up I know you can work with this you can do something and I was like okay, I can figure this out. Here's what I'll, I said, okay, here's what I'm going to do. He had been working for the law firm, so he had good employment. So I said, all right, you got good employment.

So, or I'm sorry, he's got good credit and he's got good employment. It didn't have the down payment. So, but he did have, he did have like a bank account with like SunTrust or somebody. I forget exactly who it was, but was SunTrust or someone like that. So what we did was we, I had him get me his, last two months bank statements and I altered the bank statements to show that he had 50,000 in the bank. Then I had him go get a check for like $5,000 or something for his the five, for like a for like five grand cashier's check. So he gets a cashier's check for like five grand. So we take the

$5,000 cashier's check and we deposit into the the title company. So he still owes $45,000 for his down payment essentially. His down payment is basically like 20%. And he's buying this house owner occupied. So keep in mind too, this is a lawyer who knows he's committing, he's committing bank fraud. He's faking his down payment. He knows he's faking his down payment. He knows that he's also committing what's called owner occupancy fraud, which means you're saying you're going to live in a house that you have no intention of living in. So he ends up he ends up giving me five grand for his down payment so or sorry for his like an earnest deposit so we put that into the title company then I have him go get like a day or then I have him go

get after after we do the appraisal he gets another check and I'll explain how that worked so what I do is I submit him to a lender and they're like hey he's got like 700 credit scores he has been on his job so he and he makes decent enough money not great but decent enough like he wasn't a lawyer at that time he was just kind of like an intern or whatever he was working as a fair legal or something so he's doing okay so but he had enough money to to um he made enough money to debt what's called debt to income ratio made enough money to qualify for the the mortgage provided he put down 20% the bank statements that I provided made it look like he has the 20%. He's already put down $5,000 which was honestly

like all the money he had, but it doesn't appear that way in the bank statements. Well, so now we have to order the appraisal. He's already got a pre-approval. We have to order the appraisal. So we order the appraisal, but this time when the appraiser comes out, I say, I needed to appraise at 280. Now, my appraiser is like, man, I just appraise this thing at like $150,000 or $120,000, whatever he had brought it into a month or two, two, three months earlier.

And I was like, I know, but I need to come in at $280. And so I tell him, I need you to use the comparables for the properties on the other side of the interstate in Old High Park. And he's like, I can't jump the interstate. And there's a problem with jumping a main thoroughfare or, you know, a major body. And like an interstate or a toll road or toll interstate or whatever you want to call it is a is an issue and he was and he was like i can't do that and i explained to him just to give me the appraisal well he can do it but he was saying it'll be an issue so he gives me the appraisal but there's this the interstate's running through it so i actually take back then you actually got

and i'm you still do you actually get a a map of the area right it's like a drawn out map of the area. So I went through and I removed the interstate because when they review the appraisal, they're going to have a problem that this interstate is here. The underwriters are going to look at the appraisal. They'll be like, yeah, there are three comparables. And yes, it's worth 280. But the issue here is that all the comparables are half a mile away on the other side of an interstate. So I went in and I cut and pasted out the interstate. So I removed the, the interstate and I put a couple of houses there and I remove the whole thing and I put it back into the appraisal and I send them the appraisal. They end up doing what's called a what was called

a desktop review where they only really what they check is are these houses in the area. Do they substantiate the value of this home? So they did a desktop review and they said yeah, it's clearly worth $180,000. So the day of closing, so the appraisal passes. My lawyer-client passes. He doesn't have his down payment, though. So the day of closing, he has to come up with a check for, let's say, $45,000. I'm paying all of his closing costs in the contract, which is perfectly legal.

But he's supposed to show up with, let's say, for the sake of argument, $45,000, which is his like 20% down payment, roughly. So I tell him, go get me a check for, you know, like $45, you know, whatever the exact amount was, $45,000, $212. So I tell him, go get me a check for $45 and, you know, $200 or $2 or just $45, whatever. So he goes and he gets a cashier's check for that amount from his bank account. I take the cashier's check and I change it so that it shows. that it looks like the $45,212 or whatever it was supposed to be that he's supposed to show up with the closing for for his down payment. I then go to my bank and I get a cashier's check for the exact same amount.

I then make a copy of his cashier's check that was taken from his bank account but the altered one and I send it to the lender. I give it to the or I send it to the lender. I then deposit my cashier's check from my bank with the correct amount, and I asked the title company for a letter showing that the money was deposited. They show that it's deposited. I mail, send that off to the lender. So the lender thinks that his check was deposited for $45,000, when in fact it was my check that was deposited for $45,000.

They can't call and check with his bank. They can't get a copy of his bank statements. Plus, it doesn't matter. I've already given him copies of the bank. statement showing that he's had this money in the bank for several months. So they believe it's his money. Then we do the closing. All the title work, or I'm sorry, all the closing statements show that he put down $5,000. They have the cashier's check. That was two weeks ago. It shows that he put down an additional $45,000. They have the cashier's check. You can see it. They have a letter from the title

company, plus they have the closing statement that shows he put down $45,000. We go to closing. We sign the document I of course get a check back for 150 or 160,000 or whatever it was and of course 50,000 of that was the down payment that had had come from me anyway with the exception to 5,000 I think he did put down 5,000 and you put down a little bit not much though um so I end up making about a hundred thousand dollars on that transaction here's the funny thing about that like that guy literally moved into that property sorry moved in he moved his law office into that property he put

a he put like a parking lot in the back you know like an asphalt parking lot in the back of it ran his law firm out of that out of that building for like 18 years and only about four or five maybe six months ago bulldoze the whole thing and it's a vacant lot now they're about to build something brand new there

the guy stayed there the whole time made all the payments he's actually a super became a very successful attorney but that whole transaction is is fraud like that whole transaction's fraud but he made all the payments now you know so anyway my buddy when I was talking he's like bro that's interesting like the way you know you did all that to come up with this to get the money to do this and that it was a lawyer the thing is though like he i remember saying to him well he i'm like why because there's a lawyer he's like yeah because people wouldn't think a lawyer would do that i'm like oh you serious i've done fake loans for tampa police officers for sheriff's deputies for lawyers for doctors i mean i've done for

all kinds all those all kinds of people that you would think would never be involved in something like that i've done CPAs um i've done all kinds a tax attorney I've done all kinds of fraudulent. So this guy, it didn't even phase me. But what's interesting about it is, yeah, it was fraud, but the guy did make all of his payments. I mean, it's still fraud, but the guy made all of his payments

and supposedly probably paid off the loan. It was a 30-year mortgage. He probably paid it off a long time ago or refinanced or whatever he did. Yeah, so anyway, I thought that'd be an interesting story. My buddy was like, bro, you got to do something. It's super interesting. The way you did this and did that.

I didn't think it was that interesting, but whatever. So the point is, if you like the video, do me a favor and subscribe to the station. Do me a favor and subscribe to the channel. Hit the bell. Hit the notification button, bell, notification bell. It's a notification bell. Share the video. Leave a comment for the algorithm and send the video to like five or ten of your friends.

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