Sunday, January 31, 2010
Susan Newell and Ed Boler: Fraud Begets Fraud
Guest post and photos by the Hawthorne Hawkman.
In a recent post about mortgage fraud convictions, I was asked to do a miniature photo tour of the handful of NoMi properties impacted by the fraudulent transactions of Susan Newell and Ed Boler. There were only six properties, so tossing such a small amount of pictures up as a blog post didn't seem like enough work for this former farmboy. So I decided to dig a little deeper into the complaint document.
What I found has me utterly outraged, especially what happened at the property above, 1514 Thomas Avenue North. This is the property that was later owned by Danna D III before going into foreclosure and becoming boarded and vacant. From the looks of it, somebody is making repairs to the windows, since the boards are removed on one side and intact windows are now present. Let's hope this marks a better chapter than the mournful recent history here...
The borrower in this transaction asked Newell how it was possible that he could afford to buy a house when he was only making $5.15/hr at Perkins. But Newell had a plan for how to put this together: White would just keep on buying houses and putting the illicit proceeds from inflated values into a "reserve" until he could afford a home of his own. White was even told to stop asking questions at the closings because it made Newell and Boler look unprofessional.
To make matters worse, the seller was in foreclosure at the time White/Newell/Boler came along. AND Newell was a friend of the family in foreclosure. The sale price was $200,000 and $115,699.90 was disbursed to satisfy the outstanding amount owed from the sheriff's sale. That left a princely sum of $84,300.10 to be split up amongst the seller and any fees. In a normal transaction, the seller would have probably walked away with somewhere around $65-70,000; $50,000 at the LEAST. Not bad if you've just gone through foreclosure.
This, however, was NOT a normal transaction. Newell's real estate company earned a commission of $19,900, and Boler's mortgage firm pocketed $8,045 in fees. Both of those amounts are on the high end of what would have been earned on such a transaction at the time, but not illegal nor unheard of. Even that wasn't good enough. The roughly $54,000 still going to the seller was divided up by the title company in a very odd fashion: three checks for $8,000, $7,000, and $38,907.88. The last, and largest, check was purportedly endorsed by the seller and then deposited into an account belonging to Newell's company. (No responsible title company would allow such a transfer.) The seller claims to have never seen nor endorsed this check.
So to summarize, 1514 Thomas Ave N was in foreclosure in 2005, Newell took advantage of both an unsophisticated buyer and a vulnerable seller to initiate a closing at what was probably an inflated price. The seller was robbed of at least $38,900 in proceeds, the house was probably not maintained by the buyer, and then it wound up in the hands of Danna D III. It has been foreclosed upon yet again, and remains boarded and vacant.
This kind of chain reaction has been happening over and over in our neighborhoods and it's high time we put a stop to it. Getting the offenders into prison is a start, but we also need systemic, preventative measures.
For better or worse, I won't be discussing such measures in this post. Instead, we continue with the photo tour of other Newell/Boler properties.
There were a few rather boring properties, in that they were in decent shape and appeared occupied. First, 818 Queen Ave N:
Next, 2207 Aldrich Ave N:
And then 4527 Bryant Ave N:
2720-22 Penn Ave N was hard to spot since there were no houses on that lot. In fact, I couldn't even tell which lot it was. I had it narrowed down to the lot with the buried road construction sign or the lot with the floral memorial taped to a tree:
2918 Russell, however, was another vacant property with issues.
The garage has been broken open and haphazardly closed off. The notice of condemnation is so old that the sun has bleached it white and the writing in marker is no longer visible. And a sticker on the door informs us that the place was winterized in October. Of 2006. This house has likely been vacant since being a part of Newell/Boler transactions.
Now the way that Newell and Boler carried out their fraud was pretty typical for transactions at that time. They appeared to handle both the buyers' and sellers' sides of the transaction, inflate the purchase price, and then split the proceeds. The buyer would either use a "stated income" or "no doc" loan (often misrepresenting whether the property would be owner-occupied) or would falsify income on the mortgage application. For the record, falsifying information on "stated income" loans is still fraud; the income stated should be reflective of the borrower's actual pay. Inflated fees or fabrications on the closing documents allowed proceeds to be funneled to the entity of Boler's or Newell's choosing.
What I hadn't seen before in this complaint document was that BOTH Newell and Boler lied about their previous criminal convictions in order to get their licenses. Boler "was convicted and sentenced to prison in 1994 in Hennepin County for second degree controlled substance crime, and also convicted in 1997 in Minnesota federal district court of possession with intent to distribute cocaine."
Newell "has an extensive criminal history under her maiden name, Susan Elizabeth Brown, including felony convictions for theft by swindle in January 1999, wrongfully obtaining public assistance in 1996, theft by swindle in 1991, and financial transaction card fraud in 1991." I wouldn't trust this person with her own debit card, much less a REAL ESTATE BROKER'S LICENSE.
The fact that these events transpired at all is outrageous. Thank God that perpetrators such as Boler and Newell are in prison, but we've got a lot more crooked actors to chase down and a lot more messes to clean up.