If you think that white colar crime results in a slap on the wrist, consider the recent sentencing decision in a case of mortgage fraud, in Georgia. The Georgia United States Attorney reports that last week Adriene Newby-Allen was sentenced to 135 months imprisonment and ordered to pay $5,278,703 in restitution. Newby-Allen pled guilty in July to charges arising from a multi-million dollar mortgage fraud scheme. She was alleged to have conducted a mortgage fraud scheme from which she and others fraudulently obtained millions from mortgage companies through inflated mortgage loans obtained by straw purchasers, including her husband and another co-defendant. Newby-Allen herself received approximately $1 million in loan proceeds. She allegedly inflated the sales price of real estate and caused the submission of false loan applications and other documents. At the closings on the properties, Newby-Allen and her co-conspirators caused lenders through false representations to disburse millions to a shell company she created.
The use of "straw purchasers" is neither new nor unique to Georgia. In Idaho we have seen similar allegations in real estate and mortgage fraud cases in federal and state court. I represented clients this past year in a case that alleges the defendants used "straw purchasers" to obtain favorable loans from a local bank, hoping to quickly flip the properties and then pay off the loans from the profits. Trouble (in the form of civil lawsuits and criminal charges) usually follows such schemes. The declining real estate market left the "straw purchasers" holding the debts, even though they never intended to own the properties. My clients were not indicted but were actually victims of that scheme.
Consider the penalty imposed by the federal district judge in Georgia – time and money. Lots of time and lots of money, the latter of which the defendant likely does not have. The federal sentencing guidelines continue to guide the courts as they consider an appropriate sentence in any federal case. The amount of the loss is one of the factors used by the guidelines in calculating an appropriate sentencing range. What struck me about this case was the amount of time – 135 months. That is hardly a slap on the wrist. Eleven years sitting in a federal prison should give Adriene Newby-Allen ample opportunity to mull over the choices she made. Just so you know – she will likely serve ten years or more before any release – and that early out will only occur if Adriene Newby-Allen demonstrates good behavior. Look for similar fraud cases to come throughout the United States as the nation demands an accounting for white collar crime.
It goes without saying that if you are contacted by authorities wanting to know about any role you may have had with respect to a mortgage loan or banking transaction – get a lawyer immediately. There is no substitue for good counsel in such circumstances.