Opinion ID: 766939
Heading Depth: 4
Heading Rank: 1

Heading: Cedar Creek and Southern Grove (Counts 34-35)

Text: 12 Neder also was charged with different types of land development fraud. The first scheme involved his Cedar Creek and Southern Grove projects. In 1985, Neder negotiated a $4,150,000 construction loan from Amerifirst Federal Savings and Loan (Amerifirst) to build condominiums at Cedar Creek and a $5,400,000 construction loan from Security First Federal Savings and Loan (Security) to build condominiums at Southern Grove. Each lender required Neder to establish the marketability of his development before the lender would approve the loan and release funds for construction. 13 For the Cedar Creek loan, this meant Neder was required to prove that he had presold twenty condominium units, that the presale contracts were bona fide, and that down payments had been placed in escrow as earnest money for those contracts. Neder submitted thirteen legitimate contracts. However, for the last seven required contracts, Neder submitted fraudulent sales contracts. Neder offered to make the $4,000 to $8,900 down payments, if an individual would simply sign a contract to purchase one of the units. The contracts did not reveal that Neder furnished the down payment, nor did Neder disclose to Amerifirst that he had made these payments. After obtaining the loans, Neder also had his escrow agent return the deposits he had placed for those seven contracts. Neder ultimately defaulted on this loan. The Amerifirst loan officer testified that if she had known that Neder made those last seven down payments, she would not have approved the loan or released funds to Neder for construction. 14 Similarly, before approving Neder's loan and releasing funds, Security required Neder to submit twenty-five reservation agreements, each signed by a prospective buyer of a condominium unit. The prospective buyers were required to pay a $500 deposit into an escrow account. To meet these requirements, Neder again solicited people to sign reservation agreements as prospective buyers, offering to pay the $500 deposits for them. Indeed, Neder paid the $500 deposits on nineteen of the twenty-five reservation agreements he submitted to Security. These reservation agreements did not reveal that Neder, rather than the prospective buyer, had paid the $500 deposit, and again, Neder did not disclose this fact to the lender. Neder also forged the buyers' signatures on two reservation agreements. Neder received funding for the first phase of construction at Southern Grove. However, the loan officer indicated that she would not have approved this loan if she had known about Neder's making the required deposits and forging signatures. 15 For the next phase of construction at Southern Grove, the lender required Neder to prove that he had presold seventy percent of the units for each building before releasing construction funds for that building. Neder also had to show that the purchasers of those units had made a non-refundable down payment of ten percent of the purchase price and would qualify for a mortgage loan from Security. 16 To meet these presale requirements, Neder again solicited individuals to sign contracts to purchase condominiums and lend their creditworthiness to support a mortgage. In return, Neder offered to pay the $7,990 to $8,390 required for the ten percent, non-refundable down payment. Neder referred to this arrangement as equity sharing. Neder obtained ten signed contracts in this way. Again, these contracts did not reveal that Neder furnished the down payments, nor did Neder disclose to Security that he had made the down payments. Indeed, Neder made special arrangements so it would appear that the down payment money actually came from these purchasers. Neder gave each purchaser a check for enough money to open a bank account in his or her name and then obtain a cashier's check from the money in that account to use for the down payment. The cashier's checks were delivered to Neder's escrow agent, who then verified to Security that he had received the down payments and was holding the checks. Neder's escrow agent eventually returned these cashier's checks to Neder. Neder also defaulted on this loan. Security's loan officer testified that if she had known that Neder made these down payments, she would not have approved the release of funds for the second phase of construction. 17