Opinion ID: 3052582
Heading Depth: 2
Heading Rank: 2

Heading: The Petersons’ Scheme

Text: At the time of the trial, Paul and William Peterson ran a home building business called Peterson Land and Development (“PLD”). Their father started PLD, and he later brought Paul into the business. Paul became a FHA and HUD builder in the late 80s. Sometime in 1992 or 1994, William took over from their father as the sales manager for PLD. At trial, Paul testified that in the early 1990s, he met many potential buyers who wanted to buy homes, had the employment, income, and credit to do so, “but just didn’t have the 10496 UNITED STATES v. PETERSON cash to get into the property.” Paul testified that “[u]nder the FHA program, [he] knew that [he] could not give the buyer his down payment.” He further testified that he spoke to a HUD construction analyst, Bob Hudgins, who told him that although the seller could not directly give the money to the buyer, he could give it to a relative because FHA did “not care where the donor gets the money.” Called as a rebuttal witness by the government, Hudgins testified that he did not recall the conversation with Paul, but even if it had occurred, he could not have advised Paul regarding gift letters or mortgage requirements because he had no knowledge of those areas of HUD. Paul testified that after he spoke to Hudgins, he concluded that he could lawfully assist potential buyers by taking money from PLD’s profits and subsidizing the down payments. To facilitate this plan, the Petersons purchased a cashier’s check in the name of a third party designated by the buyer. The third party never had possession or control of the gifted funds. The Petersons then deposited the cashier’s check into escrow and submitted a gift letter to HUD stating that the third party was the donor of the gifted down payment. Paul testified that the buyer took the gift letter and had it filled out and signed by the bogus donor. As the sales manager, William was responsible for retrieving the gift letters and explaining that the donor on the gift letter would not actually have to provide any money. Testimony of one of the buyers (“MM”) and the parties listed on his gift letter (“Fisher Gift Letter”) contradicted Paul’s testimony about how the gift letters were obtained. MM testified that he did not have his parents (the purported donors) sign the gift letter. MM’s parents testified that the signatures of their names on the gift letter were forgeries, and that they did not provide MM with any financial assistance for the purchase. Defendants put up the down payment money for numerous transactions between 1993 and 1998. Several buyers for UNITED STATES v. PETERSON 10497 whom Defendants directly funded the down payment later defaulted on their mortgage payments, leading to foreclosure. HUD assumed repayment of the loans.