Opinion ID: 78187
Heading Depth: 2
Heading Rank: 1

Heading: Mortgage Fraud Scheme

Text: This case involves a mortgage fraud scheme by which defendant Stacey Shefton fraudulently obtained $726,856.60 in loan proceeds from Long Beach Mortgage Company (Long Beach) by presenting fraudulent documents. The scheme began on November 23, 2004, when Lawrence Dillard (the buyer) agreed to purchase real property at 1254 Greenridge Lane in Lithonia, Georgia (the Greenridge Property) from PremierOne Properties (the seller). Before that sales transaction, GreenPoint Mortgage Funding, Inc. (GreenPoint) already had two security deeds of record (the GreenPoint mortgages) on the Greenridge Property. In order to purchase the property, the buyer obtained two loans, totaling $800,000, from Long Beach. The Fund issued title insurance policies to Long Beach that insured Long Beach's security deeds securing the new loans. Before closing, the seller informed the closing attorney that GreenPoint had sold its existing mortgages on the Greenridge Property and assigned them to Wilshire Mortgage Company (Wilshire). The seller gave the attorney statements purportedly from Wilshire that showed the amounts due to Wilshire to pay off the existing mortgages. At closing, the closing attorney issued two payoff checks, totaling $726,856.60, payable to Wilshire out of the Long Beach loan proceeds. The attorney mailed the checks to the address provided in Wilshire's loan payoff statements. Several months later, Long Beach discovered that the GreenPoint mortgages had never been assigned to Wilshire or anyone else. Moreover, they were in default. Consequently, the first and second GreenPoint mortgages had not and would not be canceled. Long Beach's security deeds were subordinate to the existing GreenPoint mortgages, leaving Long Beach with little or no security for its loans. Long Beach made claims on the two title policies issued by the Fund, and the Fund paid off the total amount due under the GreenPoint mortgages to clear the encumbrances on Long Beach's title. On or about October 31, 2005, the Fund paid GreenPoint a total amount of $742,000. This mortgage fraud scheme that resulted in the Fund's $742,000 loss was perpetrated by Stacey Shefton and others. Shefton was affiliated with both Wilshire and the seller PremierOne, and leased the unused office space to which the payoff checks were sent. Shefton obtained for his personal use the entirety of the Long Beach funds which were supposed to be used to pay off the existing mortgages and thus to clear title to the Greenridge Property and give Long Beach its desired security positions. Thus, because Shefton diverted the Long Beach loan proceeds to himself, Long Beach is the direct victim of Shefton's fraud.