FBI agents seize records in `flip' probe

Warrants target five mortgage and realty companies

2nd action in a month

Investigators focus on quick turnaround of city properties

March 25, 2000|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

FBI agents investigating property flipping in Baltimore searched five locations in Anne Arundel and Prince George's counties yesterday seizing financial and other records as part of a probe of more than 100 real estate transactions in the city.

Two Pasadena title companies, a Lanham mortgage brokerage firm, an Accokeek real estate company and the Davidsonville headquarters of a web of corporations that buy and sell properties were targets of the search-and-seizure warrants.

The searches marked the second major action this month in a stepped-up federal effort to combat property flipping in Baltimore. Two weeks ago, in a case investigated by postal inspectors, a federal grand jury indicted five people in an alleged mortgage fraud scheme involving Baltimore houses that were purchased and then resold at greatly inflated prices.

State records show that more than 2,000 city properties have been bought in the last four years and quickly resold for at least twice the purchase price -- sometimes for an increase of 1,000 percent. The deals often are accompanied by inflated appraisals and falsified paperwork. Usually, the properties are in poor condition and sometimes are uninhabitable.

Search warrants signed by U.S. Magistrate Paul W. Grimm on Thursday said agents were looking yesterday for evidence of violations of federal fraud and conspiracy statutes.

They were seeking computer and paper records for the more than 100 property sales, including financial records, appraisals and settlement files along with records of several corporations.

The search warrants named Walter Hammond and several companies that he operates out of a Davidsonville mansion, along with 11 people who have bought more than 100 houses since Jan. 1, 1997.

Hammond said yesterday that he was "trying to figure out" what the FBI was doing at the sprawling Davidsonville house where he operates The Guardian Foundation LLC, Residential Renovation and Development LLC and other companies.

He said he has been in the real estate investment business for several years.

"I buy a property and sell it to an investor," he said, adding that he never sold to homeowners who were going to occupy the houses.

Florida man named

One person named in the search warrants was Larry C. Niebanck, a Florida man named as buyer of 11 houses.

In one deal, real estate records show, Guaranteed Mortgage Corp., a Hammond firm, purchased a property at 2145 W. Lexington St. on May 14, 1998, for $13,000 and sold it two days later to Niebanck for $40,000. Niebanck applied for and received a $32,000 mortgage on the house.

Court records show that a foreclosure suit on the property was filed against Niebanck in December. Eight other foreclosure suits have been filed against him since November.

Niebanck did not respond to a message left at his home.

Title, realty companies

In addition to Hammond's Davidsonville house, the FBI conducted searches at two title companies in Pasadena, Performance Title Co. and Tower Title Corp.; Claggett Realty in Accokeek; and Provident Funding Group, a mortgage brokerage firm in Lanham.

People who answered the phones at Performance Title and Claggett said there would be no comment.

The presidents of Tower Title and Provident Funding said they were not targets of the probe.

Joe Jedrowicz, president of Tower Title, said, "No one at Tower Title is a target of the investigation. We are cooperating with the investigation."

He said that some suspect transactions had been handled by former employees of his firm who have since left. He said he ordered an audit and asked title insurance companies to notify federal authorities when irregularities were discovered more than a year ago.

He said he was assured that he is not a target of the probe.

Shortly before 9 a.m., a half-dozen agents, some wearing bulletproof vests and gun belts, entered the Tower offices on Ritchie Highway. They spent much of the day there and left with some files and a computer hard drive, Jedrowicz said. He said the company conducted two settlements while the agents were going through records in a back room.

Scot Shumway, president of Provident Funding Group, said federal authorities had told him his company was not a target of the probe. He said Hammond had come to Provident seeking financing for some transactions and that the files had been passed along to lenders.

"They looked like great loans," he said, with attractive credit scores.

The FBI, he said, is interested in deals where the buyers brought no money to the settlement table and where "bogus appraisals" were used.

He said FBI agents left his office with some files and a computer.

Sun staff writers Laura Barnhardt and Greg Garland contributed to this article.

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