Judge condemns actions of appraiser

Home assessments decried as dishonest in 4 flipping cases

License could be rescinded

May 24, 2000|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

A Baltimore appraiser accused of inflating property values as part of a real estate flipping scheme faces the loss of his state license and a $5,000 fine after an administrative law judge concluded his actions were fraudulent and dishonest.

In the first state disciplinary case against an appraiser as a result of the wave of property flipping that has swept Baltimore the past four years, Judge Laurie I. Pritchard said appraiser G. Samson Ugorji's work was "at the very least negligent or incompetent."

Pritchard, in a 50-page opinion, used such terms as "dishonesty and misrepresentation" and "fraudulent" to describe Ugorji's work on four property appraisals.

State records show that more than 2,000 city houses have been bought and quickly resold for a price increase of more than 100 percent in the past four years. Scores of buyers have lost their houses to foreclosure and mortgage companies have lost millions of dollars in a scandal that has prompted federal and state criminal investigations as well as congressional hearings.

The Federal Housing Administration has called a temporary halt to foreclosures in Baltimore and is working on a plan to give relief to homeowners who have paid inflated prices for their properties.

Pritchard's decision, dated Monday, is only a recommendation. A final decision could be months away.

The State Commission of Real Estate Appraisers, which initiated the case against Ugorji nearly 2 1/2 years ago, can either accept or modify her recommendation.

Charles P. Kazlo, the commission's executive director, said the panel most likely will act at its next meeting, on July 11. Ugorji then would have 30 days to ask for a commission hearing or to appeal to the Circuit Court, Kazlo said. If granted a hearing, Ugorji could still go to court after a final decision is made.

Ugorji could not be reached for comment. Godson M. Nnaka, Ugorji's lawyer, said he had not had a chance to review the decision. He added, "Mr. Ugorji continues to maintain his innocence. I wouldn't be surprised if he appeals."

Nnaka said, "It appears that Mr. Ugorji has been made a scapegoat," because other appraisers who were also working for the same client have not been penalized.

The charges against Ugorji involved four appraisals that he performed for Robert L. Beeman, a Wilmington, Del., man who flipped more than 100 Baltimore houses in recent years. Ugorji performed 40 appraisals for Beeman, according to Pritchard.

Beeman and Ugorji, along with two principals in a mortgage brokerage firm and a settlement lawyer, were indicted by a federal grand jury in March. They were charged with 14 counts of mail and wire fraud and are scheduled for trial in the fall.

Court records show that Beeman typically paid $5,000 to $20,000 for houses and performed modest cosmetic repairs before selling them for as much as $85,000.

In one case, Beeman bought a rowhouse at 211 N. Montford Ave. in February 1997 for $15,000 and sold it to Yvonne Peaks, a nursing assistant, for $83,000 two months later. In June 1997, the house was demolished by a city crew after it partially collapsed while an adjacent house was being torn down. Ugorji had valued the house at $83,000.

Peaks sued Beeman, Ugorji and others involved in the transaction. Eventually, 82 buyers of Beeman homes joined the suit. A settlement was announced this year. Under its terms, buyers who want to stay in their homes and who can qualify for loans will get reduced mortgages. Those who move will get modest cash payments.

While Ugorji's appraisal of the Montford Avenue house said it had been totally renovated, he admitted at a January hearing before Pritchard that the plumbing and electrical systems were not new. He also said that he might have erred in saying the house had replacement windows. He attributed these errors to the fact that he had "cloned" an earlier appraisal and had failed to accurately rework it.

William T. Beach, a state official who is also an appraiser, testified that the four appraisals were "misleading if not fraudulent." He was particularly critical of Ugorji's use of "comparable sales" of other houses to justify his valuations.

In her decision, Pritchard said she did not find Ugorji's testimony credible and noted that he had failed to produce any witness to testify that he had not violated appraisal standards.

She said, "The commission has proven by a preponderance of the evidence that the respondent failed to exercise reasonable diligence and was at the very least negligent or incompetent in the development and preparation of the appraisals."

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