In the first criminal conviction to come from a federal investigation of property flipping in Baltimore, a settlement attorney yesterday pleaded guilty to his role in a far-reaching mortgage fraud scheme.
Robert L. Friedman, 33, of Pikesville, pleaded guilty to one count of wire fraud involving transactions on a house in Baltimore that was bought and then quickly resold at a dramatically higher price.
Friedman's greater role in the case, though, may be as a source for federal investigators. Assistant U.S. Attorney Joseph L. Evans said in court yesterday that Friedman agreed as part of a plea bargain signed in April to cooperate with authorities and to testify before a grand jury and at any future trials.
Evans declined to comment further outside of court. Friedman and his attorney, Andrew Radding, also declined comment.
Friedman could face up to five years in prison in the case.
The plea agreement presented yesterday to U.S. District Judge J. Frederick Motz said prosecutors would recommend a lesser sentence if Friedman fully cooperates with the investigation.
As a settlement attorney, Friedman worked on about 20 property transactions with Robert L. Beeman of Wilmington, Del., who was charged in March along with four other men in a 14-count indictment alleging mortgage fraud.
In that case, U,S. postal inspectors identified what they said were 10 fraudulent property transactions, with mortgages totaling $548,883. The indictment stated that a scheme started with Beeman purchasing inner-city houses at low prices.
After making cosmetic improvements, he would quickly resell the home at a sharply increased price - usually to buyers with poor credit and modest incomes, the indictment stated.
To secure mortgages, the defendants would then allegedly quote lenders a sales price double what the buyers had agreed to pay.
Friedman's guilty plea yesterday involved a home at 201 N. Milton Ave. in Baltimore.
Fraudulent papers alleged
Court papers show Beeman purchased the property in 1996 for $16,000 and later that year agreed to sell the house to Dondria and Jessie Wright for $45,000. The couple could not be reached for comment.
Working with other co-defendants, Beeman created fraudulent papers that listed the sales price as $75,000 and the home's value at $80,000, court papers say. The defendants allegedly then used those false papers to secure a $52,500 mortgage.
Wire fraud charge
Friedman and his company, Consumers Title Corp. in Baltimore, handled the settlement on the property. Authorities charged Friedman with wire fraud because he faxed a letter to a Virginia lender that falsely represented the Wrights as having made an $8,163 down payment - part of the effort to make lenders believe the property was worth its inflated price.
When the North Milton Avenue house was later appraised as part a related civil lawsuit, its value was listed at $20,000, court papers show.
Asked in court yesterday by Motz if he was part of the scheme outlined in court papers, Friedman replied, "Oh yeah. Yes, your honor."
Case pending
The case against Beeman is pending. Friedman will be sentenced when it concludes.
The Beeman investigation, which started more than two years ago, grew out of a lawsuit where eventually 82 families who bought homes from Beeman became plaintiffs in the suit. An agreement to settle the case was announced earlier this year.
