Man gets probation in flipping scheme

Ex-loan officer ordered to pay $147,000 to HUD

April 19, 2003|By John B. O'Donnell | John B. O'Donnell,SUN STAFF

A federal judge yesterday sentenced a former mortgage loan officer who had pleaded guilty in a property flipping case to three years' probation, including four months of home detention.

U.S. District Judge William M. Nickerson also ordered Donald F. Hanson Jr. of Middle River to pay $147,000 in restitution to the federal Department of Housing and Urban Development for losses it incurred as a result of his illegal actions. But, pointing to Hanson's inability to pay full restitution, Nickerson set a payment schedule of $100 a month for Hanson's period of probation - a total of $3,600.

Hanson, 50, is a licensed real estate broker at American Residential Realty Inc. in Parkville. In early 2001, he said in an interview that he was president and majority owner of the firm.

Hanson and two other mortgage loan officers reached plea agreements with federal prosecutors weeks before they were scheduled to go on trial in January on charges of conspiracy and making false statements.

The three loan officers and 15 other defendants were charged in connection with a property flipping scheme allegedly orchestrated by William Otto Schmidbauer, a former Perry Hall real estate broker who, prosecutors say, made $1.4 million in gross profits on fraudulent deals. All of the defendants have either pleaded guilty or agreed to plead guilty.

Schmidbauer, who is expected to enter his guilty plea next week, often bought properties in poor condition at low prices and quickly sold them at much higher prices. Prosecutors say he got mortgages for "straw" buyers using falsified documents that sometimes included false identities of the buyers. The loans were insured by the Federal Housing Administration, a HUD agency.

In some deals, prosecutors say, Schmidbauer didn't actually own the houses, but his real estate firm handled the sales.

All told, 58 mortgage loans worth $4.4 million were obtained as part of the scheme, according to prosecutors. The FHA paid off the lenders when the buyers defaulted. Two years ago, at the time most defendants were charged, prosecutors said the defaults had cost the FHA $3.9 million.

Hanson pleaded guilty in January to having falsely told HUD that he had met buyers face to face as part of the mortgage application process when he had not.

"I'm sorry this happened," Hanson told Nickerson. "I hope to never see this court again."

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