In the years leading up to the 2008 financial crisis, there was a growing segment of the real estate investors that focused solely on undervalued properties. This style of investing is best summed up in the phrase, “Buy the worst house in the best neighborhood.” The investors then would renovate the home, or flip the house, and sell the property for a profit.
Anthony Garvin, a 49-year-old from Jersey City, used the idea of flipping houses to supposedly generate a multimillion-dollar mortgage fraud scheme. Anthony Garvin was charged last Tuesday. He was arrest with suspected co-conspirator Christopher Goodson from Newark.
Garvin was charged with 1 count of Bank Fraud conspiracy and 5 counts of Bank Fraud. Garvin was first charged back on November 17, 2017. These new charges were issued by U.S. Attorney Craig Carpenito of New Jersey.
The scheme that Garvin and his co-conspirators supposedly used was elaborate and pried upon financial institutions. Using fraudulent document Garvin and his co-conspirators managed to defraud several financial institutions. At one point, the fraudulent documents were so convincing that the conspirators were able to secure “HELOC” loans.
Buying properties in mortgage default, these properties would be purchased as a loss to the mortgage holders. Garvin and his conspirators would then “renovate” the properties to resell them. Selling those same properties to buyers that only existed on paper. The scheme would even sell the same property from one imaginary buyer to another just as fictitious second buyer. The conspirators would continuously raise the price of the houses, at one point a house was selling for nearly twice what they bought it for. The scheme netted the conspirators roughly $30 million from mortgages.
This mortgage scheme has most likely caused harm to the New Jersey housing market, causing several financial institutions to be tied up with the judicial legal system for years. The scheme also calls into question the security of commercial documents. If they can be forged once then they can be forged again. With the trail of Garvin, it remains unclear if New Jersey or any other state is moving to secure the documents in some form. If Garvin is convicted in his trial, he is looking at some severe penalties. Each charge of Bank Fraud is punishable by 30 years in prison and $1 million fine.