Real estate wasn’t booming in metro Atlanta in the early 2000s the way it was in cities such as Miami. But the market, with low interest rates and eager buyers, was still perfect for Phillip E. Hill’s mortgage fraud scheme to milk millions from inflated home values.
On Friday, a federal judge in Atlanta sentenced Hill to 28 years in prison and ordered him to pay more than $41 million in restitution for running a conspiracy that involved loan officers and real estate appraisers and racked up $112 million in fraudulent loans, of which Hill himself pocketed a cool $14 million, said prosecutors
The sentencing came six months after a jury found Hill and nine others guilty of the scam. They used “straw purchasers” to obtain loans on properties where corrupt appraisers had inflated their values, a fraudulent transaction known as a “flip.” The “straw purchasers” were then paid in kickbacks out of proceeds from the excess loans.
Prosecutors said the scheme involved the sale of more than 50 homes and 250 condominiums in eight Atlanta-area condo complexes.
Hill, 51, of Sumatra, Fla., had been the object of a number of lawsuits, including one in October 2002 that claimed he and two appraisers exposed lenders to tens of millions of dollars in losses on more than 600 properties.
Prosecutors said during the eight-week trial that Hill — who was found guilty of conspiracy, loan fraud, mail and wire fraud, and money laundering — operated through numerous Georgia corporations, among them: We Build Atlanta Inc.; Estate Firm Inc.; Estate Artistians of Georgia Inc.; and Estates Atlanta Inc.
The Friday sentencing, said U.S. Attorney David E. Nahmias in a prepared statement, was the closing chapter in an operation that had a “devastating impact on individual homeowners, neighborhoods and communities.”
Rodney E. Clarke, acting special agent in charge of the Internal Revenue Service’s criminal investigation unit, said in a prepared statement that the loan scheme — in addition to reducing tax revenue — burdened lenders with bad loans and forced foreclosures, resulting in abandoned homes in neighborhoods.
“The sentence today does not replace the losses that were incurred due to this scheme,” his statement said.
Separately, the U.S. attorney’s office in Atlanta also announced Friday that Roswell closing attorney James F. Stovall III pleaded guilty to charges of conspiracy to commit bank, mail and wire fraud, and other counts related to mortgage fraud.
According to information presented at court, Stovall participated in mortgage fraud and property flips orchestrated by one of his clients, Reti Relocation Services Inc. He flipped about 50 properties in Acworth, Alpharetta and Woodstock, fraudulently obtaining loans totally more than $20 million.
Stovall could receive a maximum sentence of five years in prison and a fine up to $250,000 on each count. His sentencing date has not been set.