Report on Real Estate Fraud Released

Written by Sullivan

September 24, 2021

It’s a hot real estate market in San Luis Obispo County, but complaints of real estate fraud over the past year were not very common.
The District Attorney’s Office released its “Real Estate Fraud Prosecution Program Annual Report” for fiscal year 2020/21 and listed just a handful of cases of alleged real estate fraud, with the majority not calling for prosecutions.

Reporting real estate fraud is required under the California Government Code Section 27388 and enacted in 2008 with Senate Bill 537, according to the report. County Supervisors set a surcharge on certain real estate documents to fund the “Real Estate Fraud Prosecution Trust Fund,” which the district attorney taps to pay for the Real Estate Fraud Unit, consisting of “a portion of a deputy district attorney and district attorney investigator.”

Cases are referred by the State Department of Real Estate or other law enforcement agencies, according to the report. The RE Fraud Unit also works with the Victim/Witness Assistance Center to collect restitution and the district attorney’s Consumer Fraud Unit.
“The [Real Estate Fraud] Unit investigates and prosecutes real estate fraud cases to deter and punish those who commit real estate-related fraud and to obtain restitution for victims,” according to the report.

The County Clerk’s Office gets 10% of all the fees collected for this purpose to cover its costs collecting the fees.
In Fiscal Year 2020/21 there were 10 real estate fraud complaints brought to the unit. There are three cases “pending,” and the number of victims is listed as three, with one of those having died.

They have one case being prosecuted at this time, and the “aggregate victim losses at investigation stage” of some $1 million. Two victims’ cases are at the “prosecution stage” with the aggregate loss of $450,000 and no convictions were reported.

As for the trust fund’s budget, the County started the year with $124,000, added $488,000 and spent $213,000, leaving a balance of $398,000, according to the report.

Salaries ate up most of the money. “These were applied toward salaries and benefits expense for prosecution and investigative resources dedicated to the Real Estate Fraud Program in the amount of $211,900,” the report said, “and office related expenses in the amount of $1,804.”

How does the district attorney’s fraud unit help victims? “Over the 2020/21 fiscal year,” the report said, “the District Attorney’s Office continued to utilize several processes to assist victims of real estate fraud schemes. For example, numerous pre- and post-court hours are spent by the attorney, investigators and Victim/Witness staff meeting and corresponding with victims to keep them apprised of upcoming events and address their ongoing concerns regarding pending and post-litigation matters, including preparation for court proceedings and obtaining restitution.”

If readers believe they’ve been defrauded in a real estate scam, the district attorney’s website is the place to start looking for justice. It provides links to “valuable consumer resources related to real estate fraud, including a Real Estate Fraud Complaint form, which allows consumers to lodge a complaint with the District Attorney’s Office electronically.

“Additionally, for select significant real estate fraud prosecutions, they may be added to and maintained on the district attorney’s website to provide up-to-date case status, resource information, and links.”

In some larger cases, the district attoney’s unit can seize assets. “Throughout these proceedings, in cases involving a loss more than $100,000, extensive asset seizure work may take place to secure and maintain the defendants’ assets for use toward future victim restitution.”
The report predicts real estate fraud will rise. “Due to the COVID-19 pandemic and attendant economic decline, we have observed indicators of an upcoming spike in real estate fraud/mortgage fraud incidents.

“Investigators at the federal level are seeing a substantial increase in fraudulent small business loans. Similar fraudulent activity is anticipated in the housing market as the number of residential mortgage defaults increase.

“Compounding matters,” the report continued, “San Luis Obispo County is in the mid-stages of a real estate boom. This is partially due to major technology firms allowing employees to telecommute on a permanent basis. These employees are increasingly relocating to more desirable and affordable counties, such as ours. This has caused a decrease in available housing, which has resulted in increased home values. An increase in home valuation concurrent with an increase in distressed mortgages provides the perfect environment for mortgage fraud.”

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