A U.S. district judge in Los Angeles has sentenced a former Bank of America mortgage employee to 30 months in prison for taking $1.2 million in payoffs to approve sales of distressed properties for far less than their actual value, the Los Angeles Times reports. Attorneys say such cases became widespread during the housing crisis.
Kevin Lauricella, the former Bank of America employee, pleaded guilty in January to accepting bribes and falsifying bank records. Assistant U.S. Attorney Ranee A. Katzenstein says plea agreements were filed by at least three other defendants following Lauricella's arrest, which indicated the problem had become widespread.
"It's part of a large, ongoing investigation," Katzenstein said. "There are a large number of related cases."
Lauricella worked for Bank of America in 2010 and early 2011, when a high number of delinquent home loans were hitting the market. He was accused of collecting bribes from flippers who sought to purchase a distressed home and then quickly resell it for a profit. Lauricella approved short sales that were far below the fair market value. Bank of America fired Lauricella in 2011 while an investigation was launched.
The homes involved in such cases are often sold to good-faith buyers, who become the victims because they face litigation over whether the sale was valid, Katzenstein says.
"The banks suffered losses, of course," she said. "But a lot of other innocent parties suffer as well when it winds up that the title is clouded on what they thought were their dream houses."
Source: “Former BofA Short-Sales Employee Gets Prison Term for Taking Bribes,” Los Angeles Times (July 21, 2014)