Four convicted in $50 million North Carolina mortgage fraud case | Think Realty | A Real Estate of Mind
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Four convicted in $50 million North Carolina mortgage fraud case

A former government organized crime informant and a Ft. Lauderdale grandmother were convicted in federal court last week on conspiracy to commit bank fraud and wire fraud involving a $50 million luxury real estate deal in the North Carolina Mountains involving many Florida “straw buyers.”

Domenico ‘Dom’ Rabuffo, 77, of Miami and his former wife, Mae Rabuffo, 74, of Ft. Lauderdale, were convicted along with Ray Olivier, 52, of Land O’Lakes and Curtis Allen Davis, 51, owner of Executive Mortgage & Investments in Tampa, Florida, according to tampabay.com. Sentencing is set for September 18.

Construction began on a number of homes but they were never completed and the banks involved foreclosed.

According to the federal indictment from the United States Attorney for the Southern District of Florida, “the defendants conspired to perpetrate a complex $49.6 million mortgage fraud scheme against various FDIC-insured lenders from 2003 to 2008. Defendants Domenico Rabuffo and Mae Rabuffo used shell companies to acquire ownership and control of a purported residential property development known as Hampton Springs, located in Cashiers, North Carolina.”

According to the indictment, “Domenico Rabuffo, Mae Rabuffo, Diane M. Hayduk, Raymond E. Olivier, and Curtis Allen Davis recruited numerous straw buyers to purchase lots in the Hampton Springs development. The straw buyers financed the purchase of the building lots in Hampton Springs using mortgage loans and further obtained construction loans for the same properties. Defendants caused the straw buyers to submit false and fraudulent loan applications and related documents to the lenders to ensure that the straw buyers qualified for the loans. Defendant Victor Miguel Vidal served as a loan officer at SunTrust Mortgage, where he shepherded the fraudulent loan applications of the straw buyers through the approval process, including fraudulent applications for $33 million in construction loans. Defendant Lazaro Jesus Perez furnished fictitious and fraudulent accountant’s letters to Vidal, in support of various fraudulent mortgage loan applications submitted to SunTrust Mortgage.”

Ultimately, based on the indictment, the lenders were induced to advance $49.6 million in loan proceeds in connection with this scheme. The proceeds of the defendants’ mortgage fraud scheme were funneled through shell-corporation accounts controlled by Domenico Rabuffo and Mae Rabuffo, and other accounts, for the use and benefit of the defendants and their co-conspirators, and to further the defendants’ fraudulent scheme.

The Sylva Herald reported that prosecutors said the scheme involved Dom Rabuffo paying the straw borrowers $12,500 for each building lot (consisting of two half-lots) they purchased, $12,500 for each year the mortgage loan remained outstanding, and $12,500 if the straw borrower took out a construction loan for the property.

The Rabuffos, who held joint account ownership with straw borrowers, would deposit funds into the accounts to show assets along with paying earnest money deposits and make monthly mortgage payments on the borrowers’ behalf, the Sylva, North Carolina newspaper reported.

According to the indictment, the Rabuffos had a network of individuals who would provide the necessary documentation and lies necessary to secure the loans.

Though it is listed as Hampton Springs in all the court papers, the development at that time was also referred to in media reports as “Blue Ridge Mountain Estates.” The Herald reported in 2009 that SunTrust Bank had foreclosed on some 14 lots in the subdivision because the bank could not verify information provided to secure the loans.

Tampabay.com reported that Rabuffo went to prison in the 1980s in New York after he was convicted in a similar financial fraud indictment. His former business partner was killed in a 1987 mob hit as he dined at an Italian restaurant in Manhattan. Rabuffo refused to discuss the killing or his past when interviewed by the Times in 2008, but insisted he was not associated with mobsters. Read the full story here.

The Ft. Lauderdale Sun-Sentinel also reported on this story. Read their full account here.

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