Real estate scheme lands four in federal court – Odessa American_ News first stage of money laundering

Four people, including a prominent permian basin realtor, have been accused of defrauding unidentified banks of $27 million over an eight-year period in a mortgage scheme.

Gayle hirsch, 61, michael cowan, 42, stephen hilliard, 58, and berta mcfaddin, 55, appeared thursday in federal court on charges of conspiracy of bank fraud and money laundering.

They were indicted in the case that marks the end of a more than two-year investigation started in august 2011 with searches of their properties.

According to the indictment, the four people swindled banks hundreds of times out of money through fraudulent documents purporting to be purchasing real estate at much higher prices.

Hilliard and cowan both owned a number of real estate investment companies, according to the indictment, while hirsch owned a real estate agency and mcfaddin worked for stewart title company.First stage of money laundering

In the scheme, cowan and hilliard are accused first of attempting to buy property at a fixed price but falsely representing a different purchase to the bank in order to obtain more money from a loan.

According to the indictment, cowan and hilliard enlisted mcfaddin to help them create a fraudulent sale of the property within their own companies at a much higher price than they would be purchasing the property from the legitimate seller.

They also had help from hirsch, who created a “broker’s price opinion” for the purchase to substantiate the higher price, according to the indictment.

This documentation of a second sale was created on the same day as the contract for the original sale of the property from the unaffiliated third party, according to the indictment.

The result would be a loan given by the bank based on the higher sale that was reported to the bank.First stage of money laundering the original sale, which would be at a much lower cost, was not reported to the bank and was paid off in full by the money they received fraudulently, according to the indictment, sometimes with extra money going into the pockets of those involved.

One example provided by the indictment is a property on glenwood avenue in ector county that cowan or hilliard is alleged to have purchased from the original seller for $47,000 in 2007.

According to the indictment, they provided documentation to the bank of a fake purchase on oct. 3, 2007, that the cost was actually $85,000. They then finalized the purchase on the original property for the $47,000 two days later with the unaffiliated seller.

The four are accused of continuing the scheme from march 7, 2003, through aug. 23, 2011, according to the indictment.

Prosecutors are seeking a $27 million money judgment against the group, and also seeking to recoup property in the form of a 2009 lincoln MKX, a 2003 mercedes benz SL500R, a 2004 GMC yukon SLT, a 2005 nissan maxima, two 2008 yamaha wave runners and a $630,000 house on possum kingdom lake.First stage of money laundering

Those forfeitures represent the tens, and sometimes hundreds, of thousands of dollars the group is accused of being able to deposit and withdraw as a result of the scheme, according to the indictment.

Hirsch, hilliard and mcfaddin have been released on a $50,000 bond, but prosecutors have filed a motion to detain cowan, who is still in custody.

If convicted, each of the four could face up to 30 years in federal prison on the conspiracy to commit bank fraud charge and up to 20 years in federal prison on the money laundering charge.

They could also be forced to pay up to $1 million in restitution on the former charge and up to $500,000 on the latter charge.