Lenders unaware that properties purchased same day as sale
By SAM GARCIA
12/13/2002

A Virginia man has been accused by the government of duping mortgage lenders in a Massachusetts flip scheme that used fake down payment and income verification.

Angel L. Serrano Jr., 41, of Potomac Falls, Va., was charged with wire fraud and false statements. The U.S. Department of Justice alleges that between 1996 and 1997, he purchased and sold distressed properties in Massachusetts the same day without informing the lenders.

The indictment states that Serrano hid the land-flips from the original sellers and the lending institutions and deceived low-income buyers into submitting fraudulent loan applications to the lender.

The indictment specifically alleges that Serrano persuaded owners of residential properties to enter into purchase and sales agreements by concealing from the sellers that the properties were to be immediately resold for a higher price. Serrano then induced low-income, first-time home buyers to pay inflated prices for the properties, telling the buyers they had to go through him to buy the properties. He also concealed that he was purchasing the property the same day for a lower price, the indictment states.

Some of the transactions used Federal Housing Administration or Veterans Administration loans. First-time home buyers typically were involved.

A fraudulent $67,965 application allegedly was submitted by Serrano to Countrywide Home Loan, Inc., in early 1997. In addition to fake rental income, $3,500 in gift funds from a sister were falsely listed as the source of the down payment. Countrywide was not informed that the property, which had a $68,000 purchase price, was purchased by a co-conspirator the same day for $58,000

In another transaction funded by Countrywide, Serrano allegedly used an alias name -- Edwin Arce -- to hide the fact that he was the seller and his sister, Evelyn Serrano, was the buyer. The government said he bought that property for $69,000 before closing on the sale to his sister for $75,000 that same day.

Another fraudulent loan application, for almost $100,000, was submitted to Countrywide on a property selling at $100,000. That property had already been purchased for $60,000 the same day, the indictment states. Serrano is accused of listing a fake gift as the down payment and falsely representing to the purchaser that he would refund $30,000 from the sales proceeds for property repair costs.

Serrano also allegedly duped National Mortgage Corporation, selling a property for $107,000 that he bought earlier in the day for $75,000. The down payment was falsely listed as cash for $12,000.

Another property financed by National was sold for $112,000 the same day Serrano purchased it for $55,000.

Other fraudulent loan packages allegedly included more fake down payments and inflated or fake income.

If convicted, Serrano faces up to five years imprisonment, in addition to a $25,000 fine for each of the three counts of the indictment.

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