SALT LAKE CITY, UT – September 2, 2010 – (RealEstateRama) — A 10-count federal indictment unsealed Thursday charges Christopher D. Hales, age 29, of Midvale, with mail, wire, and bank fraud and with money laundering in connection with an alleged mortgage fraud scheme. The indictment involves two properties, one in Lindon and one in Salt Lake City.
The indictment alleges Hales and other unindicted co-conspirators executed a scheme to produce income from false appraisals to artificially inflate the purchase price of the residences. Hales arranged to purchase the homes through straw buyers and took the false equity proceeds stemming from those sales for himself, the straw buyers, and the co-conspirators.
For the Lindon property, the indictment alleges that Hales arranged for a false lien to be attached, ostensibly to renovate the house to the increased value pre-determined by Hales. Hales then arranged to obtain a loan that was approximately $194,000 more than the house was worth based on the false lien.
For the Salt Lake City property, the indictment alleges Hales and his co-conspirators arranged first for the house to be appraised at more than $250,000 than its market value, obtained a loan relying on that false appraisal and distributed the alleged fraudulent proceeds among themselves. Approximately 10 months later, Hales and other co-conspirators arranged for the house to be purchased by a straw buyer with another false appraisal that reset the house’s value at an additional $250,000 above the previous fraudulent price. According to the indictment, those proceeds were again then distributed among Hales and his co-conspirators.
For both properties, Hales used false appraisal values, false income statements, and false claims of renovations to the properties to obtain the inflated loans, the indictment alleges.
This specific investigation, which is ongoing, is being conducted by the U.S. Department of Housing and Urban Development – Office of Inspector General, the FBI, and the U.S. Postal Inspection Service, as a part of the Utah Mortgage Fraud Task Force.
Individuals who believe they have information about financial fraud crimes related to this investigation and/or Mr. Hales can contact Special Agent Dave Smith with HUD-OIG at 801-524-6092.
Hales was arrested on a federal warrant Thursday. He had an initial appearance in federal court Thursday afternoon. A detention hearing is set for Tuesday at 10:30 a.m. before U.S. District Judge Brooke Wells. The potential maximum penalty for each wire and mail fraud count (two counts of each) is 20 years in prison. The potential maximum penalty for the four bank fraud counts is 30 years per count. The potential maximum penalty for the two money laundering counts in the indictment is 10 years per count.
Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.
