In Modesto, California, a real estate agent and his roommate set up a simple scam that enabled them to steal thousands of dollars from elderly homeowners while acquiring properties at rock-bottom prices. The agent, James Lee Langford, who is also the owner and broker for Century 21-Apollo Realty in Modesto and his roommate, Jon Vance McDade, would target elderly property owners who wanted to sell their properties with no listing agent. Once they had convinced the homeowner to sell, they would enter into an agreement by which a portion of the purchase price of the home would be paid in a seller-financed note on which the buyer – one of the two defendants in the case – would pay only interest for 5 to 10 years with a balloon payment at the end of that term.
Once the property was under contract, the real estate agent (now buyer) would get conventional financing for the entire purchase price, thereby diverting the extra money in the seller-financed note away from the seller and into their own bank accounts. They easily lulled the suspicions of the homeowners by mailing them their monthly interest-only payments in a reliable fashion. When possible, the scammers took the entire process one step further, refinancing the homes to get any remaining equity and even convincing elderly property owners to sign documents stating that they had been paid in full.
Later, these properties were allowed to go into foreclosure and some were even sold as short sales through Langford’s own real estate business. It is estimated that the scam caused losses of at least $10 million between the homeowners, the lenders and other involved banks, including $580,000 to Wachovia Wells Fargo Bank alone