Lance Collins of Baldwin County, Alabama, pleaded guilty yesterday to conspiracy to commit mail and wire fraud. Based on prosecutors’ response – they agreed to recommend leniency and have agreed to a 6-month delay in sentencing – it appears that he plans to cooperate in revealing just how he “defrauded mortgage lenders by submitting false loan applications and settlement statements to get money to purchase condominiums near the beach”[1]. 16 different property owners are suing Collins in an attempt to recoup money lost on “silent second mortgages” on properties with an estimated loss of $1 million, while prosecutors have said they suspect there are at least 50 other similar transactions in existence. Using a network of straw purchasers with inflated net worth, real estate agent, fraudulent appraisals and false down payments that were actually paid and refunded numerous times over, Collins was able to purchase beach condos with the plan to sell them for a profit. However, when the market tanked in 2007, he was unable to unload the properties and the lender foreclosed, leaving the sellers of the properties holding the silent mortgages with no way to recoup their losses. Several of Collins’ cohorts are scheduled for trial in the coming months.

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[1] http://blog.al.com/live/2011/08/alleged_mastermind_of_baldwin.html