Paper Economy: Gangsta Broka!

Wednesday, November 15, 2006

Gangsta Broka!

Remember the good old days when inner city gangs had real “street cred”?

Drive-bys, crack dealings, east-cost west-cost rivalries, Tupac, Biggie… it all seemed to be keeping it so real.

Well, it seems that in Chicago, one gangsta found a now all too familiar way to make some serious bling with little to no gunplay, that is, until the police raided his crib on Tuesday confiscating $750,000 in luxury vehicles and leaving him facing 23 counts of tax evasion and money laundering.

The crime… mortgage fraud or as its better known these days… being a real estate or mortgage broker.

Apparently, Terry Faulkner, a member of the well know south side Chicago gang the “Gangster Disciples”, ran a mortgage fraud scheme that ripped off "unsophisticated" home buyers for hundreds of thousands of dollars.

Amazingly though, it’s almost impossible to distinguish Faulkner’s actions from that of the thousands of sketchy real estate agents or mortgage brokers that have made sham deals now commonplace.

Here’s how the scam worked (from the Chicago Tribune article):

Real estate dealer Brian Urbanowski, who runs URB and another firm, XEZ Inc., bought numerous distressed South Side properties for low prices, many of them acquired at tax auctions.

Faulkner would locate victims with an unsophisticated understanding of real estate transactions and entice them into becoming a real estate "investor," promising they would reap a windfall profit with no up-front money, according to the search warrant application. Faulkner would then select an URB or XEZ property and offer it for sale to the "investor."

Faulkner would bring the victim to Rodrigo Navascues, a mortgage broker, who would create a mortgage application that inflated the would-be investor's income, assets and savings, making the applicant appear credit-worthy when in fact he or she was not, according to the search warrant application.

Then an appraiser in Palos Heights would assess the property at a "wildly inflated price," the search warrant application said. The appraiser has not been charged with any crime. Police searched that Palos Heights office Tuesday.

The victim would obtain a mortgage loan and buy the home at the inflated price. At the closing, the loan proceeds were wired to Urbanowski, or URB, according to the search warrant application. Urbanowski or his company "reaps a huge profit, usually amounting to 200 percent of investment," the application said.

The victim, meanwhile, is left with a dilapidated building and a mortgage he or she cannot repay.