Licensed Appraiser Pleads Guilty In Mortgage Fraud Scheme
PITTSBURGH, Pa. - A resident of Pittsburgh has pleaded guilty in federal court to a charge of wire fraud conspiracy in connection with a mortgage fraud scheme, United States Attorney David J. Hickton announced today.
Howard Reck, 45, pleaded guilty to one count before Senior United States District Judge Donetta W. Ambrose.
In connection with the guilty plea, the court was advised that Reck was a licensed appraiser who operated a company named Citizen's Appraisal Services, which provided appraisal services. Reck participated in a mortgage fraud conspiracy in which other members of the conspiracy represented to the lenders that sales prices for properties were higher than the true sales prices. Reck then provided appraisals that falsely represented that the market values of the properties serving as collateral for the loans were higher than the true values of the properties.
Reck's appraisals reported values that were often double that of the true market values of the properties. There were two main methods that Reck used to inflate the values of the properties. He typically "cherry-picked" comparables, meaning that when seeking properties purportedly comparable to the subject properties, he selected properties that were superior in location and condition, and often ignored truly comparable properties. Rack's second method was to overstate the conditions of the subject properties. By representing that the subject properties were in better condition than they actually were, Reck was able to compare subject properties to superior comparable properties as if they were truly comparable.
Judge Ambrose scheduled sentencing for Jan. 3, 2012. The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.
Assistant United States Attorney Brendan T. Conway is prosecuting this case on behalf of the government.
The Mortgage Fraud Task Force conducted the investigation leading to the prosecution in this case. The Mortgage Fraud Task Force is comprised of investigators from federal, state and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff's Office; the Pennsylvania Attorney General's Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee's Office.