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Defendant in Florida Found Not Guilty of Obtaining a Mortgage by Fraud and Theft Charges

The law firm of Shorstein & Lasnetski, LLC in Jacksonville, Florida handles all variations of white collar crimes. One of the cases for which our clients often request representation is the crime of mortgage fraud. As a result of handling a large number of mortgage fraud criminal cases, we have noticed that the police often charge defendants for negligent, and often common, mistakes made during the mortgage application process that do not rise to the level of criminal conduct. Other times, the state may prosecute a mortgage fraud case when a person does make an incorrect statement, but the false statement has no effect on the approval for the mortgage loan.

For instance, in a recent case south of Jacksonville, Florida, the defendant obtained a mortgage to build a home on a vacant lot. He found a mortgage broker and completed the loan application. In each of the documents during the application process and at the closing, the defendant stated his gross monthly income as $9,800 per month. According to the state, the defendant’s gross monthly income shown on his tax returns was less than $9,800 per month. The state then jumped to the conclusion that the defendant gave false information on his mortgage application and therefore committed mortgage fraud by inflating his income to get a higher loan amount.

Under Florida law, a person can be convicted of obtaining a mortgage by false representation, aka mortgage fraud, where a person makes a false statement in order to obtain a mortgage and the victim relies upon the defendant’s false statement.

In this case, the state did prove that the defendant inflated his monthly income. However, there was no evidence that the bank relied on that information to approve the mortgage for the amount requested. In other words, there was no evidence that the bank would have denied the mortgage loan, or reduced the loan amount, if the defendant had disclosed his lower gross monthly income. Because an entire element of the mortgage fraud crime was missing in the state’s case, the mortgage fraud charge was dismissed.

The state also could not prove that the defendant committed theft. The defendant may have given a false statement as to his monthly income, but it was done to obtain the mortgage. In order to prove the crime of theft, the state would have to prove that the defendant intended to deprive the victim of property. In this case, it was apparent that the defendant only intended to obtain a mortgage, and there was no evidence that he did not intend to pay the money back. As a result, the grand theft charge was dismissed as well.