Pantelis Karsos, 45 of Towson, Md., on Friday pleaded guilty to charges stemming from his role in a mortgage-flipping scheme, according to a U.S. Attorney’s office in the District of Maryland.
Karsos, the owner of Nations Mortgage in Towson, admitted to brokering loans for investors in a mortgage fraud scheme involving “flipped” properties in Baltimore City. He pleaded guilty to mail fraud, and will be sentenced on March 25.
Flipping occurs when a property is repeatedly bought and sold by the same party in an attempt to boost its value. However, that value often outstrips the property’s appraised worth after several sales, with subsequent buyers paying an inflated price as the result.
According to facts presented to the court, Karsos incorporated a company called “Knoll Housing” and recruited investors. From approximately April 1998 to December 1999, Knoll Housing purchased properties in Baltimore City for a low price and then “flipped” the properties to an investor/borrower for an inflated price.
One of Karsos’ co-conspirators, Anthony J. DiChiara , 41, of Westminster, Md., who was a licensed appraiser in Maryland, provided inflated appraisals and Karsos, as Nations Mortgage, brokered the mortgage without disclosing to the lender the inflated value of the house, or that “Knoll Housing” was owned by Karsos.
Settlements were handled by attorney Nicholas Pisotlas and Barbara Prichard and their title company, All County Title. Losses to lenders through the Knoll Housing scheme exceed $700,000.
DiChiara, who pleaded guilty to mail fraud in October, was sentenced on Friday by Judge Davis to one year in prison, followed by two years of supervised release. Pistolas and Prichard both pleaded guilty to fraud charges in December, 2003.
The criminal charges in this case are the result of a joint investigation by the FBI and the U.S. Attorney’s Office. The case is being prosecuted by Assistant U.S. Attorney Joyce K. McDonald.
More mortgage fraud cases have come to the surface in recent years. The IRS reports the number of case initiations has increased from 107 in 2001 to 215 in 2003 and the number of indictments has increased from 67 in 2001 to 94 in 2003. The number of convictions decreased from 85 in 2001 to 81 in 2003 and the number of sentencings fell from 103 in 2001 to 65 in 2003. For the partial fiscal year 2004, there were 159 case initiations, 69 indictments, 67 convictions and 64 sentencings.
Perpetrators who are caught engaging in fraudulent loan schemes usually end up with mail fraud, wire fraud or money laundering charges. Investigations can be as complex as the schemes themselves and can take as long as two years to conduct.
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