From time to time, Clearbox becomes aware of unusually bad behavior by appraisers that simply boggle the mind. As they say, “A few bad apples spoil the bunch.” Or as Shakespeare wrote, “The evil that men do lives after them”. The following article covers just one of the appraisers whose behavior caught the attention of law enforcement.
On May 22, 2015, Tyler Lowman, an appraiser, pled guilty to conspiring to commit wire fraud in an attempt to defraud and obtain money under false pretenses; United States v. Berkenfield, case number 11CR3486-JAH. The indictment lists Lowman as part of a vast conspiracy that fraudulently deceived lenders into loaning millions of dollars to unqualified borrowers.
According to court documents, several members of the conspiracy would complete and/or assist with the completion of loan applications that significantly overstated each applicant’s income. This was done to create the misleading appearance that the applicant was qualified for each loan. Certified tax preparers would often state that they had prepared tax returns for the applicants and that the applicants were self-employed. To create a more believable illusion of wealth, select members of the conspiracy were instructed to state that the applicant’s income was large because, for example, the applicant was a manager or stylist. In addition, certain members of the conspiracy submitted false deposit records that stated the applicants owned investment funds. A handful of the conspirators also added loan applicants to bank accounts and included those accounts in loan applications with the intention of creating false impressions of the applicant’s actual wealth. Additionally, some member(s) of the conspiracy also sought out appraisals that grossly exaggerated the values of properties in an attempt to intentionally deceive lenders.
Lowman was not connected to or charged with any instances of appraisal fraud documented in the federal indictment or by the state appraisal agency. However the indictment does state that Lowman, over a two year period, submitted multiple residential loan applications which were subject to criminal penalties for false statements. It also mentions that in each loan application Lowman stated that his income was from $43,000-$60,000 a month. Lowman also allegedly added two loan applicants to his own bank account. On a scale of 1 to 10 where do you believe that income disclosure falls within your internal BS meter?
Twenty six individuals were charged in August of 2011 under federal indictment for conspiracy to commit wire fraud. The conspirators were charged after a four year investigation by special agents from U.S. Immigration and Custom Enforcement’s Office of Professional Responsibility.
The state agency agreed to a settlement of charges with Lowman and his license was suspended for thirty days. In addition, Lowman was placed on probation for two years and fined $5,000.00. If Lowman violates the terms of the agreement or his probation, his license may be revoked.
As appraisers I would hope you might be thinking why is he allowed to continue to appraise?
Without proper investigation of all parties, are lenders and their agents putting their business at risk? One dishonest appraiser could cost millions of dollars in legal fees, fines and reparations. We see many cases similar to this one on a relative frequent basis. What we don’t glean from this case is whether or not there are other appraisers under investigation associated with this incident . In many instances the State is often not aware. The State appraisal agencies are typically only responding to complaints. Oftentimes indictments such as this one go undetected.
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