Update, 2/2: Added comment from Baugh's lawyer.
Marlon Baugh's federal court documents are practically a how-to guide on money laundering and mortgage fraud. The guy was a scam artist. He worked in Hallandale Beach for National Foreclosure Centers, a business that also went by the name Home Savers. He helped run a scheme in which he promised to help families whose homes were in danger of foreclosure. Then he'd bail and let the homes go into foreclosure anyway -- not before taking $800 to $2,000 per month from his victims.
financial institutions are involved. Late last week, though, Baugh switched his plea to guilty. His sentence? Just a year and a day in federal prison.
Baugh's scheme was two-pronged. The first prong stabbed into a homeowner who was in danger of losing his or her home. Baugh presented them with two options: He'd help them find a lender to refinance their mortgage, and if the person couldn't get approved, he'd set up someone else to buy the house from them but allow the original owner to still live there. According to federal court documents, no one ever got approved by a lender.
At this point in the scheme, a "straw buyer" would be brought in -- a buyer who would get a loan to buy the house but then simply charge the original occupants rent. Baugh's company paid the stooge $5,000 to $7,000 for doing this.
The problem here was that Baugh's stooges didn't have the credit to get loans to pretend to buy houses, so Baugh would make up documents showing that they had money that they totally didn't. From the court file:
Baugh prepared a false and fradulent Uniform Residential Loan Application (Form 1003) in [straw buyer Joan] Beckford's name (as the borrower), which indicated that Beckford was president of Beckford's Clothing Designs, she had been at that job for 10 years, and she had a monthly income from that job of $10,000 per month. Baugh knew she was not president of Beckford Clothing Designs, she had not worked there for 10 years and did not have a monthly income of $10,000 per month. In fact, when Beckford was interviewed, she indicated that she was not even able to sew on a button.
In that instance, Baugh also forged a letter verifying Beckford's income from her clothing company, then filed a fake document claiming Beckford had almost $80,000 in the bank when "in truth and in fact, as Defendant MARLON BAUGH then knew, J.B. did not have an account balance of $78,953.35."
Once deals like this went down, Baugh's company would pay the payments on the new mortgage while the home's original owners would lease their own house from Baugh. They were told that if they paid their rent on time for a year, they would be allowed to buy their house back from Baugh for the amount of the new mortgage plus $15,000.
After Baugh left the company, it appears they simply stopped paying the mortgages, and the homes they promised to save slipped back into foreclosure.
According to Baugh's lawyer, Jack O'Donnell, Baugh wasn't the guy in charge and left the company "after he figured out what was going on" when it comes to bailing on the mortgages, but the court documents show Baugh was front and center when it came time for falsifying those documents.
Once things started falling apart, though, O'Donnell said that's when Baugh went to federal investigators before they could come to him.
"Things were pretty loose and free back in the day," O'Donnell said. "A lot of people made a lot of money, and those that got in near the end trying to do the same thing... A lot of people got burned."
If you need to supplement your fraud income, you might want to consider writing a wildly overpriced ebook too: Since the investigation started several years ago, O'Donnell said Baugh "turned his live around the past four or five years" and has several books in the works. While we can't say for sure it's the same guy, there's a "Marlon Baugh" in the Fort Lauderdale area pimping himself online as a "nationally known mortgage expert
" and selling a book of "insider load modification secrets
" for 50 bucks. He even has the chutzpah to warn against scam artists on his blog:
Since this industry isn't highly regulated yet, there are a lot of scam artists out there that are setting up shop, doing heavy marketing to collect as much upfront fees as possible and then they shut down and reopen under a new name.
Someone claiming to be a colleague of Baugh's showed up on a Scam.com messageboard to try to discredit posts about the company -- he was quickly heckled into oblivion when other members
discovered he'd started up numerous shops just as Baugh had warned.