(LoanSafe.org) – This Tuesday, four men were sentenced to prison for a mortgage fraud scheme that involved approximately $100 million. Two of the men, Aaron Hand, former president AFG Financial Group, and Eric Shields, former CEO of AFG. The other two individuals involved in the mass scheme were Kenneth Law and Jerry Strklja.
Aaron was sentenced for eight to twenty-five years in prison for enterprise corruption, scheme to defraud, conspiracy, and grand larceny. While the CEO, Eric Shields only got five to sixteen years for his actions. Law also received about five to fifteen years, and Strklja got three to nine.
The massive scam defrauded innocent investors as these individuals would sell distressed properties with inflated appraisals. In the end, the schemers pocketed all of the investors’ money and let their properties go into foreclosure, in turn destroying the investors’ hard earned credit scores.
“Crime was the business of AFG – these four defendants went to work every day with the intent to commit mortgage fraud; it was literally their job,” said District Attorney Cyrus Vance Jr. “This scam would not have been possible without the contributions of these four defendants, who each played an integral role in the formation and daily activities of the company. I would like to thank Judge Berkman for recognizing the seriousness of these crimes, which contributed to the collapse of the securitized debt market.”
Overall the scheme was just one big case of greed and corruption. Shields has denied having any part in the scam and is planning to appeal, according to his lawyer.
Since July of 2008, the Manhattan District Attorney’s Office launched a full on investigation to find out the true practices of American Financial Group. This investigation has been called “Operation Broken Brownstone,” and to date there has been nearly thirty convictions from the operation. In today’s financial crisis, the need for law enforcers to take action for cases like this is higher than ever. Mortgage fraud and investment scams such as this are two major factors that have helped drag down the housing market over the last few years.
Update: American Financial Group Inc of Garden City, N.Y, and AFG Financial Group of Cincinnati, an insurance company that goes by AFG, are two separate companies. Please keep in mind that these two companies are not related.
