Man sentenced in housing scam
By GRAHAM BRINK
© St. Petersburg Times, published April 11, 2001
TAMPA -- A man accused of setting up a scam to bilk low-income home buyers in St. Petersburg will spend 15 months in federal prison.
U.S. District Judge Steven Merryday also sentenced Robert Lee Norman to two years of probation on Tuesday and required him to pay $77,147 in restitution.
Norman, 66, entered into an agreement with federal prosecutors in November after he and his attorney agreed that the FBI's evidence was overwhelming.
Norman, a home rehabber who arranged phony mortgage down payments and sold shoddy houses to dozens of low-income residents, pleaded guilty to one count of conspiring to defraud the federal government. In return, prosecutors dropped four related charges.
He had faced a maximum of five years in prison, a $250,000 fine and three years of probation.
Norman, an ex-con on parole from a log cabin scam in New York, began buying and selling dilapidated St. Petersburg houses in 1995. During three years, Norman and his companies bought more than 220 homes and once owned more houses than anyone in St. Petersburg.
A St. Petersburg Times report outlined how he would make minor repairs and double and triple the price. For the most part, his buyers were poor people with bad credit who were delighted to get a house at any price. But when floors buckled and roofs leaked, they stopped paying their mortgages and slid into foreclosure.
Norman made extra money by using the houses that weren't selling as collateral to secure loans from private investors and sometimes mortgaged out the same house to two or three investors at once. When his enterprise collapsed into foreclosure a few years ago, investors were stuck with millions of dollars of bad loans and rundown houses worth a small fraction of what Norman had borrowed.
The federal fraud charges focused on phony down payments he used to get government-backed loans for five buyers.
To qualify for FHA loans, buyers had to make a 3 percent down payment, either from their own pocket or from relatives. People who make down payments are less likely to walk away from their mortgage loans because they have a financial stake in their homes.
Buyers told the Times that Norman would pay the down payment himself but conceal it from the government by laundering it through a buyer's relative's bank account. On paper, it looked as if a buyer's mother or sister provided the down payment.
Contact Graham Brink at (813) 226-3365 or email@example.com.
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