David Garden Guilty on 20 Counts

Indianapolis television station Fox 59 reports that a jury found "businessman" David Garden guilty on 20 counts including corrupt business influence, forgery and theft.  Even though I was not involved in this case, I was interviewed by reporters as an expert on scams like those of David Garden.

I wish David Garden was one-of-a-kind, but he's not. People are being taught to scam hapless homeowners in "no money down" real estate courses.  The first people that get scammed in "no money down" real estate scams are the people taking the courses.  They key to making money in "no money down" real estate is to find a motivated seller, someone who will give you their home, or control of their home, without getting paid for it.  You may ask why anyone would surrender their home, their most valuable asset, without getting any money for it.  The answer is, usually they won't; and it is extremely difficult to make money in real estate with no money down. Most people can't do it.  If you find someone desperate enough, and you are a good enough con man, you might be able to come up with a lie that will just do the trick.

According to media reports, David Garden found homeowners nearly in foreclosure and promised them a "short sale".  Only your lender can truly come up with a binding agreement to do a short sale. It's far from guaranteed, and often it isn't worthwhile if you can get it.

Anther tactic is "we buy homes".  You've probably seen the signs "we buy homes" on bulletin boards and telephone poles.  the "we buy homes" scam identifies people who owe more on their house than what it is worth and who want to move.  The scammer identifies these people and promises to pay their mortgage and get them out from under the loan.  The key is the documents the scammer has the homeowner sign doesn't do any of this. Usually the scammer will have the homeowner sign a power of attorney, a sale leaseback agreement and a deed.  In no case is there a legitimate business purpose for all of these documents.  In a legitimate sale-leaseback, the buyer actually provides the capital to buy out the original lender, and then rents the house back to the original owner, generally with an option to purchase. The sale-leaseback agreement is recorded. The scammers don't record the sale-leaseback, they get the original owners out of the property, and they provide no capital.  The power of attorney makes the scammer the agent for the owner. That's like giving the keys to a safe to a thief.   When the scammer gets a deed - that's really crazy, because that's giving away your house for nothing.

Once the scammer gets control of your house, the scammer will find a tenant to rent the house, collect the money, but the scammer doesn't forward any of the money to the original owner or the lender.  The scammer may even collect a large down payment from the tenant under the guise of a rent-to-buy contract downpayment.  In this case, the owner loses, the lender loses and the tenant loses.  Only the scammer wins.

If you are a victim of a we-buy-homes or similar scam, it may be very hard for you to get justice. Humpty Dumpty has already fallen off the wall. Sometimes, if you get to the scammer early enough, you can, with a lawsuit, pressure the scammer to sign rights to the home back to you and undo all the fraudulent paperwork.  A skilled scammer will hid behind corporate shells and duped accomplices who have no money and will vanish before the law can get to them.  Unfortunately, from the people that I have seen who were victimized by these scams, the best option in the majority of the cases ended up being bankruptcy.

Since there is no easy out if you are victimized by a no-money-down home scammer, the important thing is to avoid getting scammed in the first place. If it sounds too good to be true, it probably is. If someone wants to intercede between you and your lender, be very sceptical.  Check everyone out.   If you are victimized, find a consumer lawyer near you at www.consumeradvocates.org.