Feasting on Foreclosures: Millions made on deceptive deals, feds say
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Tiffany Webb of Sheraden bought a house from two men who have since been indicted for mortgage fraud.
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Dov Ratchkauskas quickly doubled his investment when he sold a Penn Hills house to Tiffany Webb in 2008. On the same day he took title to the previously foreclosed three-bedroom Cape Cod on Universal Road for $25,000, he sold it to Ms. Webb, a private duty nurse, getting what investigators say was $54,939.
The quick and profitable transaction put a family in a house that had stood vacant. But it also led to the draining of Ms. Webb's savings, as electrical and plumbing problems, undisclosed prior to closing, mounted.
After two years of home ownership, she could no longer pay the mortgage, and the lender foreclosed, scuttling her credit rating and forcing her and her son, now 8, back to renting. "I'm going to have to live with this on my credit, because they got me," said Ms. Webb, 29, as she held her second son, 4 months old, in their Sheraden rental home.
PDFFrom 2007 through June 2010, Mr. Ratchkauskas and his then-partner, George Kubini, bought 170 local properties for "over $4.5 million," and sold them for "over $10 [million]," according to documents in a U.S. Secret Service investigation that resulted in federal indictments of the two men for fraud last month. The investigation provides a glimpse into the world of post-foreclosure property deals, where a fast-cash mentality creates investor windfalls and buyer pitfalls.
Post-foreclosure properties have become a meaningful part of the real estate market. In Allegheny County, for instance, the sheriff's office sold 8,967 foreclosed properties at auction from 2007 through 2010 -- an average of 2,242 a year, and nearly one-seventh of total house sales. That volume has attracted many investors.
"Post-foreclosure schemes are just one of the many manifestations of 'fraud for profit' type mortgage schemes that we see," said Eric Zahren, special agent in charge of the Secret Service's Pittsburgh office. "In the course of investigating many of these cases, specifically in reviewing property records, we often see the same properties show up again and again."
Ms. Webb said she was renting in the Hill District when she saw an ad reading, "Why pay rent when you can own?" She called, and soon met with Dov Ratchkauskas, whose customers know him as "Dave," at the Universal Road house. She did not know it then, but until the day of her closing, title to the home remained with Wachovia Equity Services, which took it in foreclosure in 2007.
First Published February 6, 2011 12:11 am
