These Pennsylvania Agents Have Some Explaining to Do
It’s an Ethics renewal year, and we all know what that means! The National Association of REALTORSⓇ (NAR) requires its members to complete a minimum of 2.5 hours of instructional time centered on their Code of Ethics before 12/31/2021. If you aren’t caught up, The CE Shop can help with our engaging Ethics courses. If you’re rolling your eyes at the idea of an interesting Ethics course, we understand — so don’t take our word for it. Check out what our students think of our Ethics offerings here.
While it’s crucial to understand how to act ethically as a real estate agent, it’s equally important to highlight unethical behavior within the industry.
Last month, four real estate agents in Pennsylvania were indicted on fraud charges due to their alleged house-flipping schemes that took advantage of the U.S. Department of Housing and Urban Development (HUD). Let’s flip through the details of this case so that you can draw your own conclusions.
Four Agents’ Alleged Flipping Scheme
The first indictment was handed down by the U.S. District Court in October 2021 to John Reed Pirain, who has served on the board of the REALTOR® Association of Metropolitan Pittsburgh, and his sister, Renee Vasilko. Both are agents at NextHome PPM Realty and officers of Pirain Enterprises, a franchise of NextHome.
The second indictment was issued to real estate agents Richard Sunseri and Matthew Durbin.
All four agents are being charged with conspiracy to defraud the U.S. Department of Housing and Urban Development and making false statements on housing forms.
According to prosecutors, the real estate agents bought homes under a HUD foreclosure program by allegedly lying on the required forms to indicate that they intended to live in the foreclosed homes, but instead quickly flipped the homes for profit.
What Is HUD’s Foreclosure Program?
HUD’s Single-Family Property Disposition Program allows individuals to buy a house from HUD after a Federal Housing Administration loan foreclosure. The program is designed to offer families the opportunity to purchase these foreclosed properties at a more affordable rate.
Foreclosed homes that aren’t purchased through this type of program are typically made public for real estate investors to bid on with the intent to flip the property. But these four Pennsylvania agents allegedly tried to cut out other investors by providing false statements as though they were looking to live in the properties in question.
The Devil’s in the (Flipping) Details
The three-count indictment cites counts of conspiracy, fraud, and falsifying federal documents, per coverage from TribLive.
The first indictment states that Mr. Pirain and Mrs. Vasilko bought a house in 2018, renovated it, and resold it within a year. The proceeds went to KRP Development, which is owned by Pirain Enterprises.
The siblings bought the house for $67,800 and sold it for $189,900.
The second indictment states that Mr. Sunseri and Mr. Durbin purchased a home for $113,000 in 2016 and sold it for $200,000 less than a year later. Following this alleged fraud, the pair purchased a home in 2017 for $99,000 and sold it less than a year later for $235,000.
In reference to this case, Acting U.S. Attorney Stephen R. Kaufman released the following statement: “This unlawful abuse of the Single-Family Property Disposition program has two effects that frustrate the program’s purpose: First, it can allow real estate investors to potentially outbid families who otherwise would purchase the home and reside in the community. Second, it allows real estate investors to jump the line and bid on foreclosed homes before other investors are eligible.”
The accused real estate agents have been released on bond pending trial in federal court. According to Kaufman, each defendant faces up to five years in prison and a fine of up to $250,000 if they’re convicted on all counts.
Only time will tell if these agents are found guilty or not, but what do you think the verdict should be? Let us know in the comments down below!
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