Former South Mountain officers to pay thousands in fraud settlementPosted: Updated:
PHOENIX - Arizona Attorney General Terry Goddard announced a nearly half a million dollar settlement in civil penalties stemming from a fraud case involving two police officers.
Goddard filed a lawsuit Nov. 24 on behalf of his office and the Arizona Department of Financial Institutions against Lee Brent Shaw of Gilbert and Mark Tallman of Chandler and their limited liability companies, Better Choice Investments, LLC and Better Solutions, LLC.
The suit alleged that they defrauded some 148 Arizonans of their homes.
Both Shaw and Tallman are also Phoenix police officers.
The suit alleged that between 2003 and 2007, Shaw and Tallman purchased sale-leaseback transactions from solicitors who had convinced homeowners to sell their homes for far less than market value with promises to save them from foreclosure.
Solicitors persuaded struggling homeowners to deed them their homes in return for assuming their monthly mortgage payments.
Neither the owner's mortgage lender or servicer was notified of the transfer of title.
After paperwork was signed the deal was turned over to Shaw and Tallman. In return they paid a commission to the solicitors.
The previous owners of the homes who were now renting had the option to repurchase the house within one year for a $15,000 fee if they met the condition of the sale-leaseback agreement.
Almost all of the renters were not able to repurchase their homes, so Shaw and Tallman sold or refinanced the home at full market value.
This earned them profits in the tens of thousands of dollars.
"The Attorney General's Office will continue to fight those profiting from mortgage foreclosure fraud at all stages of the process, whether it is the door-to-door solicitors or the investors who make the scheme possible," Goddard said.
In November 2009, Goddard resolved the case against the solicitors who found the properties and initiated the transactions, Richard Winer and his companies Taken Care of Investments, LLC, Homeowner Solutions, LLC, Bourbon Street Property Management, LLC, and Filibuster, LLC.
The lawsuit claims that the defendants acted in concert with Winer to violate numerous state laws, including the Arizona Consumer Fraud Act and the Arizona Debt Management Companies Act, by knowingly purchasing the fraudulently obtained properties.
In light of the settlement the Phoenix Police Department released the following statement:
"Today the Phoenix Police Department learned the Attorney General’s Office has reached a settlement agreement involving two police department employees personally owned real estate business. This matter has been under investigation for several years, however the scope and magnitude to which the involved employees participated has been kept confidential prior to this point. The Department is extremely concerned about the conduct of our employees, both on-duty, as well as off-duty conduct that may violate public trust. Effective immediately both Lieutenant’s Lee Shaw and Mark Tallman will be placed on administrative leave while our Professional Standards Bureau reviews the Investigation."
The officers worked in the South Mountain precinct until they were recently transferred. Both officers are currently on administrative leave.