Real Estate Fraud in Colorado

In Colorado, real estate fraud involves engaging in wrongful acts using property for financial gain. Real estate fraud could include mortgage fraud, credit skimming, foreclosure fraud, credit fraud, deed forgery, and other forms of fraud involving property. Real estate fraud charges in Colorado include misdemeanor and felony offenses, depending on the nature of the offense. In this article, our Colorado criminal defense lawyers will address:

Realestate
In Colorado, real estate fraud involves engaging in wrongful acts using property for financial gain.

1. What is real estate fraud?

Real estate fraud in Colorado includes criminal fraud in connection with real estate transactions. This includes mortgage fraud, foreclosure fraud, rental property fraud, deed forgery, and commercial property fraud. Some types of fraud are covered by specific Colorado statutes. However, most real estate fraud falls under Colorado's laws against theft. Under C.R.S. 18-4-401, a person commits theft when they knowingly obtain or exercise control over anything of value without authorization, or by deception.

2. What are the penalties for real estate fraud?

The penalties for real estate fraud depend on the value of property, extent of the fraud, the victim, the defendant's criminal history, and the type of fraud involved. Theft of property valued at less than $2,000 is a misdemeanor. However, most real estate fraud is a felony because it generally involves higher amounts. Under C.R.S. 18-4-401, the class of the crime is determined in part by the value of theft involved.

Value of Real Estate Fraud

Class of Criminal Offense

Penalties

$2,000 or more but less than $5,000

Class 6 Felony

12 to 18 months in prison and a fine of up to $100,000

$5,000 or more but less than $20,000

Class 5 Felony

1 to 3 years in prison and a fine of up to $100,000

$20,000 or more but less than $100,000

Class 4 Felony

2 to 6 years in prison and a fine of up to $500,000

$100,000 or more but less than $1 million

Class 3 Felony

4 to 12 years in prison and a fine of up to $750,000

$1 million or more

Class 2 Felony

8 to 24 years in prison and a fine of up to $1,000,000


In addition to prison, there is also a mandatory parole period for felony theft offenses. Mandatory parole ranges from 1 to 5 years for felony theft.

If an individual commits multiple fraud or theft offenses within a period of 6 months, the value of the thefts can be combined and charged as a single offense.

If the victim is an “at-risk” individual under Colorado law, the defendant may face enhanced sentencing. At-risk individuals include people with a disability and elders who are age 70 or older. Real estate theft of $500 or more from an at-risk victim is a class 3 felony, with penalties including up to 12 years in prison and a fine of up to $750,000.1

3. What are common types of Colorado real estate fraud?

Real estate fraud can occur at any point during a real estate transaction. This includes real estate financing, appraisals, rental income, transfer, and property sales. Common types of real estate fraud in Colorado include:

  • Deed Forgery
  • Dual Contract Loans
  • Creditor Fraud
  • Equity Skimming
  • Financial Statement Fraud
  • Foreclosure Fraud
  • Mortgage Fraud

3.1 Deed Forgery

In Colorado, a person commits forgery if they falsely make, complete, alter, or utter a written document with the intent to defraud. This includes forging a deed to property to make it appear that property is owned by the forger or represents a fraudulent transfer. Under C.R.S. 18-5-102, forgery is a class 5 felony. The penalties for deed forgery include 1 to 3 years in prison, a fine of up to $100,000, and mandatory parole for 2 years.

3.2 Dual Contract Loans

Dual contract loan fraud involves using multiple contracts to defraud the lending company. With a dual contract, the buyer and seller may agree to certain terms for the transaction then create a second, fraudulent contract to submit to the lender. This could involve over representing the amount of the sale to get a larger loan, or underrepresenting the amount of the sale to qualify for a Federal Housing Administration (FHA) loan.

Under C.R.S. 18-5-208, it is a class 3 misdemeanor to make, issue, deliver, or receive dual contracts for the purchase or sale of real property. The penalties for using dual contracts includes up to 6 months in jail and a fine of up to $750. However, if the fraud involved a federal housing loan, dual contract fraud may be a federal criminal offense.

3.3 Creditor Fraud

In Colorado, a person who defeats, impairs, or renders worthless any security interest by selling, assigning, transferring, or destroying any collateral subject to a security interest with the intent to defraud. Selling a piece of property without telling the buyer that a creditor has a security interest in the property may be creditor fraud.

Under C.R.S. 18-5-206, the penalties for creditor fraud depend on the value of the collateral involved in the fraud.

Value of Collateral

Class of Criminal Charge

Penalties

$2,000 or more but less than $5,000

Class 6 Felony

12 to 18 months in prison and a fine of up to $100,000

$5,000 or more but less than $20,000

Class 5 Felony

1 to 3 years in prison and a fine of up to $100,000

$20,000 or more but less than $100,000

Class 4 Felony

2 to 6 years in prison and a fine of up to $500,000

$100,000 or more but less than $1 million

Class 3 Felony

4 to 12 years in prison and a fine of up to $750,000

$1 million or more

Class 2 Felony

8 to 24 years in prison and a fine of up to $1,000,000

3.4 Equity Skimming

In Colorado, equity skimming involves a person who obtains a title to property, refinances the home, and takes the equity out of the property. This may involve using a straw buyer or defrauding the homeowner to obtain the title to the property. Once the individual has the title to the property, failing to apply rent towards the loan or collecting rent after foreclosure may be considered equity skimming.

Under C.R.S. 18-5-802, equity skimming is a class 5 felony. The penalties for deed forgery include 1 to 3 years in prison, a fine of up to $100,000, and mandatory parole for 2 years.

3.5 Financial Statement Fraud

In Colorado, a person commits financial statement fraud if, with the intent to defraud, they falsely make a written instrument which describes a false financial condition or ability to pay. Under C.R.S. 18-5-209, financial statement fraud is a class 2 misdemeanor. The penalties for a class 2 misdemeanor charge for financial statement fraud include 3 to 12 months in jail and a fine of up to $1,000.

Financial statement fraud includes issuing a false financial statement for the purpose of obtaining a loan or other financial device. Issuing a false financial statement with the intent to defraud is a class 1 misdemeanor. The penalties for class 1 misdemeanor financial statement fraud include 6 to 18 months in jail and a fine of up to $5,000.

3.6 Mortgage Fraud

Mortgage fraud is a type of criminal fraud in Colorado involving the mortgage lending process. Under C.R.S. 18-4-401(9), the court may impose additional penalties when theft involves mortgage fraud.

If a person is convicted of or pleads guilty to theft by deception involved in the mortgage lending process, they shall be fined a minimum amount of the financial harm resulting from the theft. A not guilty plea shall not be accepted by the court unless it includes an order of restitution to the victims of mortgage fraud.2

The mortgage lending process is the process through which a person seeks or obtains a residential mortgage loan, including solicitation, application, or origination; negotiation of terms; third-party provider services; underwriting; signing and closing; funding the loan; and perfecting and releasing the mortgage.3

The penalties for mortgage fraud are the same as the penalties for theft. The criminal charges depend on the value of the fraud involved. Fraud valued at $1 million or more is a class 2 felony, with penalties including 8 to 24 years in prison and a fine of up to $1 million, in addition to paying restitution to the victim.

4. Related Offenses

Real estate fraud may involve other related offenses. This includes identity theft charges when another person's information was used to get a loan or purchase property. It may also involve insurance fraud in attempting to defraud the insurance company with a claim for a real property loss.

4.1 Identity Theft C.R.S. 18-5-902

In Colorado, it is a criminal offense to use another person's personal or financial identifying information to obtain anything of value. This includes using another person's identity in a real estate transaction to commit real estate fraud. Identity theft is a class 4 felony in Colorado. Penalties for identity theft include 2 to 6 years in prison and a fine of up to $500,000.

4.2 Insurance Fraud C.R.S. 18-5-211

Insurance fraud involves presenting a false insurance claim for a loss, claiming a loss for damage that occurred prior to coverage, intentionally damaging covered property, or presenting a false statement for an insurance claim. This includes title insurance, homeowners insurance, or other types of property insurance fraud. Insurance fraud is a class 5 felony. The penalties for insurance fraud include up to 3 years in prison and a fine of up to $100,000.

Call us for help...

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If you have been accused of fraud related to a real estate transaction, please contact us at Colorado Legal Defense Group. Our caring Colorado defense attorneys have many years of experience representing clients who have been charged with criminal fraud offenses. We are among the best Colorado criminal defense attorneys to call. Contact us today for a free consultation by phone or in-person or in our Denver law office.


Legal References

  1. C.R.S. 18-6.5-102
  2. C.R.S. 18-4-401(9)
  3. C.R.S. 18-4-401(9)(e)(I)

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