In Nevada, straw buyer schemes typically involve a person (the “straw”) taking out a mortgage for someone else who does not qualify for the mortgage. This often leads to the mortgage going unpaid and the property being foreclosed upon.
Penalties for participating in a straw buyer scheme can amount to decades in prison and millions in fines. Though it may be possible to get these charges lessened or dismissed completely.
In this article, our Las Vegas criminal defense attorneys discuss:
1. What is a straw buyer scheme in Nevada?
Straw buyer schemes are a type of Nevada mortgage/real estate fraud where one person acts as the “straw” to facilitate a property transaction that might not otherwise go through.
Example: Adam is a real estate agent in Henderson, Nevada. He pays $5,000 to Bill, who has good credit, to take out a mortgage loan on a house for Charles, who has bad credit.
Adam gets a handsome commission, which he splits with Charles. Bill believes he is doing good by acting as a “straw buyer” because it helped Charles get a home. However, Charles never makes mortgage payments, and the financial institution forecloses on the house.
Here, Adam, Bill, and Charles could all face criminal charges for fraud. Even Bill, who meant no harm, could be prosecuted because he intentionally used his good credit to secure a mortgage for someone with bad credit.
Straw buyer schemes typically involve one or more of the following “players”:
- A real estate broker
- A mortgage broker
- A person who wants to sell their home
- A person who wants to buy the home but lacks the credit to be a mortgage borrower
- A “straw buyer” who usually has good credit and buys the home for the wannabe homeowner with bad credit
- A notary who notarizes all the mortgage lender paperwork
- An appraiser
- A loan officer
Straw buyer schemes can operate in a variety of ways. For instance, sometimes all of the players are in on the fraud, or sometimes just one of them is perpetrating the mortgage fraud scheme. Or sometimes the real estate broker fabricates a fictitious straw buyer to carry out the fraud.1
2. What are the defenses?
Our criminal defense team has served clients facing straw buyer-related charges through the height of the housing bubble and the depths of the recession. In every case, the most effective strategy is to show that you lacked an intent to defraud.
It is no crime to make an honest mistake in a real estate transaction or to be tricked into providing false information on a loan application. We would compile all the evidence available such as:
- financial records, and
- recorded communications
to show that you believed that everything you said and did was truthful and lawful.
Unless the D.A. can produce sufficient evidence to prove beyond a reasonable doubt that you intentionally tried to perpetrate a fraud, the charges should be dropped.
Another potential defense is that the police department committed misconduct in your case, such as by conducting an unlawful search and seizure. If the judge grants our request to suppress all the evidence that the police obtained illegally, the prosecutor may be left with too weak a case to continue.
3. Can I go to prison?
If you are arrested for a straw buyer scheme, you could face charges in federal court, Nevada state court, or both.
Typical federal charges that the U.S. Attorney’s Office brings in straw buyer scheme cases are:
These carry up to 30 years in prison and/or million-dollar fines, depending on the case.2
Typical state charges that the Nevada Attorney General brings in straw buyer scheme cases are:
These are category C felonies carrying one to 10 years in Nevada State Prison and/or up to $10,000 in fines. Though if you are suspected of a “pattern of fraud“, prosecutors will instead bring category B felony charges carrying:
- 3 – 20 years in prison, and/or
- up to $50,000 in fines.3
In addition to criminal penalties, you could face civil suits from the victims. If you are a real estate professional, you could also be subject to disciplinary measures such as the suspension or revocation of your real estate license.
This is all why having experienced legal counsel is so vital. We may be able to get your charges reduced or dismissed so you stay out of prison and keep your livelihood.
- Fight Fraud Task Force – Nevada Consumer Affairs
- Scams and Safety – FBI
- District of Nevada – Department of Justice
In California? Go to our page on California straw buyer laws.
- For example: Briana Erickson, Henderson man sentenced to prison in $9M mortgage fraud scheme, Las Vegas Review-Journal (April 22, 2021); Jeff German, HOA scheme straw buyer, attorney say they feared for lives, Las Vegas Review-Journal (March 4, 2015); Jeff German, Las Vegas real estate agent sentenced in mortgage fraud case, Las Vegas Review-Journal (December 19, 2012); Nevada Mortgage Fraud Task Force Announces Results of “Operation Stolen Dreams” Targeting Mortgage Fraudsters, FBI (June 17, 2010).
- 18 U.S.C. 1344. 18 U.S.C. 1343. 18 U.S.C. 1341. See also,
- NRS 205.372. NRS 645F.400. See also, Ferm v. State (Nevada Court of Appeals, 2018) 134 Nev. 936.