There’s an interesting new article out on the celebrated Massachusetts U.S. Bank v. Ibanez case that suggests that the defendant, Antonio Ibanez, was at the center of a property fraud ring. It’s not clear to me that there was anything illegal about Ibanez’s activities, but even if there were, I don’t think it much matters.
The article is by Zachary K. Kimball, who appears to currently be employed by McKinsey. The paper itself seems to have been written while Kimball was a law student at Harvard, but with its genesis when Kimball was a researcher at the Boston Fed. The contribution of the paper is to document the various property dealings of Antonio Ibanez, the defendant in US Bank v. Ibanez. Kimball did some impressive digging into the public property records to discover the various property dealings of Mr. Ibanez. He shows that the property at issue in Ibanez was one of several investment properties in Springfield Massachusetts that Ibanez (a resident of Brookline, Massachusetts, 80 miles away) and certain other parties were involved with. The various properties were all purchased out of previous foreclosures at low prices. They were then resold at substantially higher prices, with 90% of the purchase prices financed by bank loans. The various buyers and sellers in the transactions were all connected with each other in various. The implication, Kimball suggests, is that Ibanez might have been involved in some sort of a mortgage fraud ring, either unwittingly or deliberately. The “fraud” would have been as follows: a largely judgment-proof Ibanez (who had his Brookline property protected as a homestead) borrowed at 90% LTV from banks. The loans proceeds were then used to pay grossly inflated purchase prices for the properties. Why would Ibanez do this? Because he never intended to repay the loans and was receiving a kickback from the seller.