Laguna Beach Appraiser Fraud Uncovered

A Laguna Beach father and son are facing over 20 counts of fraud, conspiracy and grand theft after having allegedly misled lending institutions with inflated property appraisal values, local authorities reported.

Sixty-year-old James Meritt Eaton and his son, 28-year-old Brian Chandler Eaton, may get up to 18 years in prison if the counts are proven. A warrant of arrest has been issued for Michael John Bell, 32, who was supposedly allied with the two men.

Authorities say that from June 2005 to August 2007, the three worked for Irvine-based residential appraisal company Landmark Equities Group. James Eaton was listed as the company’s owner, with his son and Bell acting as president and executive respectively.

During the period, the company is said to have overstated the values of residential properties submitted for appraisal. This allowed lenders to give higher loans and therefore make more profits, according to the District Attorney’s office.

The scheme was allegedly used on properties around California, Nevada and Arizona. The company also built branches in Dublin, California; Las Vegas, and Scottsdale, Arizona, presumably in order to speed up the processing.

Prosecutors also established business links between Landmark Equities and sub-prime lender Quick Loan Funding, including shared office space. The latter wrote about $4 billion worth of mortgage loans before falling into bankruptcy in 2007.

Between April and December 2006, the height of the sub-prime mortgage boom, the three men are said to have manually altered employee-entered appraisals by removing negative comments and changing values by anywhere from $4,000 to $40,000.

According to reports, Landmark Equities employees were required to disclose their passwords and other security information to the Eatons and Bell. One employee who refused to give her password was fired in August 2006.

James Eaton was arrested last December 15, and his son turned himself in three days later. The Orange County District Attorney’s Office is working with the Office of Real Estate Appraisers to locate Bell and conduct further investigations.

 

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