April 15, 2019
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 12 C 04693 -
Matthew F. Kennelly, Judge.
Wood, Chief Judge, and Bauer and St. Eve, Circuit Judges.
Third Mortgage Company sued several individuals and
businesses after it fell victim to a mortgage fraud scheme.
At issue in this appeal is the personal liability of Ira
Kaufman. Kaufman participated in numerous fraudulent closings
as the attorney for the seller. Kaufman is also the owner of
Traditional Title Company, LLC, which was the title company
used for several closings that facilitated the fraud. For the
reasons that follow, the judgment against Kaufman is
mortgage fraud scheme at issue began with Yaseen Ahmed, the
president of High Point Developers, Inc. Ahmed also co-owned
4725 S. Michigan, LLC, which owned a condominium building
located at 4725 S. Michigan Avenue. Ahmed obtained the
proceeds of 35 mortgage loans through false statements and
omissions made in loan applications and supporting
documentation by purported buyers. Ahmed and five others
pleaded guilty to criminal offenses related to the scheme.
and another man, Eliot Higueros, recruited individuals to
pose as buyers for units at 4725 S. Michigan Avenue. These
straw buyers submitted fraudulent loan applications to
various lenders, including Fifth Third. The participants in
the scheme split the loan proceeds when disbursed; no
payments were ever made on the loans.
different borrowers purchased 26 properties at 4725 S.
Michigan Avenue. 4725 S. Michigan, LLC was the seller and
Kaufman was its attorney for each of the closings. The
closings were conducted by Traditional Title, and took place
at Kaufman's law office. The loan applications contained
misrepresen- tations about the buyers' employment status,
assets, and income. The applications also falsely indicated
the units were going to be the primary residences of the
buyers, despite each buyer purchasing multiple units in the
received closing instructions from Fifth Third that required
it to notify the bank immediately of any misrepresentations
that would influence the bank's decision to make the
loan. The instructions also required Traditional Title to
suspend the transaction and notify Fifth Third if "the
loan is owner occupied and the closing agent has knowledge
that the borrower does not intend to occupy the
property." Kaufman failed to abide by either requirement
by concealing the buyers' misrepresentations from Fifth
Third and instructing closing agents to complete closings
even when buyers were purchasing multiple properties.
then extended the scheme to units in other buildings. Fifth
Third was the lender for four of these properties. Kaufman
participated in the transactions as the attorney for the
seller; Traditional Title did not participate in these
closings.These properties include: unit 5 at 6621 S.
Ingleside Avenue; unit 2 at 7919 S. Phillips Avenue; unit 1
at 5416 S. Michigan Avenue; and unit G at 5416 S. Michigan.
testified that he was not aware of the mortgage fraud scheme.
He claimed that he reviewed the numbers for the sales but
"didn't really look at the people." He also
said that it was not his job as the seller's attorney to
review the closing instructions or the buyer's loan
application. Ahmed testified that Kaufman knew the buyers
were part of the scheme. Two closing agents, Julio Martinez
and Michael Lee, testified that they informed Kaufman about
the misrepresentations in the loan applications. Kaufman
testified that they never gave him that information.
Third filed seven claims of fraud against Kaufman, based on
his knowledge that the individuals had been recruited as
straw buyers, and that they made false representations in
their loan applications. After a bench trial, the district
court entered judgment for Fifth Third against Kaufman.