Rip-Off Alert: Scammers target real estate flipping opportunities
LAS VEGAS (KSNV News3LV) — After watching home improvement shows, you might dream about flipping real estate and making profits with little to no work.
Before you pick up a hammer, you may want to be aware of the new rip-off scammers are using.
This story was no flip. It was a flop emotionally and financially for one homeowner who hoped to use his good credit to become a property manager.
Would you buy this house?
Derrick Suggs mistakenly did so after getting caught up in an elaborate mortgage fraud scam.
"I just started looking at myself and saying, 'you didn't do your due diligence, so now you have to figure your way out of this,'" said Suggs.
Suggs admits he made some rookie mistakes when he decided to try and make money by managing properties in Memphis. He and a friend thought they could buy houses, manage them, and share in the profit.
Initially, his contribution would only be his good credit and he wouldn't have to put any money up front.
"That business model made sense," said Suggs.
However, postal inspectors say Suggs and his friend were set up to fail once they met Larry Graham and Sylvia Cathey.
"She purchased properties and then she would resell them within a few months for a greatly increased profit," said U.S. Postal Inspector Susan Link.
How could she do this? Because of false information supplied by her appraiser partner, Larry Graham.
"He would inflate the values of the properties so that they would look more appealing to the banks to approve the loans," said Link.
Based on fraudulent documents, Suggs bought 12 properties at inflated prices that were basically uninhabitable.
"My name is pretty much on everything and I'm going to be the one left holding the bag," said Suggs.
Postal inspectors say the best advice for any and every investment is to do your research.
"Before you buy, go look at the house that you are supposed to be investing in," said Link. "If the investors would have gone and looked at the properties, they would have noticed some significant issues with what they were told vs. what they found."
Cathey was sentenced to more than four years in prison for her role in the scheme as well as 300 hours of community service and restitution to the victims.
