Ex-loan officer to plead guilty in fraud scheme

September 27, 2010 

Blair Witkowski, a former mortgage loan officer at Carolina First Bank on Hilton Head Island, is scheduled to plead guilty today to one count of conspiracy to commit bank fraud in connection with a scheme that cost banks as much as $7 million dollars, according to U.S. Attorney Michael Rhett DeHart.

Prosecutors say Witkowski used inflated appraisals to fraudulently arrange residential mortgages for "straw purchasers" and then used the difference between the inflated mortgage proceeds and the actual value of the property to pay the straw purchasers, himself and others, according to court documents.

Most of the properties involved are in Beaufort County, DeHart said Friday.

Witkowski said he is sorry and wants to take responsibility for his actions.

"I'm really just disgusted with myself and what I've done to my family," he said.

He turned himself in about 21/2 years ago and has since cooperated with authorities, he said.

He said he doesn't understand why he made decisions that he regretted immediately.

"I thought I was helping some friends," Witkowski said. "In the end, it got out of hand."

Court documents state the alleged conspiracy cost Carolina First and other financial institutions $2.5 millionto $7 million. DeHart declined to comment when asked if others would be charged.

DeHart also declined to provide details about how the scheme worked beyond those in the documents.

The documents state Witkowski:

• Overstated the income, employment and assets of borrowers to deceive the bank into issuing mortgages.

• Manufactured fraudulent tax returns and financial statements to deceive the bank regarding the ability of borrowers to afford their mortgages.

• Falsely stated on loan applications that the properties would be the borrowers' primary residences, even though they had no intention of living there.

• Recruited and paid "straw purchasers."

• Used inflated appraisals to approve mortgages for the straw purchasers for an amount far greater than the property was worth.

"After the properties were 'flipped' and sold to straw purchasers at inflated prices, Witkowski would use the difference between the inflated mortgage proceeds and the actual value of the property to pay the straw purchasers, to make the mortgage payments for a limited period, and to pay himself and others kickbacks," the documents state.

Witkowski received more than $495,000 in kickbacks for the sale of eight homes, according to the documents. Upon conviction, he would have to forfeit any property he obtained as a result of the alleged conspiracy.

Witkowski faces a maximum of 30 years in prison, five years of supervised release and a $1 million fine.

He is unlikely to receive the full sentence, however, DeHart said.

If Witkowski pleads guilty as expected at 3 p.m. in Charleston, officials likely would spend four to five months preparing a report before he would be sentenced, DeHart said.

He will remain free on bond until sentenced, DeHart said.

Carolina First officials declined to comment.

The Island Packet is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service