Bluffton man pleads guilty to conspiracy to commit bank fraud

Blair Witkowski, a former mortgage loan officer at Carolina First Bank on Hilton Head Island, pleaded guilty Monday to charges of conspiracy to commit bank fraud, according to court documents.

Prosecutors say Witkowski, who lives in Bluffton, 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.

Court documents state the alleged conspiracy cost Carolina First and other financial institutions $2.5 million to $7 million. Most of the properties involved are in Beaufort County, prosecutors have said.

Witkowski suggested his case could snare more people.

"I obviously did not do this alone or mastermind this entire scheme, but I am trying to take responsibility for my actions and my part, and I hope all the other people involved will do the same," Witkowski said by phone after the proceeding.

Officials likely will spend four to five months preparing a report before Witkowski will be sentenced, prosecutors have said. He was released on his own recognizance until then.

The alleged conspiracy occurred from about 2005 through 2008, according to Witkowski's plea agreement.

The agreement calls for Witkowski to make "full restitution," including restitution to "each and every identifiable victim who may have been harmed by his scheme."

Witkowski, 35, agreed to cooperate fully with the government in identifying all victims.

He also agreed "to be fully truthful and forthright with federal, state and local law enforcement agencies by providing full, complete and truthful information about all criminal activities about which he has knowledge."

Provided he cooperates, the government will move for a reduced sentence. Witkowski faces a maximum of 30 years in prison, five years of supervised release and a $1 million fine.

According to court documents, 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.