Mortgage

Home flipper pleads responsible to fraud of greater than $three million

A Minneapolis operator of several house-flipping businesses pleaded guilty to defrauding investors out of almost $3.2 million in a case involving phony letters, material misrepresentation and misappropriation of funds.

Suzanne Grffiths, who now resides in Arizona, found her victims at national real-estate investment training and coaching programs. Active in house-flipping, or fix-and-flip, circles, Griffiths approached individuals she met at events to propose coinvestment opportunities in homes obtained through her businesses, Level 5 Properties, 45 North Investment Properties and Our Town Properties. In communications with potential partners, she made false guarantees of repayment for their investments and frequently misrepresented the status of improvement projects. 

Fix-and-flip buyers purchase homes in need of repairs to resell after renovations are made. The house-flipping trend has been popularized over the past two decades by reality-television programs, such as “Flip or Flop” and “Property Brothers.”

In a 2018 example cited by the U.S. Attorney’s Office, District of Minnesota, Griffiths received a $100,000 investment for a property renovation, promising the investor that they would hold second position on the home’s mortgage and that necessary documentation would be sent to officials. But Griffiths took the funds and never filed necessary paperwork.

In a separate instance in 2020, Griffiths convinced an individual to invest $70,000 in a home purchase. Months later, she returned to the investor to solicit additional renovation funds for the property, providing documentation on title company letterhead that detailed the potential cash returns. Upon contacting the title company, the investor learned Griffiths had altered information in the letter, omitting pre-existing encumbrances made on the home. The investor lost the entire amount.

Griffiths pleaded guilty this week to one count of wire fraud and one count of money laundering. A sentencing date has not yet been set. The Internal Revenue Service’s criminal investigations department and the United States Postal Inspection Service led investigations into the charges.

Real estate data intelligence provider Attom reported that 323,465 single-family homes or condos were flipped last year, the highest number since 2006. But that number represented a proportional decrease relative to all sales in the country, falling to 5.5% in 2021 from 5.8% in 2020 and 6.1% in 2019. The median price of homes purchased by house flippers last year was $210,000 and typically earned a gross profit of $65,000, taking an average of 153 days to complete, Attom found.

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