Former Realtor convicted in homeowner scams

INDIANAPOLIS — A former Indianapolis Realtor accused of defrauding financially strapped homeowners has been found guilty of more than 20 crimes, including corrupt business influence and several counts of theft and forgery.

A jury convicted David Garden, 58, Wednesday night after a three-day jury trial in Marion Superior Court.

Prosecutors said Garden victimized several Indianapolis homeowners who were facing foreclosure and other financial difficulties. The Indianapolis man persuaded unsuspecting homeowners to sign over their property titles to him, leaving them holding the mortgage on houses they no longer owned. Garden advised them to move out, telling them he would arrange a short sale with their bank. Instead, he rented their homes and kept the money for himself, prosecutors said.

In some cases, Garden convinced homeowners that filing for bankruptcy was in their best interest. But doing so only removed their properties from sheriff's sales and allowed Garden to keep tenants in the homes and collect payments.

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In one instance, Garden lived in one property for more than a year without the owner's knowledge.

Some of the properties that Garden rented out were in deplorable condition, prosecutors said. In a previous interview with IndyStar, one tenant who was paying Garden $650 a month in rent and thought she would own the house in two years as part of a rent-to-own agreement said constant flooding caused the wooden floor to rot.

Garden operated under several business names, including Star Homes Inc., Garden Homes Realty, Christian Home Realty and Five Star Realty, according to the Marion County prosecutor's office.

Garden was arrested after a two-year investigation by the prosecutor's office and the Indianapolis Metropolitan Police Department. The Indiana attorney general's office had received 45 consumer complaints against Garden.

Garden is scheduled for a sentencing hearing May 25.

Experts say they've seen real estate scams come and go, and the way people are scammed tends to vary.

The common theme is the involvement of homes in or nearing foreclosure. Steve Hofer, a consumer lawyer and a member of the National Association of Consumer Advocates, said the "home apocalypse"a few years ago — when a lot of people were behind on their mortgages and desperate — was the last time he saw an increase in real estate scams.

"It's really a predatory scheme. The person kind of identifies the area of weakness of the consumer and hangs on that until they can be sure of the kill," Hofer said. "What they're looking for is people who are willing to give up their houses for nothing but a promise."

According to a recent survey by the Washington, D.C.-based Lawyers' Committee for Civil Rights Under Law, about 55% of homeowners in Indiana said they have dealt with scammers who either asked them to stop making loan payments or to sign over property titles to them.

Andrew Pizor, an attorney for the Washington, D.C.-based National Consumer Law Center, said while real estate scams are not uncommon, he has not heard of a scam that involves renting homes without the homeowners' knowledge or consent.

"That's kind of a twist," Pizor said. "Usually, what they do is resell it or get another mortgage on the house, pocket the equity and disappear."

Hofer said high foreclosure rates create an environment conducive for real estate scams. That's a concern in Indiana.

According to a RealtyTrac, one in every 823 Indiana homes were foreclosed in May. Indianapolis' foreclosure rate is one in every 617 homes — nearly twice the national average of one in 1,199.

Experts advise homeowners to not act rashly.

Don't feel you need to move out right away, Hofer said. Homeowners have the right to stay in their homes until they are sold. And, don't immediately trust anyone who offers to help you avoid foreclosure.

"Pretty much any individual or company that says they can help you with mortgage problems should be taken with a grain of salt," Pizor said, "Don't trust ads unless they're run by a government agency. Billboard signs, radio ads, they're usually scams."

Hofer agreed, saying homeowners shouldn't trust intermediaries. Those usually hint fraud, he said, and are often unnecessary in short sale transactions.

Homeowners also can contact the local office of the U.S. Department of Housing and Urban Development, which has trained counselors. Some private attorneys and legal aid agencies offer counseling for free or at a low cost, Pizor said.

Follow Kristine Guerra on Twitter: @kristine_guerra