Sarasota: Mortgage Fraud Capital of America?

Sarasota real estate broker Craig Adams is reportedly an informant and ringleader in one of the largest real estate fraud investigations in America. Photo by the Sarasota Herald-Tribune.

The man behind one of the largest real estate frauds in Florida has recently turned FBI informant and could implicate dozens of others in a massive property flipping scheme.

The role of Sarasota real estate broker Craig Adams was revealed by the Sarasota Herald-Tribune as part of their ongoing investigation of mortgage fraud.

WUSF News Director Scott Finn interviewed investigative reporter Matthew Doig about Adams, and his scheme involving at least $200 million in property value, according to court documents.

Adams has implicated at least 30 people so far in his schemes, Doig said. More are expected to come as the investigation continues.

“This is just a small piece of it. It really could put Sarasota on the map as the mortgage fraud capital of the country,” Doig said.

Adams was a local boy who made good buying and selling houses and condos in Sarasota’s red-hot housing market.

Doig described Adams as charismatic and good with numbers.

“He was able to rope a lot of people into this. A lot of people went willingly into this, because he promised riches, and a lot of time, delivered on it, as long as the property market was going well,” he said.

Adams allegedly used other people’s names -- associates, friends, and even his mother – to buy property from him at inflated prices. He would take the loan money and use it for himself and to continue buying more properties.

Doig said at the time, Adams allegedly had a joke: “We’re running low on money. Let’s go buy a house.”

But as the housing market tanked, the Ponzi scheme was revealed.

“I guess they didn’t see ahead to the end game. Clearly in 2005 they weren’t thinking, well, three years from now, when the housing market goes, what are we going to do?” Doig said.

This sort of deal wasn’t unique to Sarasota. The Herald-Tribune conducted a statewide analysis showing more than 50,000 similar deals involving quickly flipping property with high increases in price.

But despite warning signals, the FBI and Florida Department of Law Enforcement were not focused on the issue, Doig said.

Many of these properties have ended up in foreclosure. That didn’t just hurt the banks, Doig said – it hurt anyone who bought a house or took out a home equity loan based on inflated property values, pumped up in part by fraudulent deals.