Can I be held accountable?

January 27, 2009 2:39 PM

Friend wants me to lie to mortgage company on his behalf. Legal ramifications for me or my company if I were to?

Friend and I started a business. He mismanaged and was forced out by the investors. Turns out he was in the middle of mortgaging his house, and now he wants me to lie to the mortgage company and say he is still employed with my company.

What are the legal ramifications of this were I to lie for him? I'm not planning on doing it anyway, but I want to have a more concrete reason than "because it's wrong" since I've tried that and he doesn't seem to grok that. Yes, I know that should be enough, and there's enough there for a separate askmefi post.

This is in NY if that matters.

posted by anonymous to law & government (15 comments total)

I don't know what happens if you get caught, but I do know that the reason the mortgage company cares is because they don't want him to take a loan out he can't pay back. He doesn't want to take a loan out that he can't pay back either, so fooling them probably isn't in anyone's interest.
posted by aubilenon at 2:48 PM on January 27 [1 favorite has favorites]

Because it's fraud?
posted by electroboy at 2:48 PM on January 27 [1 favorite has favorites]

It's mortgage fraud to misrepresent your situation on your mortgage application, and the FBI appears to be kinda interested in that sort of thing.

Your issuance of a statement misrepresenting him would probably get you in the same load of shit. I'm not a lawyer, and I'm not in NY. I'd hope FBI pamphlets on this stuff would deter the guy.
posted by fairytale of los angeles at 2:49 PM on January 27

You can google around with the phrase "aiding and abetting credit and loan application fraud" and see the number of months these people have served in prison. It's not just "wrong" it's a "felony" akin to aiding and abetting grand theft. Don't do it.
posted by mattbucher at 2:50 PM on January 27

A big fine and up to several years in prison for fraud. Losing the ability to get a job involving a background check, or any kind of credit yourself.
posted by grouse at 2:51 PM on January 27

Try "because it's fraud."

(Or, perhaps more dramatically, "because it's mortgage fraud.")

(Or, perhaps more technically, "conspiracy to commit fraud.")

Seriously, you could be prosecuted under state or federal law, and in the current climate especially, your friend is no friend by asking you to lie. "No" should really be enough.
posted by *s at 2:51 PM on January 27 [2 favorites has favorites]

Federal prison for the both of you. Enjoy!
posted by Damn That Television at 3:10 PM on January 27 [1 favorite has favorites]

Can't he hire you now and chalk you up as having been with him in a consulting capacity, without going into details?
posted by crapmatic at 3:16 PM on January 27

I see a lot of people have already pointed out the possible criminal ramifications, but a situation like this presents potential civil liability too. It is quite possible that a person who does what you propose could be sued for fraud in both their personal capacity and through their business; and this would be in addition to any criminal charges that might be brought. (And criminal charges would not need to be brought before a civil suit could be commenced.) A party who loses such a lawsuit would have judgments against themself and/or their business which could be enforced by means such as garnishment, seizure of assets, freezing of bank accounts, and/or liens against property (which can lead to forced sale of said property). Depending on the amount of the judgment, it could potentially ruin the person and their business. A party who wins such a lawsuit will still have some hefty legal bills to pay.

In short, this is a terrible idea.

(IAAL, IANYL, TINLA.)
posted by AV at 4:17 PM on January 27 [1 favorite has favorites]

I would also add that the mortgage company isn't going to just take your word for it that he is still employed by your company... they will want to see a recent paystub and last year's W2.
posted by lgandme0717 at 4:41 PM on January 27

F-R-A-U-D. This is a dude who "mismanaged" funds and was forced out by investors...that should give you a big clue on how this dude operates. If its sketchy, its probably wrong.
posted by hal_c_on at 5:51 PM on January 27 [2 favorites has favorites]

If the 'it's criminal' warnings don't do it for you consider this...

If you help him get a loan though dishonest means and he defaults then the bank would have a cause of action against you for the value of the loan. $$
posted by tiamat at 8:33 PM on January 27

OR ...
Or you could employ him again for a while.
Just so you're not lying.
posted by Xhris at 9:44 PM on January 27

Okay, I refi'd my house in 2006. One of the documents I signed stated that they had the right to investigate every piece of financial paper attached to the loan, including verifying that there were no falsified employment or fiduciary records. IIRC, part of this falls under Homeland Security, for whatever reason. I was told at that time that they don't ALWAYS investigate every document... but if your "friend" were to default on the loan, or make slow-pays, they WOULD investigate. Then, you are an accessory to falsifying documents.

That means you will be held equally and severally liable if he is investigated and it looks like it's a class E felony for you if you help him based on a cursory read of this page which details New York mortgage fraud cases.

Tell him you don't want to go to jail for 7 years and be a felon. That should be enough. Not a lawyer, not giving legal advice, just a homeowner who refi'd since the laws have changed and had to read a crap-ton of documents that now have my signature on'em. The one that caught my eye about this was on about page 200 out of 277 or so I signed at least 3 times on each page. There's no getting out of being held jointly responsible when you have a notarized document with your name, business address, etc. all over it, man. You'd have to produce pay stubs and crap with YOUR signature on them, possibly a year's worth, that sort of thing. It's not just "lie to somebody," it's a ton of legal documents.

I know everybody else said this already, but... Don't help stupid people get into debt they can't pay and put your ass on the line (and be potentially held legally liable) out of guilt or for any other reason... EVER EVER EVER EVER FUCKING EVER. Not a family member, not a best friend, not an employee, neighbor or anybody.

Stupid people need to make their own mistakes and whether or not they learn from them is not your problem, man.
posted by Unicorn on the cob at 10:45 PM on January 27 [1 favorite has favorites]

The Seattle Post-Intelligencer -- which may vanish within the next few weeks -- had an article on the lax enforcement of mortgage fraud laws during the housing boom. In fact, the FBI knew there was massive fraud taking place, but the agents once assigned to that "beat" had been re-purposed after 9/11 to international money laundering cases and the like.

Definitely during the NINA/NINJA era of 2004-2006 the banks were essentially handing out free money with barely more verification than a signature loan. These days, though, credit is only going to people who can prove their wherewithal to a tee. I don't know if your experience is leading you to believe they won't be checking up on you, but I would not count on that today.

In fact, more than lying, they may well follow up with requests for paystubs and other objective proof that you're not just "employing" him, but paying him. They may try calling his office number and asking for him with an expectation that he will be there, not just that you're a message service. They probably wouldn't go so far as to hire a private investigator as a disability claim or somethng similar would generate, but they will certainly do more checking than a year ago or two years ago.

And if they give him the money, and he defaults, they could sue you.

Let me put this another way. Your friend DOES NOT deserve a house. Your friend can get by just fine with something he can afford. Your friend has to adjust his expectations to live within his means. There is no way that your helping him buy this house he can't afford is actually helping him. In fact, you're almost guaranteeing that someday down the road he'll be giving it back to the bank. Do not be the friend that helps him get himself in trouble. This is called codependency. Think of your friend as an alcoholic wanting just one more drink. You're the guy who's taking his keys and putting the bottle down.
posted by dhartung at 8:31 AM on January 29