The Herald Tribune just ran an article on the explosion in “flipping” houses exposing the latest statistics on the house flipping here in Sarasota.
Many of the houses in foreclosure were purchased in short sales from Banks and then flipped at huge profits within hours or days. Does that sound familiar? Are there inside deals where bank officials are letting the houses go at bargain prices only to be flipped at huge profits within weeks. This is really suspicious when no improvements or renovations are done. Are the same players involved in these deals? The FBI will surely be looking into this as well as Federal bank regulators. The banks may or may not be losing money on these deals. If it was a Freddie Mac loan and they let it go on a short sale, the bank may recover their full loan value and lose nothing. Who then gets defrauded? The taxpayers as usual. That is what gives rise to FBI jurisdiction.
Over the years, as a criminal lawyer, I have defended brokers, buyers, sellers and others involved in mortgage fraud. Fraud may be involved when the loan is taken out. This is the typical fraud on what they called “liar loans” where the buyer falsifies the loan application. This is mostly a thing of the past and the lenders have closed this loophole. The other way fraud can occur is in the foreclosure process where inside deals are made. These inside deals may involve kickbacks but often are done for the benefit of friends and relatives. Once again the flipping is causing an inflated market on homes and running up prices making it tough for the average home owner. What else is new?
It is only a matter of time before the bubble bursts again and only a matter of time for the FBI to once again become involved. If a deal sounds too good to be true, it generally is. It will be interesting to see if the Herald Tribune article prompts the Feds to take a look.
Flippers find a way
Breaking the Banks
How could anyone say no? With another election coming, our political hopefuls are all bragging about their tax plans.As a criminal tax lawyer and former IRS special agent, I can tell you that it is long overdue. Our tax system is in a state of dysfunction. The Internal Revenue Code is now so complex, that no one can fill out their own return without buying a computer program to decipher the myriad of rules and regulations. The time for meaningful tax reform is now. But it is not going to happen. The special interests have too strong of a lobby. The big corporations and the filthy rich get too many breaks. In America, for the last twenty years the rich have gotten richer and the poor, poorer.
An unfair tax system promotes cheating. Just like a totally unreasonable boss promotes embezzlement, an unreasonable government promotes tax evasion. The average citizen feels like he is being screwed by the IRS and feels like it justifies filing a false return, fudging on deductions or in some cases, simply not filing a tax return. Tax evasion is a symptom of a deeper underlying problem with our entire tax system. People cheat because they feel the system is not fair. Our tax system has become an income redistribution system. Most people feel the working class is taxed and the money is given to those that do not work, and at the top, the rich people pay nothing.
I personally feel that taxation is necessary. We have to have national defense. We have to have roads, flood control, education and health care. What we need is a fair tax and a simplified return. I once proposed that the tax return should be no more than two pages. On the front you declare your income, all of it, regardless of type. To that number the same tax rate is applied to everyone. Equal taxation, oh my god! On the back page you fill in how you want the money spent. You could have categories like “education”, “health care”, “national defense”, “Infrastructure” and “national emergencies”,
This would solve the other problem of how our elected officials spend the money. The budget would be real simple. The people decide how the money is spent when they file their returns, not some political hack. Most people would like to see how their money is really spent. Most people would not cheat on their income taxes or sales tax if there was meaningful reform. How about a national sales tax? How about a consumption tax? We have a screwed up system. You get taxed when you earn the money. You get taxed again is you don’t spend it and simply have it in a savings account. You get taxed again when you die and try and give it to your kids. Let’s make this simple. Tax it one time and tax it fairly.
For thirty years I have defended income tax cases in Federal Court and Sales tax cases in the State courts. The system is not fair. The best way to reduce tax evasion is to make the system fair and just. Let your elected officials know, if you can find them or reach them. It is time for a tax revolution in America. What we really have is “taxation without representation”