Court rules negligent lending cannot excuse mortgage fraud

he was not granted a fair trial because the judge did not allow him to present as evidence specific examples of irresponsible lenders.

“Two wrongs do not make a right, and lenders’ negligence, or even intentional disregard, cannot excuse another’s criminal fraud,” Gould wrote.

Lindsey was allowed to introduce at trial broader evidence about the shady, unchecked nature of the mortgage industry at the time. He argued that the “Wild West” era of “no document” and “stated income” loans facilitated the fraud scheme, through which he used five straw buyers for nine home loans and eight properties. In total, he secured $3 million in mortgages.

Evidence at trial showed that Lindsey would live in or rent out the properties in the borrowers’ names. Once he turned a profit, he would stop making the mortgage payments. When the borrowers defaulted on their loans as a result, both they and the lenders suffered, the appeals court ruled.

The foreclosure crisis pummeled Las Vegas harder than almost anywhere else in the country. The 9th Circuit acknowledged that fact in its ruling, citing statistics that the city has the second-highest foreclosure rate in the nation.

Lindsey, who worked for Clear Mortgage Inc. from 2006 to 2007, is serving an 11-year prison sentence. He also was ordered to pay $2.2 million in restitution. Contact Jenny Wilson at jenwilson@reviewjournal.com or 702-384-8710. Follow @jennydwilson on Twitter.