ATLANTA -- A Hoschton man, formerly a mortgage broker, is facing up to 60 years in federal prison and hefty fines and restitution after pleading guilty to several scams.
Edward William Farley, 47, entered his plea Thursday, just three weeks after being charged with bank fraud and conspiracy.
Sentencing is scheduled for Feb. 3 before United States District Judge Timothy Batten.
According to investigators, Farley operated through several groups in Dunwoody and Norcross, defrauding mortgage lenders by "flipping" properties in metro Atlanta, including Buford, Dacula, Grayson, Lawrenceville, Norcross, Snellville and Suwanee.
After paying appraisers to inflate property values by up to $100,000, reports said, Farley recruited often unqualified investors to buy them from one of his companies. The associated loan applications, authorities said, were often supported by false income, employment, bank deposits and statements, W-2s and leases.
Farley, however, would not buy the properties himself, according to authorities, until the money came through on the fraudulently obtained "second" purchase, when he could pay up to $100,000 less than the inflated mortgage loans he arranged. This caused lenders to lose millions of dollars, authorities said.
Then, to conceal his income from past victims, reports said, Farley began operating under "Alliance Resource management" in Lawrenceville, claiming to purchase primarily residential properties in the process of being renovated and sold for a profit. The problem is that the "company" lacked the equity and income to do so.
He led investors, lenders and banks to believe their loans and investments were fully secured, providing promissory notes guaranteeing interest rates of 14 to 60 percent.
The same properties "fully secured" multiple investors, according to authorities, resulting in losses exceeding $20 million. Victim repayments made were proceeds from new investors and lenders, constituting a Ponzi scheme. Investigators said there were more than 150 victims.
Finally, authorities said Farley transferred money he didn't have among several Alliance Resource Management bank accounts, withdrawing proceeds before insufficient checks came back. He received $1.2 million from Washington Mutual Bank in this check-kiting scheme, then used $400,000 of investor's money to address the problem.
Farley diverted Alliance Resource Management assets to himself after filing bankruptcy, authorities said, and hid that from Bankruptcy Court and company creditors.