ATLANTA -- A judge sentenced a former mortgage broker from Hoschton to 25 years in federal prison Tuesday for orchestrating a $23 million scheme that victimized more than 100 investors, authorities said.
U.S. District Judge Timothy C. Batten Sr. meted out the prison term after Edward William Farley, 47, admitted to a real estate investment "Ponzi" scheme and other unscrupulous activities, including a check-kiting scheme and bankruptcy fraud.
Farley must also pay $24 million in restitution, the judge ruled. He pleaded guilty to charges of bank fraud and conspiracy involving mortgage fraud in November. Two co-defendants have also been sentenced.
Authorities who announced Farley's sentencing Tuesday said his misdeeds were three-pronged.
Farley operated companies called "Creative Home Search," "Southern Land Partners," "Georgia Land Group," and "Global Mortgage" in Dunwoody and Norcross. He defrauded mortgage lenders through same-day "flips" of properties located in nearly every major Gwinnett city and others in metro Atlanta, authorities said.
Farley paid an appraiser to fraudulently inflate the value of each property by as much as $100,000, and recruited often unqualified investors and borrowers to purchase them from one of his companies, though he had yet to purchase the properties himself, authorities said.
He'd later buy the properties for up to $100,000 less than the amount of the inflated mortgage loans he had arranged for the buyers, causing losses of millions to lenders.
In the Ponzi scheme, Farley operated under the name "Alliance Resource Management," or ARM, in Lawrenceville, and duped real estate investors and lenders, causing losses in excess of $20 million. He made repayments to early victims from scheme proceeds generated from newer investors and lenders, authorities said.
Farley also fraudulently obtained $1.2 million from Washington Mutual Bank in a check-kiting scheme by transferring funds he did not have among several ARM bank accounts, and withdrawing scheme proceeds before the "insufficient funds" checks were returned, authorities said.
U.S. Attorney Sally Quillian Yates called Farley a "creative mortgage fraudster" who contributed to the blight of communities hard hit by the economic recession.
"Homeowners think someone new is moving in, their houses will keep their value, and their community is growing," Yates said in a release. "But just the opposite happens. Flipped houses turn into eyesores and the neighborhood quickly suffers."
Also on Tuesday, Batten sentenced co-defendant Walter Hermann, 41, of Dunwoody, to 2 years, 9 months in federal prison on a charge of bank fraud involving real estate appraisals he submitted in Farley's mortgage fraud scheme. Hermann was ordered to pay $2 million restitution.
The judge ruled Hermann's appraiser's license can't be reinstated during his prison sentence or a subsequent five years of supervised release.
A third defendant, real estate closing attorney Trent Edward Wright, 38, of Cumming, pleaded guilty to mail fraud and was sentenced in March to nearly 2 years in prison and $2.4 million restitution.