One of 2015's biggest news stories in Florida was the arrest, indictment and conviction of Glenn and Kathryn Jasen. If you click on these links, you'll discover that the Jasens' federal crime was failing to disclose to the buyers of their property that it had been affected by sinkholes. Indeed, the Jasens violated the Florida statute discussed in my last post through failing to disclose that they had collected money from their insurance company on a sinkhole claim. They were indicted under 18 U.S.C. s. 1343 - a federal wire fraud statute. The federal government proved that they intentionally participated in a scheme to defraud and used interstate wires in furtherance of the scheme. In other words, they intentionally defrauded their buyers regarding the condition of their property and received money from the buyers' federally-insured mortgage lender in doing so. The Jasens now face up to twenty years in a federal penitentiary.
The answer to the question posed by this post's title is that lying about your property's condition could be a federal crime if the buyers finance their purchase with a federally-insured mortgage loan. Even as someone who usually represents defrauded buyers in residential real estate misrepresentation cases, I must agree that this is a scary proposition.
However, as this article points out, the Jasen case was the first federal criminal conviction of its kind. The Jasens pocketed their insurance money, did nothing to address the sinkhole activity or resulting damage, and endangered the health and safety of a young family through failing to disclose any of this. The United States Attorney was essentially shamed into pursuing this case by the local news media. I'm not holding my breath on Milwaukee-area news stations shaming the United States Attorney for the Eastern District of Wisconsin into turning garden-variety leaky basement cases into federal wire fraud cases.
After all, many of the claims that we pursue ARE state crimes or statutory violations. Wis. Stat s. 943.20(1)(d) makes it a felony to obtain money through misrepresenting the condition of your property with the intent to deceive and defraud the buyer. Wis. Stat. s. 100.18 prohibits making any untrue, deceptive, or misleading representation with the intent to sell real estate. Yet, I am not aware of any district attorney prosecuting a seller in any of my cases even after a jury has found the seller liable.
Why not? For one, salaried government attorneys have no financial incentive to pursue these cases. More importantly, government attorneys expect to win every single case that they indict. While the Jasen case was a slam dunk, no government attorney would attempt to obtain a felony conviction in the more common residential real estate misrepresentation cases that are often colored in shades of gray. Were the sellers who owned their property for only three years aware that the basement or roof leaked? Were the sellers aware that the cracks in their living room were signs of a major structural defect? What if the sellers hired contractors to repair the defects affecting their property? What if the basement has not leaked since 2010? What if the buyers' home inspector alerted the buyer to the leakage? What if the buyers were advised to have the property evaluated by a structural engineer or a mold specialist? The United States Attorney would stay miles away from these fraud cases, but these are the cases that I litigate on a daily basis even though I know that I will lose some of them.
If you think that you were deceived in the purchase of your home, please do not contact the U.S. Marshals. Instead, you should email me at firstname.lastname@example.org.