Housing scheme alleged

Residential home mortgages in Southern Nevada are exploding faster than bugs on the windshield of a speeding car.

Yet, at least one real estate entrepreneur has found a way to turn a profit in a down market.

Matt Marlon has been buying homes from desperate debtors and renting them out. The only problem is that Marlon doesn't keep his promise to save sellers from foreclosure because he often fails to make any payments, real estate attorney John Netzorg said.

After getting a tip from Netzorg, the Nevada secretary of state's office investigated and arrested Marlon, 64, on New Year's Eve while Marlon was meeting with two potential home sellers who were cooperating with investigators. The state agency charged Marlon with 32 felony counts. He is detained in the Clark County jail pending arraignment today.

Such schemes are called equity skimming because the buyer skims equity the homeowner has in the property. The homeowner loses the opportunity of living in the home free of rent while the foreclosure is being processed.

Equity skimmers frequently target homeowners who are struggling to avoid foreclosure. The skimmer promises to take over payments on the mortgage. Once the deed to the home is signed over, the skimmer usually rents out the house and never makes any payments, according to the National Association of Bunco Investigators.

Conditions are ripe in Nevada for that type of scam, given the desperation of numerous homeowners who are saddled with rapidly increasing adjustable mortgage payments while houses are becoming difficult to sell.

Many homeowners are struggling to sell their homes before the lender forecloses, taking not only their home but also leaving a black mark on their credit record.

"We're concerned that these initial charges represent just the tip of the iceberg," Secretary of State Ross Miller said Wednesday. "There are potentially many more victims of this type of scam out there, and we intend to aggressively investigate those cases."

Marlon is charged with 23 counts of offering a false document for recording, theft by false pretenses from victims over the age of 60 and forgery.

Netzorg said he has identified 90 cases of equity skimming involving Marlon dating back several years, even before the subprime mortgage crisis erupted. Marlon was using the name John Olson in dealings with home sellers. Marlon is the brother of Dr. Anthony Marlon, chairman and CEO of Sierra Health Services, but a spokesman for the secretary of state said the agency has no reason to believe that Dr. Marlon was involved in equity skimming.

Netzorg found a pattern of cases involving Matt Marlon while investigating for Miriam Aguilar, a client he represents free in a pro bono publico case, defined as one being handled for the public good.

The equity skimming cases involved numerous corporations, but they all listed the same address, 3993 Spring Mountain Road, No. 177, which is a box in a private mail service store.

Attorney Matthew Kreutzer said Matt Marlon bought the home of his client, Amanda Sunga, using a "sham corporation" called Mustangstreet, which also listed the mail drop office on Spring Mountain Road. The corporation was in default in May, two months before Mustangstreet purchased the home of Sunga, a 65-year-old home caregiver.

The 90 individuals who sold their houses are not the only ones hurt, Netzorg said. State and local governments also have been victimized because the county recorder has been waiving transfer fees based on false claims.

Under state law, the Clark County recorder's office would collect $1,200 on a $300,000 home, given the 0.4 percent combined state and local transfer tax rate, if the transaction tax were not waived.

In fact, Netzorg said the transactions wouldn't make economic sense to an equity skimmer if the person performing the fraud was required to pay the transfer tax.

If an equity skimmer paid the transfer fee, he would net little or nothing by renting the house for a few months before it was foreclosed and the tenants were evicted, Netzorg explained.

The recorder's office only needs to demand identification in the relatively small percentage of transactions that are not filed by title companies, Netzorg said, because title companies know they can be sued for filing fraudulent documents.

Dennis Freeman, a spokesman for the recorder's office, said the county agency cannot require identification for every filing because many papers are filed by runners. He was unable to cite any law or regulation that prohibited requiring identification.

"We all share the same concerns," Freeman said, "and we're working on a way to remedy the problem at hand."

In Aguilar's case, the first clue of problems to come was Marlon's failure to negotiate the price.

Despite the glut of homes for sale in the area, Marlon didn't bargain with her on the $387,000 price she wanted for the house at 5729 Leonidas St. in North Las Vegas.

"He was an impatient guy. He goes straight to the point," the 27-year-old single mother said. "He said he was in the business. He was a broker."

Aguilar, a bartender who saved for 10 years to get her dream house, was relieved. She was current with her first and second mortgage payments, but it was becoming increasingly difficult to make payments, which started out at $2,800 a month but had ratcheted up to $3,500.

Marlon said he wanted to buy the house for a brother-in-law. He gave her $1,500 in cash and promised to record the paperwork. She didn't think she needed to worry about foreclosure anymore because Marlon said he would make the mortgage payments.

But since the Aug. 28 transaction, Marlon has not made a single payment on her house. But she has met a family that claims to be paying $650 a month in rent for her former home.

"My credit is going to the trash because of his actions," Aguilar said. "I wanted to get another house."

Aguilar has bitter memories of her encounter with Marlon. She remembers her son's reluctance to lose his room, which he had made look like a jungle.

Marlon said, "Don't worry little man. You're going to be OK. You're going to have a better room," according to Aguilar. She and her son moved into a rental house after the sale.

A friend of hers, Javier Limon, 40, is going through a similar experience. Limon in fact, recommended she contact Marlon after he sold his home to Marlon, Aguilar said.

Limon said he lost his job as a food server and was going through a divorce when he met Marlon in July. Limon was six months behind on mortgage payments on his house at 5112 First Sun St. in North Las Vegas.

Marlon visited Limon at the house and wasted no time in making a decision. "OK, I'll take the house." Marlon said, according to Limon.

Marlon promised to make his mortgage payment for the month and pay the late fees, Limon said.

"I was trying to avoid foreclosure. So my credit wouldn't be bad," Limon said. "My credit has always been intact to this point in my life."

Limon said he was trying to make child support payments to his ex-wife for three sons and a daughter.

"I'm in dire straits here. I need a couple of thousand," Limon told Marlon. Marlon paid him $1,000 in cash. Limon signed the sales documents in early August, and Marlon took possession three days later.

"I don't appreciate it at all," Limon said. "I tried to do the best to hold onto the house."

Sunga became delinquent on home loan payments after going to the aid of an ill sister, according to a pending lawsuit.

Marlon paid her $200 for the house at 2146 Savannah River St. in Henderson, according to Kreutzer and the court papers. Marlon promised to make payments and enable her to avoid foreclosure, but his company didn't make payments on $295,000 in mortgages made by Countrywide Home Loans to Sunga, according to a lawsuit filed in Clark County District Court.

"Now, left with no property to use as a negotiating tool, (Sunga) faces potential financial ruin, because (Marlon) did not fulfill its obligations," Kreutzer wrote in court papers on behalf of his pro bono client. Kreutzer said Marlon should be sued, rather than his client, if Countrywide sells the house for less than the amount owed and seeks a judgment for the deficiency or difference.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or (702) 383-0420.