The Troy, Michigan, property at the center of a federal investigation just sold in a foreclosure auction for $21 million.
Boruch Drillman and Aron Puretz bought the vanilla office complex outside of Detroit for $42.7 million in 2020, but presented a fake purchase price to its lender for $70 million.
The lender used that inflated price to provide Drillman and his co-conspirators with a $45 million loan, a larger loan than they would otherwise have received. Riverside Abstract, a Lakewood, New Jersey-based title insurer, performed two closings, one for the real transaction and one for the inflated sales price.
Drillman pleaded guilty in December for his role in the mortgage fraud. Puretz recently pleaded guilty for mortgage fraud as well. More guilty pleas are expected to come.
Once Drillman pleaded guilty, the loan was sent to special servicing.
A receiver was appointed in February and the lender, Wells Fargo, acting as the trustee for the CMBS bondholders, submitted the winning bid to seize the property in a foreclosure sale in May, according to Trepp, a securitized mortgage data provider.
Back in 2020, the property had an appraised value of $61.7 million, but a re-appraisal in March put the property’s valuation at $22.4 million. The new appraisal is about half of the original loan made on the property.
The Department of Justice is pursuing cases throughout the country where property owners allegedly defrauded lenders or Freddie Mac and Fannie Mae. In many cases, the owners “flipped” the property to a related party so they were able to obtain a larger loan from the lender. In essence, the scheme allows property owners to buy properties without putting any equity in the deal.
Drillman did not return a request for comment.
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