by Kim Powell
MIDLAND - Roughly 100 pages of written arguments were sent between the US District Court and the four defendants who are accused of a massive mortgage fraud scheme that involved about 800 properties and $45 million in bank loans.
Investigators say that between March 2003 and August 2011 that the four came up with a "same-day property" flip scheme, where Stephen Hilliard and Michael Cowan would buy property used for one of their investment companies, and then sell the same property at a higher price to another investment company.
The two would receive mortgage loans by submitting fake and misleading documents to the bank. As for Cynthia Hirsch and Berta McFaddin, they are accused of getting the papers needed to get the properties and bank loans.
Now, the court has been trying to get several categories of evidence excluded from the case as they could mislead the jury.
According to court documents, the defendants have argued that, "evidence that they have repaid many of the fraudulently obtained loans and thus, as a consequence, the banks have been or are being made whole and will not suffer any loss."
The court fears that could lead to the jury believing that there is no harm, no foul. Even though the four paid back the banks who fell victim to this scheme, a crime was still committed.
Cowan argues that, "the very fact that the banks repaid and that the defendants had demonstrated a history of repayment, might provide a background context that would make any later misstatement (assuming one occurred) immaterial."
Evidence that suggests the banks are partially responsible for not catching the fraud as it happened will also be prohibited from the case, as blaming the victim is not a defense in a mortgage fraud case.
However, the court will allow evidence that the appraisals for the homes were legitimate.