Man who bought HOA-foreclosed homes faces federal fraud charges
Posted August 2, 2017 2:18 p.m. EDT
Updated August 2, 2017 7:17 p.m. EDT
Raleigh, N.C. — A Wake Forest man made more than $1 million by swooping down on homes in foreclosure and using an intricate shell game involving fraud, forgery and offshore companies, according to federal authorities.
Xavier Milton Earquhart faces 14 counts of bank fraud, five counts of engaging in monetary transactions involving criminally derived property and one count of aggravated identity theft. He is being held without bond in the Harnett County jail.
Earquhart was arrested in Wake Forest in June 2014 when residents on Coral Bell Drive saw him drilling out the locks of a nearby house and called police. Police eventually dropped all charges against him when he showed that he had purchased the title of the $300,000-plus home, which the Heritage Wake Forest Homeowners Association had foreclosed on for nonpayment of dues, for $3,800.
"Everything that occurred with this house was lawful," Earquhart told WRAL News at the time. "To say the least, it was very traumatizing."
The arrest kick-started a federal investigation into Earquhart's real estate transactions that culminated in a recent indictment.
Authorities allege Earquhart illegally obtained seven properties in Wake Forest, Cary, Holly Springs and Charlotte through HOA foreclosures, using aliases to bid on properties and funneling money through holding companies. He would produce fraudulent documents showing the mortgages had been paid off and that he had clean titles to the properties and would liquidate the holding companies as soon as the properties had been resold, according to the indictment.
"He received money that he was not entitled to, so I would definitely call that stealing," said James Oliver, a real estate attorney with Hatch Little & Bunn in Raleigh, which isn't involved in the case.
"He goes to sell the property or put a mortgage on the property. Someone does a title search. They see he owns it. They see that the mortgage has been satisfied. Of course, they don't realize it's fraudulent, and so the bank loans money," Oliver said. "When he'd get title, he'd transfer title to several different entities, which I think makes it more convoluted and difficult to track what's going on."
The indictment lists Xavier Smart, Xzayvier Ernhart and David Imrich among the aliases used in the alleged scheme, which authorities allege cost banks a total of $920,000.
"I can't imagine there are too many people out there filing fraudulent satisfactions and thinking they're going to get away with it," Oliver said.
E.J. Stern, one of the Coral Bell Drive neighbors who first alerted police to Earquhart three years ago, said he's not surprised by the federal indictment.
"The police had their suspicions. My neighbors and myself had our suspicions," Stern said. "I'm glad the justice system found a way to catch this guy."
Earquhart also is accused of acquiring a homes on Knowles Street in Raleigh through fraudulent documents and using it as collateral to obtain $185,000 in bank loans, according to the indictment.
"It's good to see people who aren't doing the right thing – making bad choices – be accountable for those choices," Stern said.
As part of the indictment, federal authorities are seeking a court-ordered forfeiture by Earquhart of more than $1.1 million in cash, nearly $300,000 in gold bullion coins, a Rolex watch and any other property he gained through his real estate transactions.