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Murrieta Man Gets Year in Prison for Defrauding Homeowners

The U.S. Attorney's Office in San Diego says the man would tell people that he would help them save their homes, but did nothing of the sort.

A Murrieta man was sentenced this month to a year in prison for carrying out a scheme to defraud homeowners, mortgage lenders and federal bankruptcy courts and for willfully failing to report over $175,000 in income tax, U.S. Attorney Laura Duffy recently announced.

In handing down the punishment to William Barry Blythe, 67, Judge Anthony Battaglia also ordered him to pay about $320,250 in restitution to the Internal Revenue Service for back taxes, interest and penalties.

According to court documents, Blythe approached homeowners who were behind on their mortgage payments and offered to take ownership of their homes and negotiate better terms on their mortgages. To carry out his scheme, he directed the homeowners to deed their homes to one of Blythe's trusts, prosecutors allege.

Blythe then allowed the homeowners to stay in their homes if they paid monthly fees to the trusts that owned the houses. He knew, however, that the trusts did not assume responsibility for the mortgage, and that he therefore could not negotiate better terms with lenders.

When homeowners gave Blythe the monthly payments, he deposited the payments into his own trust account instead of the bank accounts for the trust entity that supposedly held title to that homeowner's property. Blythe then filed bankruptcy for each of his trusts, first in the Central District of California, then the Southern District.

In each of the San Diego bankruptcy petitions, Blythe falsely claimed that the trust seeking bankruptcy protection purchased real properties, owed mortgages on those properties, made no income from the properties and had numerous unsecured debts, court documents state. Ultimately, each of the bankruptcy petitions was dismissed.

Blythe also misrepresented to mortgage lenders that he purchased the properties encumbered by mortgages, when in fact he had duped homeowners into deeding those properties to him by claiming that he would assume responsibility for their mortgages.

The defendant evicted families from the homes if they were unable to pay his required monthly fee or extorted additional payments from them to deed the property back, according to the U.S. Attorney's Office in San Diego.

One victim reported that she and her husband trusted Blythe to help them save their home and paid him $1,000 per month to do so. Her husband died in January at age 34. A month later, Blythe gave her a five-day eviction notice and demanded $10,000 to deed the house back to her.

The defendant attempted to evict another victim from his home and only after the victim paid him $2,000 did Blythe give him back the deed to the house, prosecutors alleged.

Blythe admitted in his plea agreement that the monthly payments he received from homeowners as part of his scheme constituted income to him. He admitted that he filed false tax returns for tax years 2010, 2011 and 2012, omitting a total of at least $177,499 in taxes.

The court set a July 25 hearing to determine restitution due to victims of Blythe's fraud.


—City News Service.

Bright Side Holistic Healing Center June 26, 2014 at 12:55 PM
won* the case
Daniel Osborne June 26, 2014 at 03:47 PM
I hate guys like this. There are a number of honest real estate investors that actually do help people. We have letters of recommendation from nearly everyone we've help. But unfortately, @$$hats like this guy give the rest of us a black eye. If I'm doing a transaction that requires the owner to sign over the deed but keeps their mortgage in place I their name, I minimize their risk by one, using an independent third party make the payments. Two, I pay the mortgage 3 months in advance. Three, at closing we sign documents, held by the independent third party, that automatically deeds the property back to the owners if payment falls more than 60-days behind. I feel sorry for these home owners. I also feel this jerkwad is getting off way too easy.
Aaron Powers June 27, 2014 at 10:06 AM
That's BS that only the IRS gets their money. What about the homeowners and banks that lost because of this crook?
KMA June 27, 2014 at 06:01 PM
Aaron- the IRS always gets their money- how can they pay bonus' to people who break the law and violate the Constitution." I can't find my e-mails"
WrigsMom June 29, 2014 at 09:13 PM
This is horrible! But in the big picture it is small potatoes! The Wall Street crooks ( Goldman Sachs, AIG and the banksters) who started this mess in the first place are still making billions and not one of them will go to jail! And don't blame it all on Obama, he wasn't in office when it started, he didn't bail out the crooks! Albeit he could be more aggressive prosecuting them but that would require "cooperation" and that is something our legislators refuse to do.

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