Murrieta Man Gets Year in Prison for Defrauding Homeowners

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.