A former San Luis Obispo real estate broker pleaded guilty to orchestrating what federal prosecutors call a scheme to fraudulently flip properties across San Luis Obispo County.
On Monday, Timothy William Barnes, 37, now a resident of San Francisco, entered a guilty plea to one count of bank fraud in federal court in Los Angeles.
According to a news release from the U.S. Attorney’s Office, the federal offense carries with it a maximum sentence of 30 years in prison.
Prosecutors allege that Barnes, while operating Apex Properties Real Estate Brokerage Inc. in San Luis Obispo between January 2010 and September 2012, purchased properties after banks gave approvals for short sales on the homes.
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In a short sale, banks agree to accept less money than the outstanding balance on the mortgage as an alternative to foreclosure, usually because the home is “underwater,” meaning the value of the property is less than the amount owed on the mortgage.
Financial institutions authorized the short sales after Barns minimized the value of the houses and concealed higher offers he already received on the properties. Barnes made false statements about the fair market value of the properties in documents submitted to the various financial institutions, prosecutors said.
Barnes allegedly admitted during the case to having already negotiated the resale of the homes at higher prices while still negotiating the short sale of the properties at the lower price. The scheme netted Barnes profits of more than $500,000, involving properties in San Luis Obispo, Paso Robles, Pismo Beach and other parts of San Luis Obispo County, according to the U.S. Attorney’s Office.
Barnes is scheduled to be sentenced in U.S. District Court in Los Angeles on June 16.