A Naples man has been indicted in Ohio on charges he illegally flipped 235 houses for five years by filing forged deeds using fake names and witnesses.
Blaine D. Murphy, 43, of South Golf Drive, is accused of trying to make a “quick profit” on foreclosures and short sales from 2005 to 2010 by enlisting others to join a nationwide criminal enterprise, with most sales in Ohio, Michigan, Pennsylvania, Missouri and Texas. He is accused of purchasing homes sight unseen in Ohio, leaving a trail of delinquent taxes, code violations and condemned houses that blighted neighborhoods.
Murphy has been held in the Collier County jail since Dec. 23, when he was indicted in Cuyahoga County, Ohio. He’s fighting extradition there and is to be arraigned by Collier Circuit Judge Frank Baker on Jan. 17.
“Cuyahoga County has brought to justice an individual who is responsible for causing millions of dollars in damages and ruining whole neighborhoods across Ohio and the Midwest,” Cuyahoga County Prosecutor Bill Mason said in a written statement. “Today is a triumph of justice over greed.”
Defense attorney Larry Zukerman of Cleveland, contended Murphy is being blamed for his bad buyers’ actions and said he’d never seen a similar criminal case anywhere.
“This is the first mortgage fraud ... case filed where there has been no damage to anyone,” Zukerman said of allegations that Murphy damaged communities. “This is how business has been done with banks for the last 20 years.”
“Banks sell or unload their bad product to corporations that then resell the product. It’s nothing unusual,” he added. “ … They’re now trying to go after my client for the actions or inactions of the buyers. These are all legitimate sales.”
The indictment, unsealed Wednesday, involves properties in 15 Ohio counties and alleges Murphy used an alias, Bryce Peters III, to sign deeds and another alias, Martin J. Franks, as a witness to Peters’ signature. Peters is listed as vice president of Bryce Peters Financial Corp. — Murphy’s company — which isn’t licensed to do business in Ohio.
Mason said it’s the first time a “house-flipper” was charged with using fictitious identities to forge deeds and other documents.
The 16-count indictment handed up by a Cuyahoga grand jury charges Murphy and his company with forgery; tampering with records; possessing criminal tools (deeds), federal mail fraud under Ohio’s Racketeer Influenced and Corrupt Organizations Act (RICO); money laundering; operating an unlicensed foreign corporation; acting as an officer of an unlicensed foreign corporation; and telecommunications fraud involving faxed documents.
His company was cited in 53 Cleveland Division of Housing and Buildings complaints involving “substantial and severe” code violations since 2008. A housing court judge found him in contempt of court and fined him $9.5 million for not appearing in court for violations and related lawsuits.
Residents at Largo Condominiums on Second Street South in Old Naples, where Murphy lived for six years, said they’d heard he was very wealthy, but declined to comment. Murphy, who was on the condo association’s board, lived there with a roommate, Joseph Anthony Farina, 43.
Farina also lives with Murphy at his South Golf Drive house, where he was arrested. Reached by phone, Farina declined to comment.
Lisa Gasteiger, business manager of RexAir Flight School and Maintenance Center, where Murphy took flying lessons, said they hadn’t seen him or his plane at the airport in three years and was shocked at the news.
“He was a super, cool guy, he really was,” Gasteiger said. “Everybody liked him.”
The indictment says Murphy recruited people to help him close real estate transactions and fraudulently transfer property. It says others may be indicted, but one cooperating witness won’t be prosecuted. The indictment followed a joint investigation with the FBI that found two alleged accomplices signed 235 deeds with two notaries and a New Jersey attorney.
Zukerman called the cooperating witness one of Murphy’s competitors.
“She has millions of reasons for what she’s doing,” Zukerman said of her cooperation.
From 2005 to 2010, the indictment says, Murphy’s intent was to make a “quick profit” selling houses. Of 235 houses sold in Cuyahoga County, 96 went into foreclosure, prompting $1.03 million in tax delinquencies. Prosecutors are seeking forfeiture of 79 houses still owned by Murphy’s company.
The indictment says homes were purchased “sight unseen” and Murphy didn’t adhere to sales procedures or ordinances. His aliases made it difficult for officials to track him down.
“In his quest to make a fast profit, Murphy ignored property code violations and payments of taxes at the expense of these communities ...” the prosecutor said, noting he sold them in bulk or individually.
Florida records show he operated Cirrus Aviation Leasing One and Air Fleet Management One, at 300 Fifth Ave. S. in Naples, and both were dissolved last year. The IRS filed a $121,313.08 lien against him for business taxes dating to 2008.
Bryce Peters Financial Corp. was incorporated in Reno, Nev., in 2000, but defaulted this year after not filing documents. Neither the Secretary of State nor the Better Business Bureau received complaints.
It couldn’t be immediately determined if any were filed with the state Attorney General. Records show his company also operated in Maple Shade, N.J., where state records show he was a defendant in eight actions filed by financial corporations involving unpaid loans in three counties.
Federal records show his company was sued this month by a Mississippi leasing firm. Bankruptcy records show he filed for personal and business bankruptcy in 1997, 1998 and 1999, when he operated Garden State Construction Contracting, BPI Realty, Studio B Companies and Blaine Trust Financial Holdings.
Michigan records show Bryce Peters Financial and Paramount Land Holdings Inc. were involved in about 2,000 similar sales involving bulk properties that prompted one buyer to sue him after years of unpaid taxes caused her to lose her home; her lawyer couldn’t be reached.