Sheree Becker, one of Otton’s “advanced mentoring students” has been found guilty of seven charges of obtaining financial advantage by deception. (Update – Sentenced 29/11 to 3.5 years jail, minimum 15 months). Feted by Otton (he referred to her as “advanced mentoring student” and “Doctor of Real Estate”), Becker contributed to his podcasts, provided testimonials for his book and appeared on stage at his seminars – telling the audience “heaps of houses and heaps of money”.
Becker’s attendance at Rick Otton seminars was mentioned in court – noting that the principles behind Otton’s teachings were “preying on those in distress”.
Becker set up a number of deals according to Otton’s strategy. As an intermediary (or “transaction engineer” in Otton’s terms) Becker set up rent-to-buy/vendor finance type deals between homeowners and potential purchasers. She had power of attorney from the owners, so that she could deal with the house. In many cases both parties were vulnerable – owners in financial stress, and buyers who couldn’t obtain a bank loan. Many ‘buyers’ had not been long in Australia and spoke little English. These deals raise many risks for owners and purchasers which I’ve outlined elsewhere.
See here for how these deals worked.
Becker received an initial payment from the ‘purchaser’ (sometimes the First Home Owners Grant) and monthly payments. However, the real money was in the “back end” profit, obtained when the purchaser qualified for a mortgage loan and finalised the purchase, because the purchase price was significantly higher than the amount Becker agreed to pay the owner.
The problem was, many ‘purchasers’ were unlikely to be eligible for a mortgage loan for many years – if ever.
As Becker wrote in Creative Property Magazine at the time “My back-end profit was tied up in the transaction ….I had a lot of money that was tied up and parked.” “So then came the round of phone calls to those clients to start putting in a plan to have them refinance as soon as possible”.
The “plan”, it turned out, was working with a loan introducer who lodged fraudulent mortgage applications to a bank ‘insider’, which enabled Becker to finalise these deals and walk away with her profit. Becker included in sale contracts a deposit paid (which a lender would want to see) when, in fact, that deposit hadn’t been paid.
Some borrowers negotiated with the bank with the assistance of free legal services and entered arrangements which they could afford. Without that assistance, many would have lost their homes.