Real Estate Fraud Deconstructed: Themes and Classifications

Fraudsters are perpetrating real estate transactions with sophistication and speed. The techniques employed by fraudsters to infiltrate the real estate market are extracted from 163 real estate fraud cases over the past twenty years as reported by the United States Department of Justice. Based on the sample, the primary perpetrator tends to be a middle-aged male and in roughly half of the cases, has colluded with others. Fraud schemes generally last 5.4 years, and the fraudster is typically not sentenced until four years later. The average prison term is nine years and followed by supervision. Regression statistics support that fraud incidents producing larger financial losses to its victims result in longer prison sentences for the perpetrator. Patterns emerging from these cases are used to classify dominant fraud themes and to identify general classes of how real estate is involved in the fraud incidents. This study concludes with practical steps to detect and deter future real estate fraud.