Are there legal consequences for placing bogus contracts into escrow in order to fool the construction bank?

Question

I know a builder who was in default on his construction loan on a small neighborhood project, (45 homes). The lender has give him every opportunity but he keeps screwing up the sales office and team. Now, under the gun, he got some old friends to put 3 of them under contract for 90 day escrows, hoping that by the time the 90 days are up, he will have 3 legitimate escrows and his friends can cancel their contracts, thereby fulfilling his requirement to get 3 in to escrow immediately. Is this not an attempt to defraud the bank? What are the changes that the bank knows these are bogus contracts and they want to keep their fat out of the fire with their investors? What is the ethical thing to do? There is nothing in it for me either way. I do, though, find him arrogent.

Answer 1

It is fraud! Report what you know to the bank anom style & bail! Anyone screwed enough to pull that kind of stunt is liable to come after you with a bat for speaking up! Just think about what could happen to the friends credit if they are stuck in those contracts!

Answer 2

This is fraud.
Anyone who says that anything put into a contract is legally binding doesn't know a thing about the law. Just because someone signs a piece of paper, it doesn't make the contract legal. For example, two people can't enter into an agreement for you to become their employee and work for free. Such a contract is not legal. This is why legal questions should be asked to a qualified attorney only.

Answer 3

Anything put into contract is binding. If cancellation is done with in the time allowed I don't see any thing wrong with taht. It's a loop hole.

Answer 4

It is commonly known as fraud, is illegal and if you/he are defrauding a bank (federally insured) it may (probably) be a felony.

Answer 5

of course you better be careful

Answer 6

you will be put in jail and be fined