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Anatomy of a Real Estate Scheme; Dealers Illegally Obtained Government-Backed Loans, Evaded D.C. Rent Control Law Series: THE MANIPULATORS: HOW FRAUD DESPOILED A NEIGHBORHOOD Series Number: 1/3
[FINAL Edition]
The Washington Post (pre-1997 Fulltext) - Washington, D.C.
Author: Downey, Kirstin
Date: Sep 2, 1990
Start Page: a.15
Section: A SECTION

According to land records, she paid $68,900 for the property, and purchased it with a $67,800 FHA-insured loan from Michigan-based Modern Mortgage Corp. According to the factual proffer, [Patricia Whiteoak] signed two contracts: The first, for official consumption, stated that she would put up cash from her own pocket, as required by the FHA. The second, an undisclosed side contract, stated that [Steven Madeoy] and [Marvin Gitelson] would kick back about $10,500 to cover her costs, according to court documents.

To show that she could afford the down payment, [Ritchie Gaylen] helped Whiteoak obtain a fake gift letter stating that her sister was giving her $5,000 for the down payment. Lawyer Michael Friedman, of Potomac, Steven Madeoy's brother-in-law, prepared false documents showing that Whiteoak had made the required down payment.

So Gaylen also prepared papers for the D.C Rental Accommodations office stating that Whiteoak was the owner, and that she qualified for an exemption as the owner of four or fewer apartments. In March, the papers were filed and the rents in all four units increased to $275 a month, a doubling for two of the units.

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