THE STATE ATTORNEY GENERAL'S OFFICE in Pennsylvania last January filed the first criminal indictments against a home builder in the Poconos real estate fraud case.
Allegations of builder fraud were widely published in the local press during the past few years, ultimately receiving national recognition in New York Times stories. The stories alleged that builders lured low-income, minority New York City residents to the promise of a better life in the Poconos, only for the buyers to find long commutes, poor social services, and homes they could not realistically afford and later were foreclosed on.
The state indicted Donald Kishbaugh and Steven Parisi, the owners of Eagle Valley Homes; three Eagle Valley employees, Kimberly Loffio, Lauren Erb, and Rose Perdue; and Anita Peterson, a settlement agent and the owner of Mountain Valley Abstract.
According to the attorney general's office, Kishbaugh and Parisi targeted first-time home buyers lured by advertisements of affordable housing in the Poconos. Many of the buyers were not qualified to purchase a home at the inflated price that Eagle Valley was selling homes, which was about $190,000.
Despite their poor credit histories, many potential home buyers were told that large 20 percent down payments were not necessary. The sales agents took deposits as low as $500 on a home and $500 on the lot.
All the defendants are out on bail and face multiple years in prison. A civil case against Eagle Valley is also proceeding. Two other civil cases are pending against developer Gene Percudani, the subject of a similar real estate fraud federal investigation, and Keystone Builders. The three civil cases seek nearly $8.3 million in consumer restitution and $1.8 million in civil penalties.