Rise in Foreclosed Commercial Property for Sale Spawns Other Troubles

The rise in the number of foreclosed residential properties and foreclosed commercial property for sale has encouraged a lot of people to build fraudulent businesses tied with the foreclosure market. Recently, a man was prosecuted in Missouri for deceiving investors using an online company that supposedly purchased and refurbished foreclosed houses.

As Kansas City foreclosures and distressed property numbers in the rest of the state continue to rise, more and more people are reportedly engaging in fraudulent activities, including John Michael Sheehan, who was sentenced to more than five years in prison. Sheehan reportedly established a Internet-based company that offers investors a chance to buy and sell foreclosed single family dwellings.

Under the scheme, investors are asked to invest in purchasing and renovating foreclosures in Missouri, with the investors getting a share of the benefits once the properties have been sold. Sheehan reportedly promised a return of between 10 and 18% annually for a minimum amount of $15,000 of investment. Investors were reportedly not told by Sheehan that multiple parties are involved in each property. He also admitted later in court that most of the money was not used to buy or refurbish foreclosed properties.

According to housing market experts, such type of deceptive businesses have become more common since the start of the real estate crisis, which saw the number of distressed residential and foreclosed commercial property for sale increase. Sheehan's business has reportedly caused several investors to lose money with an estimated combined total of over $1 million.

Aside from the prison sentence, Sheehan was also ordered by the court to pay over $1 million to each investor that he had victimized. Alesia Claremae Sheehan, his wife, was also part of the case and is still awaiting judgment. The buy and sell foreclosures scheme launched by Sheehan went on between June 2005 and June 2006. During these times, Sheehan also reportedly held seminars which were attended by the people who invested in his scheme.

Real estate experts have stated that there are other fraudulent businesses out there that have tie ups with foreclosed residential properties and foreclosed commercial property for sale. Authorities, however, are reportedly stepping up their efforts in putting a stop to such activities.