The Creative Investor - Indictments issued in HUD scam

A Florida man was indicted Thursday of defrauding the U.S. Department of Housing and Urban Development through his real estate company after 4 of his employees pleaded guilty. Eugene McReath of Panama City,Fl. owns Southern Construction and Investments, a Birmingham,Al. based company that buys,renovates and sales houses for a profit. According to the indictment. Many of the houses that McReath sold were financed with HUD loans. McReath is accused of paying his buyers down payments,then falsely telling HUD that the down payments came from relatives of the home buyers. The prosecutors say McReath lied to HUD to get around the department's policy of not insuring home loans when a seller make a down payment.