Alvin Clay, a former Little Rock lawyer who served five months in prison for mortgage fraud, gave up his law license the other day to avoid disbarment proceedings before the Arkansas Supreme Court.
Three years ago, just before the real estate bust, Clay and his associates were accused of inflating the value of homes they were selling to gullible buyers in Little Rock and pocketing the profits they took from mortgage companies.
Everybody was supposed to make money in real estate back then, except the buyers who bought virtually worthless homes and were stuck with huge mortgages, driven into foreclosure and finding themselves without a roof over their heads.
A multi-count federal indictment accused Clay and his partners of keeping at least half the money they obtained from mortgage companies. If a home was worth just $35,000, they would finance it for $57,000 and sell it to buyers who had almost no income, the prosecution alleged.
Prosecutors accused Clay of making fraudulent mortgage applications that made him and his partners more than $100,000 in profit.
Burger King employees became homeowners without any idea how they would pay their mortgage. It was easy money if you were the middleman or a banker. Then the bubble burst and the economy tanked.
We wrote about Clay in April 2008. Clay, who is built like a defensive tackle — in fact, he is a former football player — told us he’d never seen those profits and saw himself a victim of prosecutorial misconduct because he defended drug dealers the feds wanted to send to prison.
A faith-based organization that exposed prosecutorial misconduct in Texas and Louisiana sent a representative to Arkansas to help Clay fight the charges, but it was a lost cause: The fraud was too obvious, and now Clay is an ex-con without a law license.
We’re still paying the price for the great recession, although it’s not often that we hear about fraudsters going to prison. Most of them were never charged and are still living off their ill-gotten gains.
