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PEORIA, Ill. (WAND) - A man who conspired with others to defraud lending institutions is going to prison for bank fraud. 

David Litman, 41, of Foosland in Champaign County pleaded guilty on Dec. 17, 2019 to conspiracy to commit bank fraud and bank fraud. He was involved in a real estate short-sale scheme. 

Litman had admitted to conspiring with other people to commit the fraud against lending institutions in a series of short-sale transactions between 2008 and 2010. He caused false broker price opinions that undervalued residential properties to be submitted to financial institutions who hold the property mortgages, which he intended to buy with short sales. 

Prosecutors said he sent in false documents to financial institutions in order to induce them to approve the requested short sales. This included falsified listing agreements and proof-of-funds letters. 

The banks relied on the false broker price opinions, false real estate commission expenses, false listing agreements and other false documentation and approved the short sales to Litman "for payments that were less than they otherwise would have been likely to receive," a press release from prosecutors said. 

Litman also caused the recording of false expenses, including false real estate commissions, on HUD-1 settlement statements, which document the short sales he entered into. He tried to hide some of those false real estate commission expenses by issuing commission checks late. 

“The defendant’s repeated acts of fraud over several years caused lending institutions to lose a significant amount of money,” Acting U.S. Attorney Doug Quivey said. “The defendant’s participation in the scheme thwarted the lenders’ ability to accurately value the homes involved and prevented them from recouping a greater portion of their losses on the homeowners’ mortgages. Fraud in any part of the mortgage industry ultimately costs both lenders and borrowers and can’t be tolerated.”

Litman must report to federal prison on May 18, 2021 to serve a two-year sentence. He is also required to pay $279,900 in restitution and serve two years of supervised release after his prison term ends. 

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