The real estate industry is not known for being transparent, and this lack of transparency can act as a shield for fraudsters who take advantage of unsuspecting buyers and sellers. It is what happened in the case of Maryland real estate agent Christopher Kwegan, who was forced to plead guilty to charges related to a mortgage fraud scheme in 2016.
The charges against Kwegan related to the fraudulent sale of a property using forged loan documentation and a straw purchaser. In the summer of 2008, Kwegan was hired to sell a Baltimore row house for $75,000. However, rather than hit the market and prospect for buyers, Kwegan used a straw purchaser to acquire the property for $250,000. On its face, that sounds like good news for the seller. Unfortunately, the buyer was not actually interested in the house. She was recruited by Kwegan’s associates to act as a straw purchaser. In other words, she was a front to be used by Kwegan and his partners to disguise their dirty deal.
To secure the $250,000, Kwegan forged loan documentation. When the bank wired the money at closing, Kwegan and his partners split most of it among themselves, paying the seller just $15,773.65.
How Blockchain Can Fight Fraud
A blockchain is a ledger, a record of accounts, shared across a decentralized web of computers. It means that no entry added to the ledger can be changed without first assuming control of the entire network. When real estate transactions are committed to a blockchain, there is no way to hide illegal schemes like the one engineered by Kwegan and his partners.
Moreover, blockchain-based smart contracts enable parties to transact safely without knowing or even meeting each other. Contracts can be programmed to automatically release funds, a deed, or other consideration on the satisfaction of an agreed upon condition like a successful inspection or signature.
Propy leverages blockchain technology to handle the above concerns. With Propy, buyers and sellers can transact in a safe and user-friendly online environment without fearing being ripped off by scammers like Kwegan.