Facts: Plaintiffs alleged that Robert Beeman purchased dilapidated houses in poor sections of Baltimore, searched for unsophisticated, low-income buyers, and promised them a renovated home for a mere $500 down payment. Beeman had the buyers sign contracts for greatly inflated prices and arranged 100% purchase financing through an accomplice working in a mortgage company. To support this financing Arthur Hoffman, a real estate appraiser, supplied an appraisal at exactly the sales price. When the buyers took possession they found none of the promised repairs had been made. They sued multiple defendants for fraud and the trial court awarded them compensatory and punitive damages. Hoffman appealed.

Questions:

1. Did Hoffman commit fraud?

2. What is “flipping?”

3. Is flipping illegal or inherently fraudulent?

4. What made this flipping scheme fraudulent?

5. What is “100 percent financing?”

6. What was Hoffman’s role in this scam?

7. What is an appraisal?

8. Why were Hoffman’s appraisals fraudulent?