A Mesa real estate agent has been found guilty of fraud and theft from a short-sale deal that netted his parents a hefty profit.
James Thorton, formerly with Desert Sunrise Realty, is facing three to more than 12 years in prison for defrauding two banks in a home sale at the end of the real estate crash, according to the Arizona Attorney General's Office.
In 2012, Thornton had the listing on a Mesa home that the owner was facing foreclosure on. Thornton sold the house to his parent’s LLC for $580,000, when there had been other offers as high as $870,000.
Both banks approved the deal to Thornton’s parents because they weren’t aware of the higher priced offers, according to the Attorney General's Office.
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Within days of their purchase, Thornton then listed the home for $1.1 million. He sold it two months later for $1.05 million in cash.
Thornton’s real estate license became inactive on Feb. 9, according to the Arizona Department of Real Estate. He couldn't be reached for comment.
Michael Ludlow, the broker at Desert Sunrise Realty, said Thornton is no longer employed by the agency but that he testified on Thornton's behalf.
“I wasn’t the broker of the firm then, but I think the attorney general was on a witch hunt with this investigation,” he said.
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Thornton made false statements to the banks, potential buyers and other real estate agents during the short sale to his parents, according to the state prosecutor.
To discourage buyers and devalue the home during the short sale process, Thornton misrepresented the number of rooms and bathrooms in the home, fabricated a code violation to an appraiser, and removed high-end, custom appliances from the home, according to the Attorney General's Office.
Short sales allow homeowners to avoid foreclosure if they can’t afford their mortgage and owe more than their house is worth. But the homeowner’s lenders must approve the deal and be guaranteed they're receiving the highest offer.
The Attorney General's Office said Thornton also falsely told the $1.05 million cash buyer that the reason there was a substantial gap between his parents’ purchase price and the new list price of $1.1 million was that there had been a “lien paid outside of escrow.”
A jury found Thornton guilty late last week. His sentencing is scheduled for March 16.
