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UNITED STATES v. HIBBS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


October 20, 1976

UNITED STATES OF AMERICA
v.
CHARLES C. HIBBS and FAIRHILL COMPANY, INC.

The opinion of the court was delivered by: LUONGO

SUR PLEADINGS AND PROOF

 LUONGO, J.

 This is a suit by the United States against defendants, Charles C. Hibbs and Fairhill Company, Inc., under the False Claims Act, 31 U.S.C. § 231, et seq., *fn1" arising from false certifications which induced the Federal Housing Administration (hereafter FHA) to insure certain mortgages. The mortgagors defaulted on the mortgages and the United States was called upon to honor the claims of the mortgagee. It now seeks to recover statutory forfeitures plus double the amounts it was required to pay out on the defaulted mortgages, including acquisition and maintenance expenses in connection with the defaulted mortgage properties.

 The matter was tried to the Court on March 22-24, 1976. Upon pleadings and proof, I make the following

 FINDINGS OF FACT

 1. Defendant Charles C. Hibbs is an individual engaged in the business of selling real estate. He resides in Bala Cynwyd, Pennsylvania.

 2. Defendant Fairhill Company, Inc. is a corporation organized pursuant to the laws of the Commonwealth of Pennsylvania. It is engaged in the selling of real estate with its principal place of business in Philadelphia, Pennsylvania.

 3. No evidence was presented at trial as to defendant Fairhill Company, Inc.

 4. On April 24, 1973, under Criminal No. 72-600 in the Eastern District of Pennsylvania, Charles C. Hibbs was convicted for making or causing to be made false statements to the Federal Housing Administration for the purpose of inducing agency action in violation of 18 U.S.C. § 1010.

 5. The indictment consisted of 39 counts, three for each of 13 properties located in the 2900 block of North Marshall Street, Philadelphia, Pennsylvania, charging the submission of false statements in certifications as to the condition of the roof and the plumbing and heating and electrical systems in said properties.

 6. Hibbs was the real estate broker on each of the properties, six of which (2909, 2911, 2915, 2917, 2923 and 2933 North Marshall Street) are involved in the present litigation.

 7. Prior to the insuring of any mortgages on single family dwellings, the FHA assigns an appraiser to inspect the property and render an opinion as to its value and condition, and to determine whether there is compliance with those standards and conditions prescribed by HUD regulations.

 8. When an appraiser is confronted with conditions as to which he lacks expertise, he requests that the broker obtain certifications from a contractor that certain structural components comply with specifications or that certain work has been done according to specifications.

 9. In those instances where certifications are requested, the FHA will not insure the mortgages unless such certifications are filed with the agency.

 10. Hibbs caused certifications to be issued on the condition of the roof by Raymond Darrah on November 28, 1969, on the plumbing and heating systems by Joseph Matz on May 14, 1970, and on the electrical systems by Gerald Smith on April 30, 1970. The FHA relied upon the certifications in issuing its commitment to insure the mortgages on the above numbered properties.

 11. The mortgagee on the six properties was the United Broker Mortgage Company, with its principal place of business in Philadelphia, Pennsylvania.

 12. The convictions established that Hibbs, knowing that the certifications were false, caused them to be made or used for the purpose of inducing the FHA to issue mortgage insurance on the above properties.

 13. The government would not have undertaken to insure the mortgages against default had it not been for the submission of the false certifications.

 14. The mortgagors on the six properties became delinquent in their payments and defaulted on their mortgage obligations. Thereafter mortgagee presented claims to the FHA for payment on the mortgage insurance commitment. 15. The United States expended a total of $59,904.21 in honoring its insurance commitment on the six defaulted properties. The figures are broken down as follows: 2909 North Marshall Acquisition costs * $8,096.85 Maintenance costs 656.93 Foreclosure costs ** 1,445.47 $10,199.25 2911 North Marshall Acquisition costs $8,490.41 Maintenance costs 589.18 Negative escrow 48.43 Foreclosure costs 630.69 $9,758.71 2915 North Marshall Acquisition costs $9,142.74 Maintenance costs 572.21 Foreclosure costs 212.43 Sub-total 9,927.38 Positive escrow 18.00 $9,909.38 2917 North Marshall Acquisition costs $8,643.68 Maintenance costs 785.19 $9,428.87 2923 North Marshall Acquisition costs $9,744.31 Maintenance costs 702.69 $10,447.00 2933 North Marshall Acquisition costs $9,298.02 Maintenance costs 862.98 $10,161.00

19761020

© 1992-2004 VersusLaw Inc.



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