Appraisal fraud - American or European case - Help for my thesis
Hi,

I’m writing a thesis on the audit of RE valuation.

I’m struggling to find good examples of recent fraud cases, so far I found :
- Trump
- Adler Group

Could you please share some more with me ? (Ideally Europe based)

Many thanks
[{"id": "j23rf0t", "text": "Like examples of RE  values for tax purposes being different for bank purposes?\n\nAnd how auditors caught this?\n\nYou have to be a bit more specific. Even definition of RE is very large.", "replies": [{"id": "j29pos0", "text": "How auditors caught RE properties being over evaluated", "replies": [], "depth": 2}], "depth": 1}, {"id": "j23yk04", "text": "Savings and loan crisis in the United States was rife with this. \n\nhttps://www.latimes.com/archives/la-xpm-1985-08-29-mn-23713-story.html", "replies": [{"id": "j263ow0", "text": "I wouldn't call that \"recent\".", "replies": [], "depth": 2}], "depth": 1}, {"id": "j2429ck", "text": "There are two problems with appraisal reports in the US, at least for commercial appraisal.\n\n***The inclusion of irrelevant data***\n\nI review reports all the time that are 150 pages or more. The best reports present data with no analysis or conclusion (meaning it is irrelevant).  The worst present that data with contradictory conclusions or even inferred conclusions.  It is very common to have a dire picture painted in the area, neighborhood, and market analysis, but then have a cap rate risk profile that leads to a conclusion of say, a 3% OAR.\n\nRelated to this is the excessive use of the DCF.  This is a carryover of computerized financial analysis in the 1990s, but most appraisers seem unaware that few even value public companies using DCFs anymore.   All the little moving pieces are so subjective and in aggregate compound to nonsense.  Terminal rates rarely make sense and call into question the entire valuation.  No, the PWC report is not the same thing as actually talking to institutional investors.  Everyone knows it's nonsense. Institutional investors use Argus more to track leases and income much more than actual actual valuation.\n\nThe IVSC standards explicitly state that inclusion of irrelevant data and analyses is misleading. Everyone knows that's the point. It isn't there because it supports the concluded value. It is there to distract the reviewer who never has time to read a *War and Peace* length document.\n\n***Comparable Data is Never Verified and Often Fabricated***\n\nI am rarely engaged to actually verify comparables. But it is easy to check if something was just taken from Costar or if it exists.  Virtually all comparable sales are taken straight from Costar with no modification at all.  Costar has gotten better, but it isn't great.  It's often wrong, particularly with cap rates.\n\nMost appraisals I read easily go to 50-100 pages before even getting to any comparables. When they are presented, they are often 2 pages.  I see reports all the time that have just a few pages of rent comps with no analysis.  I would say about 25% of the comps I find are fabricated in some way.\n\n*Appraisers commit fraud all the time because that is what clients want.*", "replies": [{"id": "j245zwr", "text": "Right?  For lease comps they often times don't mention where escalations were, whether tenant is paying reserves or management fee.  Sometimes the rate is just wrong.  NNN deals are not always so straight forward.  Gross deals literally apples and oranges.", "replies": [{"id": "j24heii", "text": "In the northeast, the biggest problem is omitting free rent and tenant improvement allowances.  Appraisers almost always omit those if they can because they drive the face rent down, sometimes considerably. \n\nEscalations are the easiest fabrication to spot.  When 3% annual increases are reported, it is almost always fabricated.", "replies": [], "depth": 3}], "depth": 2}, {"id": "j25d4cv", "text": "Yeah, we just check the value lol. Don\u2019t really care for anything on the report, and only do them for compliance purposes", "replies": [{"id": "j25e7i3", "text": "FIRREA and the Dodd-Frank act require review of appraisals, and officers of federally regulated banks are personally liable, including criminal liability.  Is the risk low for doing time?  I guess so.  \n\nBut if the government fails to inflate wages, mass defaults appear inevitable. If the Resolution Trust Corporation takes over bank assets again, even minimally, blood will be spilled.  \n\nLOL is definitely not a reaction anyone will have when charged with fraud.", "replies": [{"id": "j26g8rv", "text": "I don\u2019t work for a bank", "replies": [{"id": "j26gcpn", "text": "Then why are you using appraisers?  They're idiots!", "replies": [{"id": "j26gtbi", "text": "Some of our clients require us to have their portfolios appraised quarterly. There\u2019s some back and forth but I don\u2019t do much besides providing them updated leases and comps", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "j2471i0", "text": "Great Question - Caesar\u2019s Palace Coup, is a book about how the two largest debt equity companies went bankrupt \n\nBritney Spear\u2019s conservatorship plays a big role, so it\u2019s definitely topical. They placed her on a concert residency in Vegas. Apollo and TCP (private debt  companies) hid her residency contract and projected revenues,  \u201cProject Song Bird\u201d Chapter  7 , from the real estate appraisal firm building out her performance hall to artificially hold the value low to their benefit. They appraisers asked for updated financials several times but eventually submitted their opinion of value without the uodated financials\u2026 while Britney, changed the entire landscape of the Vegas residency and Vegas tourist population  from gamblers to younger tourists coming for elite experiences and everyone made millions and billions while the little people suffered. The appraisal is outlined in the book. \n\nI want to say it was Kroll Associates was the appraisers but I might be wrong, I read the book last summer (linked below) \n\nApollo and TCP managed debt and when they went under (in which the defrauding played a critical role in the end), all Caesar\u2019s palace employees lost their retirement savings, not to mention other regular citizens like firefighters pension funds. \n\nhttps://www.amazon.com/Caesars-Palace-Coup-Billionaire-Corruption/dp/163576677X", "replies": [{"id": "j24ml6s", "text": "Great book", "replies": [], "depth": 2}], "depth": 1}, {"id": "j24hgd4", "text": "Search for conservation easements, there have been some big cases recently.\n\nhttps://www.propublica.org/article/syndicated-conservation-easement-irs-tax-scam", "replies": [{"id": "j29nwfj", "text": "Very interesting, thanks for sharing !", "replies": [], "depth": 2}], "depth": 1}, {"id": "j251gjo", "text": "Matt onofrio from Minnesota was just last month.", "replies": [], "depth": 1}, {"id": "j288v7q", "text": "Check out \u201cDolphin Trust\u201d from Germany. Unfolded when covid hit\u2026 there should be English reports about because most victims were from the UK and Hong Kong if I remember correctly.", "replies": [], "depth": 1}]