House flipper Blaine Murphy sentenced to two years in prison

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House flipper Blaine Murphy sentenced to two years in prison

May 16, 2013 [Peter Krouse,]

CLEVELAND, Ohio — A Florida man who bought dilapidated houses in Cuyahoga County and sold them using forged documents to make a quick buck was sentenced Thursday to two years in prison.

Blaine Murphy, who prosecutors said presided over his housing-flipping scheme from his $1.2 million house in Naples, Fla., also was ordered to pay restitution of $1 million, a portion of which has already been paid, and fines totaling $100,000.

Common Pleas Judge Richard McMonagle said if Murphy is released early from prison he must serve the remainder of his term under house arrest in Cleveland’s foreclosure-ravaged Slavic Village neighborhood.

The two-hour sentencing hearing came after McMonagle and lawyers in the case drove past three of the homes that Murphy owns on the city’s East Side.

According to prosecutors, Murphy bought hundreds of rundown houses sight-unseen from banks. Then, instead of fixing them up, he would sell, or “flip,” them to another buyer at a profit. In doing so, he would ignore code violations and fail to pay taxes.

Murphy pleaded guilty in April to 10 counts of tampering with records including deeds that he signed with the pseudonym Bryce Peters. He also pleaded guilty to one count of telecommunications fraud.

Murphy’s use of a fake name hampered efforts by cities to determine who was responsible for fixing up dilapidated houses.

“He bought homes and sold homes with reckless abandon,” Assistant Cuyahoga County Prosecutor Greg Mussman said. “And it was for greed.”

Murphy, who was extradited from Florida early last year, told McMonagle on Thursday that he never intended to hurt anyone.

“The remorse I have is on a daily basis,” he said.

Several Cleveland residents and local contractors testified at the sentencing hearing about recent efforts Murphy has made to rehab or demolish homes he still owns in the city.

Mussman, however, portrayed Murphy as a callous criminal, who was able to afford a yacht while the cities where he flipped properties crumbled.

Cleveland City Council members Anthony Brancatelli and Mamie Mitchell testified to the harm they believe Murphy’s actions have created in their wards.

Mitchell said some senior citizens living in her ward are “almost penniless” because the blighted conditions around them have reduced the value of their homes.

Murphy’s lawyers argued their client isn’t to blame for the blighted neighborhoods, but rather Wall Street banks are at fault for the high-interest loans they made to unqualified buyers who later defaulted on their loans.