There's an old confidence trick, the “shell game,” in which a dealer allows a naïve passerby to bet money that he or she can guess which one of three shells hides a pea. The game is based on mere sleight of hand. But the illusion of an “honest” game is maintained by the seeming success or failure of other “players” who are, in fact, shills — actors in on the con.
This week, notorious Kensington slumlord Bob Coyle acknowledged having committed a kind of shell game of his own, pleading guilty in federal court to two charges of loan fraud stemming from several multi-million-dollar bank loans Coyle took out on hundreds of properties. According to his guilty plea, those loans were based in part on fraudulent information — including Coyle’s failure to disclose to banks that he’d been making (apparently disingenuous) rent-to-own agreements with many of his tenants and that many of his properties were virtually worthless.
His plea was good news for a number of community organizations and legal advocates who’ve waited for years to see some measure of justice served to a man who blighted their neighborhoods and lied to the (mostly poor, mostly immigrant) tenants whose cases they helped with.
But if it’s a silver lining, it’s to a darker cloud that still hasn’t lifted. While Coyle’s missteps and malfeasances have been closely chronicled in the press, the errors in judgment by the banks who loaned Coyle all those millions — if errors they were — seem to have been quietly ignored.
They shouldn’t be: As chronicled by this writer some years ago, Coyle’s fortune was built on increasingly absurd loans by various local banks — absurd because basic due diligence in examining Coyle’s properties should have set off alarms. But the banks (like financial institutions around the country at that time) may have had their own interest in not looking too deeply into what, exactly, was backing up those enormous mortgages. That much was alleged by Coyle in response to a separate civil lawsuit filed against him by Republic Bank.
Coyle will now have to pay restitution to the tenants he lied to — and also to the banks, which in many cases have become the owners of the rotting inventory Coyle purchased with money they so freely lent to him. But were these banks the hapless victims of Coyle’s shell game, or were they the shills — making sure someone, somewhere, saw a pile of money instead of a heaping mess?
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