What is a potential red flag of loan fraud related to real estate developers?

A higher-than-normal employee turnover can be a potential red flag of loan fraud related to real estate developers for several reasons. High employee turnover may indicate underlying problems within the organization, such as poor management practices, low employee morale, or even a culture that does not prioritize ethical behavior. In cases of fraud, especially in industries like real estate development where significant financial transactions occur, employees may feel compelled to leave due to observed unethical practices or activities they do not want to be associated with.

Additionally, when employees frequently leave, it could lead to a lack of experienced personnel who are knowledgeable about the company's operations and financial practices. This loss of continuity can create opportunities for fraudulent activities to occur unnoticed, as new employees may not fully understand the protocols or may be less likely to question irregularities in loan applications or financial reporting. Thus, high employee turnover can serve as an indicator that something is amiss within the organization, warranting further investigation into potential fraudulent activities.