So the only thing he did was live at a house he sold his girlfriend?
That's definitely non the only thing he did. He sold the house to his girlfriend as a short sale (paying the mortgage company less than what was owed), continued to live in the house and then she re-sold it for a profit. Mortgage companies don't take kindly to getting cheated out of what you agree to pay when you sign.
Kind of old news. Maybe it's just now making its way through the legal system, but this story is at least two years old.