Cash out at Closing?

I was recently approached by an older business associate who swears that he has found a way to legally get cash out at the sale of a property. The scenario would look like this;

Purchase Price: $50,000
Appraisal/ New Purchase Price: $100,000
Third Party Lien on Property: $50,000

At closing the title work would show the lien and it would be paid off. Ive also heard that I cannot legally touch the closing money at anytime. Has anyone on this site ever heard of a similar program? Ive heard of writing third party fees directly into the HUD’s ect and of course mixed reviews. Some attorneys have told me that its legal, some have told me its not but nobody has been able to seem to point me where in RESPA or federal laws have a section directly related to this. Thanks to anyone who joins this discussion.

Sounds fradulant to me

:cool sounds a bit ify !!!