FL loan officer sentenced in $2.5 million Reverse Mortgage fraud scheme

In the following press release the United States Attorneys Office in Miami, FL announced that a loan officer was sentenced Friday by U.S. District Court Judge William P. Dimitrouleas in Ft. Lauderdale, Fla., for his participation in a nationwide $2.5 million reverse mortgage fraud scheme.

Louis Gendason, 42, of Delray Beach, Fla., was sentenced to 70 months in prison, five years of supervised release and ordered to pay over $2 million in restitution. Gendason was the mastermind of this complicated reverse mortgage fraud scheme, which was designed to lure financially distressed elderly homeowners into applying for reverse mortgage loans, to create fictitious equity in their homes with fraudulent appraisals, and ultimately to steal that false equity from the seniors and their lenders. Gendason cultivated relationships with each of his co-conspirators and they executed their respective roles in the scheme at his behest.

Kimberly Mackey, 47, of Pittsburgh, and Marcos Echevarria, 29, of Palm Beach, Fla., received prison sentences of 60 and 24 months, respectively, on Nov. 3, 2011. A third co-defendant, John Incandela, 25, of Palm Beach, was sentenced to 41 months in prison on Dec. 16, 2011. Gendason was the final defendant in the scheme to be sentenced.

“This reverse mortgage loan modification scheme robbed elderly homeowners of more than just their homes,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “It also robbed them of the American dream of home ownership, their peace of mind, and in some cases, their life’s savings. Through these prosecutions, these fraudsters have been brought to justice.”

“The stiff sentence the court imposed on the leader of this reverse mortgage fraud scheme sounds a cautionary note to those who prey upon elderly, distressed homeowners,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will not waver in our commitment to investigate, prosecute, and hold accountable those who try to victimize our nation’s most vulnerable consumers.”

A reverse mortgage, also known as a Home Equity Conversion Mortgage, allows borrowers who are at least 62 years of age to convert the equity in their homes into a monthly stream of income or a line of credit. Unlike the traditional mortgage loan scenario, in which borrowers make monthly payments to a mortgage lender in satisfaction of their outstanding loan, in a reverse mortgage loan scenario, the mortgage lender purchases borrowers’ equity and makes installment payments to the borrower.

According to the information and statements made during the August 2011 hearing in the case, from May 2009 through November 2010, the defendants engaged in a reverse mortgage scheme that defrauded unwitting borrowers, Genworth Financial Home Equity Access Inc., and the Federal Housing Administration (FHA). As the scheme’s ring-leader, Gendason, along with loan officers Incandela and Echevarria, solicited seniors to refinance their existing mortgages with a reverse mortgage loan financed by Genworth. To qualify the borrowers for these loans, Gendason altered real estate appraisals to fraudulently inflate the value of the borrowers’ properties. In fact, however, none of the borrowers had sufficient equity in their properties to qualify for a reverse mortgage. The defendants then submitted the fraudulently inflated appraisals to Genworth. Based on the false documentation, Genworth approved and the FHA insured more than $2.5 million in reverse mortgage loans.

As part of the scheme, Mackey, a licensed title agent, fraudulently closed the Genworth loans and did not pay off the borrowers’ existing mortgage loans. Mackey attempted to conceal the fraudulent loan closings by preparing false settlement documents that showed that the existing mortgages had, in fact, been paid off. The defendants divided up the loan proceeds and each used the money for his or her personal benefit, including for such things as gym memberships, vacations, and casino gambling.

The defendants further engaged in a loan modification scheme to conceal the existence of the Genworth reverse mortgage transactions from the original mortgage lenders, whose loans remained unpaid. To this end, Gendason, Incandela and Mackey conspired to create fictitious offers to buy some of the borrowers’ properties in the form of “short sales.” A short sale is a sale of real estate in which the sale proceeds are less than the balance owed on the loan to the mortgage lender, but avoids foreclosure and related costs. In other instances, to hide the existence of the Genworth reverse mortgage loan from the original lenders, the defendants made monthly mortgage payments to the borrowers’ original lenders. Many of the elderly homeowners that trusted the defendants anguished for years over whether they might lose their homes after learning that the defendants had stolen their reverse mortgage loan proceeds.

The case was investigated by agents from the U.S. Department of Housing and Urban Development Office of Inspector General, the Internal Revenue Service’s-Criminal Investigation, the U.S. Postal Inspection Service, the FBI and Florida’s Office of Financial Regulation, with assistance from the U.S. Secret Service and Genworth Financial Home Equity Access. The case was prosecuted by Kevin J. Larsen, a Trial Attorney in the Justice Department’s Consumer Protection Branch, and Assistant U.S. Attorneys Jeffrey H. Kay and Thomas Lanigan of the Southern District of Florida.

PA woman sentenced 100 months in fraud charges

In the following press release from the FBI Field Office in Philadelphia it was announced that Bonnie Sweeten, 40, of Pennsylvania, was sentenced today to 100 months in prison for fraud schemes in which she stole in excess of $600,000 from her employer and family members. Sweeten pleaded guilty June 21, 2011 to wire fraud and aggravated identity theft. In addition to the prison term, U.S. District Court Judge William H. Yohn, Jr., ordered Sweeten to pay restitution in the amount of $1,091,831 and a special assessment of $200. Sweeten remains in federal custody.

Sweeten stole funds from family members, from the law office where she had been employed, and from the law firm’s clients. She used the identity of another person and posed as another person while using false identification and forging signatures on various documents including a property settlement.

Additionally, Sweeten stole the identity of a friend and fellow employee and used the identity to facilitate her flight from the jurisdiction. She also forged a signature of a judge on a court order for the purpose of fraudulently withdrawing client funds from a bank. As part of her scheme to defraud, Sweeten concocted an elaborate hoax that she and her daughter had been kidnapped in order to deceive family members and law enforcement as to her whereabouts.

The case was jointly investigated by the Federal Bureau of Investigation and the Bucks County District Attorney’s Detectives. It was prosecuted by Assistant United States Attorney Denise S. Wolf.

Kathleen Harps sentenced in foreclosure rescue fraud case

In the following press release by the FBI Field Office in Norfolk, VA it was annouced that Kathleen Harps, 51, of Chesapeake, VA, was sentenced today in Norfolk federal court to 54 months in prison for operating a foreclosure rescue mortgage fraud scheme.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement after Chief United States District Judge Rebecca Beach Smith imposed the sentence. Harps previously pled guilty on August 23, 2011.

According to court documents, during 2006 Harps owned and operated the now defunct Hampton Roads businesses, New Beginnings Group, LLC, and IMAK Group, LLC, which specialized in “foreclosure rescue.” Through these businesses, Harps and others solicited homeowners in financial distress and facing foreclosure, to agree to sell their homes to Harps or straw buyers working with her. Harps promised the homeowners that, during a one year period after the sale, they could remain in their homes without having to pay the mortgage, while simultaneously putting their financial affairs back in order, so that they could buy back their homes at the end of the year. This, however, failed to occur. Instead, court records show that Harps and her straw buyers made assorted false statements to fraudulently obtain mortgage loans, upon which they later defaulted. As a result, foreclosures soon followed and the homeowners lost both their homes and substantial sums of homeowner equity, which was siphoned out of the closing transactions and paid to Harps’ businesses.

This case was investigated by the Federal Bureau of Investigation. Assistant United States Attorney Robert J. Krask is prosecuting the case on behalf of the United States.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.

Eric Omar Jones sentenced to 151 months in NC mortgage fraud case

In the following FBI press release Thomas G. Walker, United States Attorney for the Eastern District of North Carolina announced that in federal court today, Chief United States District Judge James C. Dever III, sentenced ERIC OMAR JONES, 41, of Clinton, North Carolina, to 151 months’ imprisonment followed by five years’ supervised release. Additionally, the court imposed restitution of $142,145.85.

A federal grand jury returned a superseding Criminal Indictment on February 2, 2011. On April 21, 2011, a jury convicted JONES of all counts of the indictment, which included one count of conspiring to commit bank fraud and to make false statement to influence a bank on a loan, 15 counts of bank fraud, and two counts of making false statements to influence bank loans.

In determining JONES’ sentencing guidelines range, the court found that he had received more than $1 million in gross receipts from financial institutions as a result of the offense. It found that the defendant was the leader of a criminal activity that involved five or more participants or was otherwise extensive. It found that the defendant abused a position of private trust through his interactions with unsophisticated investors. It also found that he obstructed justice through perjurious testimony at his trial.

At trial the government’s evidence showed that between 2002 and 2004, JONES participated in a scheme to defraud Omni National Bank and other banks. JONES used the credit of straw purchasers to obtain loans from Omni National bank in the name of those individuals. He then used that loan money to purchase properties through his company, University of Hard Knocks Investments, Inc., and then immediately resell them to the straw purchasers, whom he referred to as investors. Six straw purchasers testified at trial. David Pikul, the closing attorney who handled these transactions, also testified at trial. On April 11, 2011, Pikul pled guilty to conspiring with JONES to commit bank fraud and to make false statements to an FDIC insured bank. JONES enticed the straw purchasers to participate by promising them that he would make mortgage payments on the properties, take care of repairs, and sell the properties at a profit. These promises were untrue and fraudulent.

Further evidence showed that to obtain loans from Omni and other banks, JONES made numerous false statements on the HUD settlement forms that were submitted to the banks. These forms hid the fact that the bank’s money was being used by JONES’ company to purchase the property. They also often falsely stated that a down payment was being made, when, in fact, there was none. Sometimes the HUD forms falsely stated the seller of the property. As part of this scheme, on at least four occasions, JONES sold the same property to the same straw purchaser a second time for a higher price. In addition, JONES was living in one of the properties he had sold to one of the straw purchasers. He was doing this without her knowledge and without paying any rent or mortgage. This straw purchaser ultimately had to evict him.

JONES, testifying at trial, admitted he had 10 years of experience in the mortgage and real estate industry at the time of the crime. He also admitted receiving and signing many of the false HUDs–knowing they were false. He claimed that the closing attorney, David Pikul, had come up with this idea and had told him that it was a correct way of doing things. He admitted receiving a lot of money through University of Hard Knocks Investments and using that money, considered by him to be his business “profits,” to take several gambling trips to Las Vegas, Atlantic City, South Carolina, and New Orleans.

The Federal Bureau of Investigation and the North Carolina State Bureau of Investigation participated in this investigation. David A. Bragdon and William M. Gilmore represented the United States.

4 indicted in Northern Ohio mortgage fraud allegations

In the following press release Steven M. Dettelbach, United States Attorney for the Northern District of Ohio announced that an indictment has been filed against David R. Sharrock, Richard W. Balliett, Rhonda J. McElroy, and Ronald L. Kightlinger charging them with multiple counts of bank and wire fraud in connection with a mortgage fraud scheme which caused approximately $1.3 million in losses to Geauga Savings Bank, J.P. Morgan Chase Bank, Washington Mutual Bank, and Suntrust Mortgage, Inc.

Sharrock is also charged with making false statements to the FBI relative to the scheme.

David R. Sharrock, age 69, currently resides in Mansfield, Ohio. Richard W. Balliet, age 44, currently resides in Bucyrus, Ohio. Rhonda J. McElroy, age 49, currently resides in Bellville, Ohio. Ronald L Kightlinger, age 51, currently resides in Crestline, Ohio.

The indictment alleges that Sharrock, Balliett, and McElroy (“the sellers”) sold homes in the cities of Mansfied, Marion, Galion, Plymouth, Shelby, and Bucyrus, Ohio. The sellers made fraudulent misrepresentations to the mortgage lenders by providing undisclosed down payment assistance to the buyers and by submitting fictitious purchase agreements and verifications of deposits. As a result, the sellers signed false settlement statements at closing. [Editor note - more details have been taken from the indictment and listed below this press release].

The indictment also alleges that Ronald L. Kightlinger acted as a straw buyer in purchasing a commercial building from David R. Sharrock in Mansfield, Ohio. Sharrock subsequently lied to FBI agents relative to whether he provided down payment assistance in the scheme.

If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this case, including the defendants’ prior criminal records, if any, the defendants’ roles in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case is being prosecuted by Assistant United States Attorney Vasile C. Katsaros, following an investigation by the Federal Bureau of Investigation.

An indictment is only a charge and is not evidence of guilt. The defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Editor Note - According to the Indictment:

• David Sharrock is the owner of D.R.L Properties Trust LLC, Herman Trust Properties and D & D Rentals which between them managed hundreds of investment properties in Northern Ohio.
• Richard Balliett oversaw the day to day operations of Homes Central, Inc which also owned and managed investment properties
• Rhonda McElroy is the daughter of Sharrock and worked at D & D Rentals. She allegedly sold multiple properties to the borrower G.S.
• Kightlinger purchased Sharrock’s property at 34-38 West 4th St, Mansfield, OH.

The following properties are mentioned in the indictment

1. 71 Greenwood Ave, Mansfield, OH
2. 76 Greenwood Ave, Mansfield
3. 21 Greenwood Ave, Mansfield
4. 44 Raleigh Ave, Mansfield
5. 565 Arnold Ave, Mansfield
6. 385 Home Ave, Mansfield
7. 284 Remy Ave, Mansfield
8. 144 Columbia, Mansfield
9. 398 Home Ave, Mansfield
10. 542 Gruber, Mansfield
11. 28 Blanche St, Mansfield
12. 338 High St, Mansfield
13. 53 State st, Mansfield
14. 219 LaSalle St, Mansfield
15. 190 Hillside Circle, Mansfield
16. 174 Arthur Ave, Mansfield
17. 216 Blymyer Ave, Mansfield
18. 252 John Ave, Mansfield
19. 34-38 W 4th St, Mansfield
20. 208 Blaine Ave, Marion, OH
21. 335 Edgewood Dr, Marion
22. 576 Herman St, Marion
23. 364 Chester St, Marion
24. 185 Latourette, Marion
25. 738 Gill Ave, Marion
26. 306 Patten St, Marion
27. 190 Glad St, Marion
28. 287 Cass Ave, Marion
29. 168 Nye St, Marion
30. 207 Carhart St, Marion
31. 458 Scranton Ave, Marion
32. 431 Vine St, Marion
33. 236 N Grand Ave, Marion
34. 32 Trux St, Plymouth, OH
35. 130 South Riblet St, Galion, OH
36. 15 Summit St, Shelby, OH
37. 703 S Poplar St, Bucyrus, OH

Two men arrested in San Bernadino real estate fraud allegations

In the following press release the San Bernadino County (CA) District Attorney announced that two men accused of using fraudulent means to obtain the certificate of title to a deceased woman’s home have been arraigned in San Bernardino Superior Court.

Troy Lamar Preston, 41, of San Bernardino, and Mario Emile McKinley, 31, of Riverside, have been charged with two counts of forgery, two counts of offering a false or forged instrument, theft from elder or dependent adult, first degree burglary, and identity theft.

On November 14, 2008, Velma Jean Lee’s residence in San Bernardino was paid off. Three days later, Lee died. Preston and McKinley conspired to take over title for the purpose of selling it to an investor to benefit from the proceeds.

On December 22, 2008, Lee’s name was forged on a Grant Deed fraudulently transferring her property over to Seaboard Inc. The public notary was positively identified as McKinley. In the meantime, Preston signed an Affidavit-Death of Joint Tenant in an effort to avoid probate. McKinley was the notary for this document as well.

Upon interviewing the Chief Executive Officer (CEO) of Seaboard Inc., investigators learned that the CEO knew Preston, but was unaware that his corporate identity had been stolen to transfer Lee’s property over to his corporation. Preston was positively identified in two separate interviews by the decedent’s son and the Seaboard Inc. CEO

Senior Investigator Maurice Landrum from the San Bernardino County District Attorney’s Office, Real Estate Fraud Division, obtained a search warrant for McKinley’s Riverside residence. During the course of the search, Landrum located and seized McKinley’s notary journal, which placed him inside the decedent’s home. Based on McKinley’s statements and the notary journal, criminal charges were filed against McKinley and Preston (who, at the time, was on formal probation and had not reported in since April of 2011).

On Monday, December 12, 2011, Investigators arrested McKinley at his residence in Riverside. On Wednesday, December 14, 2011, Investigators located Preston and arrested him in the City of San Bernardino.

Both McKinley and Preston were booked into the West Valley Detention Center, and bail was set at $345,000. A Preliminary Hearing is scheduled for December 23, 2011 in Department 22.

Chapin, SC developer sentenced in mortgage fraud case

In the following press release Bill Nettles, United States Attorney for the District of South Carolina announced that Kenneth Paul Holmes, age 48, of Chapin, South Carolina, was sentenced in federal court in Florence, South Carolina, for conspiracy to commit bank fraud, a violation of 18 U.S.C. § 1349. United States District Judge Terry L. Wooten of Florence sentenced Holmes to five months’ imprisonment and ordered him to pay $2,488,398.00 in restitution.

Evidence presented at the guilty plea hearing established that Holmes was an investment developer in the Myrtle Beach area and was involved in building seven properties. When Holmes was unable to sell his properties in Horry County between October, 2007 and November 1, 2008, he, along with a group of mortgage brokers and investors, obtained straw purchasers to purchase the property at inflated prices obtaining loans in excess of $5,200,000 thus allowing Holmes to sell his property and creating an excess of $1,680,000 which they divided. Judge Wooten granted the government’s motion for a reduction of Holmes’ sentence based upon the substantial assistance Holmes had provided to the government in investigating and prosecuting other individuals.

The case was investigated by agents of the Federal Bureau of Investigation. Assistant United States Attorney William E. Day, II of the Florence office handled the case.

Indiana man pleads guilty to mortgage fraud kick-back scheme

In the following press release from the FBI Field Office in Tampa, Robert E. O’Neill United States Attorney for the Middle District of Florida announced that Chad Evans (37, Brookville, Indiana) yesterday pled guilty to one count of bank fraud and one count of money laundering. Evans faces a maximum penalty of 30 years in federal prison for the bank fraud charge and 10 years in federal prison for the money laundering charge.

According to the plea agreement, beginning in October 2007 and continuing through May 2008, Evans orchestrated a mortgage fraud scheme. The scheme involved Evans purchasing approximately 20 low value properties in the Cincinnati, Ohio, area. Evans then resold the properties by supplying the buyers with the down payments, which he fraudulently failed to disclose to the lender. Evans then recovered the down payment funds by falsely representing to the lender that the money was being directed to pay off a company called TC Funding for construction loans. TC Funding was controlled by Evans and his wife. The money was wired to TC Funding.

“Mortgage fraud is every bit as corrosive to American society as street crime,” stated Darryl Williams, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati Field Office and Linda J. Osuna, Special Agent in Charge, IRS-Criminal Investigation, Tampa Field Office. “This type of fraud has far-reaching economic consequences and severely thwarts recovery from the foreclosure crisis, leaving communities with inflated home values and financial institutions with uncollectible loans.”

Both cases are scheduled for sentencing on December 21, 2011.

The cases were investigated by the Internal Revenue Service (IRS) and the FBI. They are being prosecuted by Assistant United States Attorney Thomas N. Palermo.