In the following press release United States Attorney Don DeGabrielle and FBI Special Agent in Charge Roderick Beverly announced that a 14-count indictment charging nine Conroe area residents for their alleged involvement in a fraudulent loan scheme designed to secure “refinance” loans for unqualified buyers of mobile homes and lots sold by the Emerson Manufactured Homes was unsealed today following the arrest of the defendants.

Keith Steven Raybon, 44, the owner of Emerson Manufactured Homes, Ltd. (“Emerson”); Michael Davis, 42, and Michael David Grimes, Sr., 59, both employees of Emerson; Jeannie Nelson, 32, a licensed Texas mortgage broker and Executive Vice President of Royal Lion Mortgage, Inc.; Kandy Powell, 39; Hollys Devayne Heasley, 78, the operator of Monopoly Company (“Monopoly”), a real estate appraisal business, and his daughter, Holly Heasley Arbuckle, 46, an employee of Monopoly; Patricia Lennon, 42, the operator of Ameristar Residential Appraisal Services, and Heather Adams, 33, an employee of Old Republic Title Company of Conroe, were indicted by a federal grand jury on May 10, 2007and charged with conspiracy to commit mail fraud and wire fraud, and 13 counts of wire fraud.

“Mortgage fraud victimizes more than the lending institutions,” said Roderick Beverly, Special Agent in Charge of the Houston office of the Federal Bureau of Investigation. “Excessive foreclosures, such as those seen in this investigation, impact all of us through lower home values and increased property taxes. To continue to combat mortgage fraud effectively we need the help of the community. If you suspect mortgage fraud please report it to the Houston office of the Federal Bureau of Investigation (FBI) by calling 713-693-5000.”

All nine defendants were taken into federal custody earlier today by investigating agents. Four defendants, Raybon, Davis, Powell and Nelson appeared before U. S. Magistrate Judge Calvin Botley this afternoon and have been ordered released on $100,000 personal recognizance bond. The other five defendants will remain in federal custody pending their appearance before Judge Botley tomorrow morning at 10:00 a.m.

The indictment alleges the nine defendants were involved in a fraudulent loan scheme devised and executed between April 2001 and June 2002, to obtain loans to enable borrowers to purchase mobile homes and lots sold by Keith Steven Raybon through Emerson Manufactured Homes, Ltd.
The scheme allegedly involved, among other things, Emerson’s advertising of mobile homes with low payments, and employees of Emerson telling borrowers they could qualify for mortgages because Emerson Manufactured Homes owned the mortgage company.

According to the indictment, the defendants created documents to vest title to the mobile home and lot in the borrower’s name and create a lien in favor of Emerson in a “pre-closing” transaction designed to support fraudulent loan applications to “refinance” the property which were submitted to ABN Amro Mortgage Group, Inc., (“ABN”), a subsidiary of Standard Federal Bank in Troy, Michigan. Refinancing a loan precludes the need for a down payment and permits the closing costs to be “rolled in” to the loan, effectively providing 100% financing for the borrower. Inflated real estate appraisals for these properties were also allegedly submitted to ABN. In some case, funds were then deposited into borrowers’ bank accounts, according to the indictment, so the borrower could appear to qualify for loans. In yet others, money orders were allegedly purchased by the defendants and sent to ABN to keep mortgages current for borrowers unable to meet their obligations in an effort to hide the borrowers’ inability to pay their mortgages.

The loan proceeds from the lender were disbursed by the title company, according to the indictment, to pay Emerson an allegedly inflated price for the mobile home and lot, and significant fees to Royal Lion and the appraisers for each completed loan.

The conspiracy to commit mail fraud and wire fraud affecting a financial institution count carries a maximum sentence of five years imprisonment and a fine of $250,000. Each of the thirteen wire fraud counts carries a maximum sentence of thirty years and a fine of $1 million.

The matter was investigated by the Houston office of the Federal Bureau of Investigation and United States Department of Housing and Urban Development Office of Inspector General. The case is being prosecuted by Assistant United States Attorney John Braddock.

An indictment is a formal accusation of criminal conduct, and is not evidence. A defendant is presumed innocent unless and until convicted through due process of law.

Update on Thursday, April 9, 2009 at 8:30AM by The Editor - Ian Shuter - ACFE, DMS

The Houston Chronicle is reporting that Keith Raybon has admitted guilt in a conspiracy to place money in borrowers’ bank accounts to match an amount represented on their loan applications, said Richard Kuniansky, Raybon’s attorney, who added that it was a narrow part of the government’s allegations.

Jeannie Nelson, a former mortgage broker and executive vice president of Royal Lion Mortgage, also pleaded guilty to the same count as Raybon.

Houston Chronicle article