The Mortgage Fraud Blog

In the following press release, Jim Letten, U. S. Attorney for the Eastern District of Louisiana announced that MICHAEL O’KEEFE, JR., age 47, of Poplarville, MS and formerly of New Orleans, has been charged in a five count indictment in connection with an on-going federal investigation into a “house-flipping” scam at Citywide Mortgage.

Count One of the indictment charges O’KEEFE, JR. with violation of Title 18, United States Code, Section 371, Conspiracy to Defraud the United States. The range of punishment for this offense is a term up to five years imprisonment, and a fine of $250,000. Count Two charges O’KEEFE, JR. with violation of Title 18, United States Code, Section 1956, Conspiracy to Commit Money Laundering. Counts Three, Four and Five charge O’KEEFE, JR. with Engaging in Monetary Transactions in Property Derived From Specified Unlawful Activity. The range of punishment for Counts Two, Three, Four and Five is 10 years imprisonment per count and a fine of $250,000. Restitution can be ordered by the sentencing court.

The indictment (click here for a copy) alleges a “housing flipping” scheme that involved fraudulent FHA loan applications at Citywide Mortgage and the role O’KEEFE, JR. had in that scheme. It is alleged that O’KEEFE, JR. assisted his underwriter in compiling and approving fraudulent loan applications through the use of a “ghost” employee. The fraudulent loan applications included false tax information, false credit and employment information and an inflated real estate appraisal. The underwriter at Citywide approved the loans and applied for HUD insurance for the loans. Based on the fraudulent applications, the Department of Housing and Urban Development insured the loans. Citywide then sold the loans to another mortgage company. Various properties eventually went into default and HUD became responsible for paying off those loans. Editor note - Two properties are mentioned in the indictment, 5120-22 Dauphine and 5442 Dauphine.

Counts Two, Three, Four and Five allege that O’KEEFE, JR. engaged in various financial transactions with monies derived from the criminal scheme. Specifically, it is alleged that O’KEEFE, JR. used these criminally-derived proceeds to pay off delinquent mortgages that had been originated by Citywide Mortgage. The indictment charges that O’KEEFE, JR. arranged for the purchase of cashier’s checks used in the transactions.

O’KEEFE, JR. is the seventh person charged in the on-going investigation. Five other persons have also been charged and have entered pleas of guilty. Earlier, MICHELLE COCHRANE, a former underwriter at Citywide Mortgage, pled guilty to charges that she conspired with others while employed at Citywide Mortgage to make false statements to HUD in order to obtain HUD mortgage insurance for numerous fraudulent loans. Additionally, ROBERT GREEN pled guilty to charges that he prepared false tax returns which were used in support of various fraudulent loan applications. Three “straw buyers” TIMOTHY FALLS, DENNIS ADDISON and DENNIS LEBLANC have pled guilty to charges that they acted as straw buyers. CALVIN DAVIS, remains charged with Conspiracy to Commit Mail Fraud, Making a False Statement in a HUD Transaction and Income Tax Evasion for his role in the “house flipping scheme.”

U. S. Attorney Letten reiterated that an indictment is merely a charge and that the guilt of the defendant must be proven beyond a reasonable doubt.

This case was investigated jointly by Special Agents of the Federal Bureau of Investigation, the Department of Housing and Urban Development, Office of Inspector General, the Internal Revenue Service, Criminal Investigation Division and the United States Postal Inspection Service. This case is being prosecuted by Assistant United States Attorney Abram McGull II and the Chief of the Organized Crime Strike Force Unit, Mark A. Miller, both of whom will continue conducting this important program fraud investigation.