Son of disgraced ex-Senator charged in Louisiana flipping fraud
Wednesday, June 20, 2007 at 8:11AM 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.
The Editor - Ian Shuter - ACFE, DMS
On July 11, 2007 the FBI in New Orleans announced that Calvin Davis entered a guilty plea in the ongoing “housing flipping” scheme. Davis admitted in that document that he purchased the properties, obtained fraudulent appraisals and arranged for straw buyers to purchase them. DAVIS then sent the strawbuyers to Citywide Mortgage to obtain loans by using fraudulent employment and credit documents as well as false tax returns.
These loans were approved by MICHELLE COCHRANE, a former underwriter at Citywide Mortgage. COCHRANE recently admitted at her guilty plea, that she participated in the house flipping scheme with DAVIS and others. COCHRANE pled guilty to approving fraudulent FHA/HUD loan applications for the “straw buyers” while employed at Citywide Mortgage. COCHRANE also admitted that after she approved the fraudulent loan applications, the loans were forwarded to the HUD offices in Denver Colorado. 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. According to a plea letter filed in Court, DAVIS is expected to provide cooperation. DAVIS will remain on bond while awaiting sentencing .
Resources:
FBI Press Release
Plea Agreement
The Editor - Ian Shuter - ACFE, DMS
Michael O’Keefe, Jr. age 49, a resident of New Orleans Louisiana, and President of Citywide Mortgage Company, pled guilty in federal court this morning before U.S. District Judge Ivan L.R. Lemelle to making false statements during a transaction with the U. S. Department of Housing and Urban Development (HUD), announced U. S. Attorney Jim Letten.
The charge to which O’KEEFE pled was contained in a superseding information that was filed this morning. According to the factual basis as well those filed in the prosecutions of CALVIN DAVIS and MICHELLE COCHRANE describes a “housing flipping” scheme at Citywide Mortgage Company. DAVIS purchased properties in the 9th Ward and Lower 9th Ward, obtained fraudulent appraisals and arranged for straw buyers to purchase them. DAVIS then sent the strawbuyers to Citywide Mortgage to obtain loans by using fraudulent employment and credit documents as well as false tax returns. These loans were approved by MICHELLE COCHRANE, a former underwriter at Citywide Mortgage knowing that the loans were fraudulent. After she approved the fraudulent loan applications, the loans were forwarded to the HUD offices in Denver, Colorado. Based on the fraudulent applications, HUD insured the loans, which were then sold to investors on the secondary market. Various properties eventually went into default and HUD became responsible for paying off those loans.
The Editor - Ian Shuter - ACFE, DMS
CALVIN DAVIS, age 48, and a resident of New Orleans, Louisiana, was sentenced today by the Honorable Martin L.C. Feldman to forty (40) months imprisonment pursuant to his plea of guilty to Conspiracy to Commit Mail Fraud, Making False Statements to Obtain HUD Insurance and Making False Statements In Income Tax Returns, announced U.S. Attorney Jim Letten.
The Editor - Ian Shuter - ACFE, DMS
MICHELLE COCHRANE, age 48, a resident of Folsom, Louisiana, was sentenced yesterday in federal court by U. S. District Judge Carl J. Barbier to one year and one day in federal prison for her role in a conspiracy to make false statements to obtain HUD insurance, announced U. S. Attorney Jim Letten. Additionally, Judge Barbier ordered the defendant to pay restitution in the amount of $95,000. Judge Barbier considered the cooperation provided to the government by COCHRANE in imposing the sentence.
According to court documents, COCHRANE conspired with CALVIN DAVIS, and devised a “housing flipping” scheme and their respective roles in that scheme. COCHRANE, a former underwriter at Citywide Mortgage, previously pled guilty admitting that while employed at Citywide, she participated in a house flipping scheme in which DAVIS purchased properties, obtained fraudulent appraisals which overvalued the property and then arranged for the straw buyers to purchase them. COCHRANE approved fraudulent FHA/HUD loan applications for the “straw buyers.” The fraudulent loan applications included not only false tax information, but also false credit information and an inflated real estate appraisal. 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.
COCHRANE is the 6th person to be sentenced for offenses stemming from this investigation. CALVIN DAVIS was sentenced to 40 months pursuant to his pleas of guilty to Conspiracy to Commit Mail Fraud, Making False Statements in an Income Tax Return and Making False Statements in a HUD Transaction. ROBERT GREEN, who pled guilty to Making False Statements in HUD transaction and admitted that he prepared the fraudulent tax returns, was sentenced to a probationary term. Three “straw buyers” TIMOTHY FALLS, DENNIS ADDISON and DENNIS LEBLANC who also pled guilty to Making False Statements in HUD Transaction were sentenced to probationary terms. MICHAEL O’KEEFE, JR., who pled guilty to Making False Statements in a HUD transaction, is awaiting sentencing.
The Editor - Ian Shuter - ACFE, DMS
According to official court records and news reports on October 14, 2009 Michael O’Keefe Jr. was sentenced to 18 months imprisonment. He was ordered to surrender to start his sentence on 1/4/2010.
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