In a press release United States Attorney Stephen J. Murphy announced that Safi Sobh, 34, of Dearborn, Michigan, was found guilty today of conspiring to commit bank fraud by submitting false documents in support of mortgage loan applications, and of aiding and abetting bank fraud. Co-defendant Amed Shami, 25, of Dearborn, was acquitted of the same charges.  Murphy was joined in the announcement by FBI Special Agent in Charge Andrew Arena, of the Detroit Division.

The jury deliberated for about five hours before returning the verdicts, concluding a three-week trial before United States District Patrick J. Duggan.

The evidence presented during the trial showed between July 2002 and December 2005, Safi Sobh was the leader of a conspiracy that successfully corrupted the system of checks and balances that lending institutions rely upon to determine how much money they can safely lend on a property, and whether a particular borrower is likely to repay the loan. Ohio Savings Bank, Standard Federal Bank, and several other federally insured financial institutions relied upon the false representations of the conspirators and loaned millions of dollars, most of which has not been recovered. Working out of his realty, The Success Group, Safi Sobh hand-picked and taught his co-conspirators how to commit these crimes. The eight co-conspirators who were also indicted and who pleaded guilty included corrupt loan originators, processors, appraisers, and straw buyers. Amed Shami was acquitted of being a straw buyer on two of approximately 30 properties.

Aiding and abetting bank fraud carries a maximum penalty of 30 years in custody and a $1,000,000 fine; conspiracy carries a maximum of 5 years in custody and a $250,000 fine.  Safi Sobh’s sentencing has not been scheduled.

United States Attorney Stephen J. Murphy said, “The mortgage lending process depends on the honesty of brokers, appraisers, and real estate agencies. When this process is corrupted by a team of fraudsters, as it was in this case, the result will be a federal prosecution. I salute the hard work of the FBI and the prosecutors who handled this complex fraud trial.”

The case was investigated by agents of the Federal Bureau of Investigation, and prosecuted by Assistant United States Attorneys Cynthia Oberg and Julie Beck.

In a press release earlier this afternoon United States Attorney David E. Nahmias  announced that after an eight week trial, a federal jury today returned guilty verdicts against ten defendants charged with multiple counts in a mortgage fraud scheme that targeted the Atlanta metro housing and condo market from 2000 through part of 2003.  The verdicts returned today included guilty verdicts on charges of loan fraud, wire and mail fraud, and money laundering.

United States Attorney David E. Nahmias said of the verdicts, “The monetary loss calculated to date is in excess of 41 million dollars but we expect it to be significantly higher when we conclude our work. More importantly, this monetary loss, as great as it is, does not fully capture the loss to the many neighborhoods and condominium communities that have been gutted of their value due to this one fraud scheme. These guilty verdicts condemn the corrupt actions of the key people who were responsible for this fraud scheme, from crooked attorneys and appraisers, to loan officers, to the man at the top, Phillip E. Hill. The verdicts in this case take us one step closer to repairing the corroded cornerstone of a large-scale corrupt housing market that has made the metro Atlanta area one of the most active mortgage fraud locations in the nation.”

Rebecca A. Sparkman, Special Agent in Charge, Internal Revenue Service, Criminal Investigation, said of the case, “Mortgage fraud adds to the underground economy that erodes the integrity of our tax system and threatens the financial health of our communities. Mortgage fraud is a serious offense and the punishment must be as serious as the crime.”

The ten defendants found guilty today of participating in this conspiracy include:
MARCUS C. ALCINDOR, a/k/a “Christopher Alcindor,” 42, of St. Lucia, convicted of conspiracy, loan fraud, mail and wire fraud, and money laundering;
BARBARA BROWN, 34, of Marietta, Georgia, convicted of conspiracy and two counts of wire fraud; 
FRED FARMER, 59, of Roswell, Georgia, convicted of conspiracy, loan fraud, mail and wire fraud, and money laundering;
PHILLIP E. HILL, 49, of Blounstown, Florida, convicted of conspiracy, loan fraud, mail and wire fraud, and money laundering;
CHRISTINE LAUDERMILL, 40, convicted of conspiracy, loan fraud, wire fraud, and money laundering;
ROBERT POWERS, 45, of Cumming, Georgia, convicted of conspiracy, loan fraud, mail and wire fraud, and money laundering;
LESLIE RECTOR, 35, of Atlanta, Georgia, convicted of conspiracy, loan fraud, mail and wire fraud, and money laundering;
DAVID THOMAS, 46, of Baton Rouge, Louisiana, convicted of conspiracy, loan fraud, and money laundering;
DEAN THOMAS, 42, of Atlanta, Georgia, convicted of conspiracy and money laundering; and 
DAVID VAN MERSBERGEN, 46, of Atlanta, Georgia, convicted of conspiracy, loan fraud, and money laundering.

In addition to the defendants found guilty today, several other individuals pleaded guilty to mortgage fraud charges related to the same scheme before trial. These defendants include:
WILLIAM CHAVIS, 45, of Atlanta, Georgia;
JEREMY DERCOLA, 29, of Douglasville, Georgia, MICHAEL FLAKE, 31, of Stone Mountain, Georgia;
WESLEY GOLDEN, 57, of Atlanta, Georgia;
CHRISTOPHER HALCOMB, 45, of Cumming, Georgia;
WENDELL HIGGS, 42, of Suwanee, Georgia;
CORTNEY JACKSON, 49, of Detroit, Michigan,
WAYNE JENKINS, 49, of Atlanta, Georgia;
RASHID MUHAMMAD, 36, of Syracuse, New York; 
JULIAN PEREZ, a/k/a “Tony Perez,” 49, of Roswell, Georgia;
BRANT PETREE, 23, of Marietta, Georgia;
THEODORE TAGALAKIS, 36, of Atlanta, Georgia;
ANDREW WOLF, 45, of Alpharetta, Georgia.

CHERYL DENNY, 42, of St. Lucia, and JAMES MOSS, 49, of Roswell, Georgia, were acquitted in directed verdicts by the court before the jury began its deliberations.

The trial of two remaining defendants, RILEY GRAHAM, a/k/a “Riley Williams,” 39, of Detroit, Michigan, and ANNETTE SPEAR, 50, of Union City, Georgia, is tentatively scheduled for April, 2007.

CHRISTOPHER BAKER, 40, whose last known address was Canada, and CARL BEST, 42, of New York City; are both fugitives and are being sought. Anyone with information on these defendants is asked to call IRS-Criminal Investigation.

Click here for our original journal entry 

Bowling Green Daily News — November 6, 2004

The trial of Joe B. Murphy, the Gamaliel man accused of conspiracy to defraud the United States, which was reported in this journal on Tuesday 2nd Nov 2004, concluded Friday with a verdict of not guilty. After meeting for 30 minutes in the morning, the jury returned the unanimous verdict, much to the relief of Murphy.

“He’s just elated to have all this over with and behind him,” defense attorney Currie Milliken said. “He knew he was not guilty so he pled not guilty and that matter was submitted to the jury and the jury vindicated him. It means our system works.”

Original story from the Bowling Green Daily News - November 2, 2004

The Orange County Register, Calif. — Oct 19 2004

New Century Mortgage Corp. was cleared by a California jury Monday of involvement in fraud perpetrated by a former New Century employee and her boyfriend against an outside mortgage broker. The Orange County Superior Court jury made the finding after a day of deliberations and a 10-day trial in a lawsuit brought by Edward Arce, a mortgage broker who does business as Envizion Financial.

Arce alleged that in late 2002 and early 2003, Jared Tornow, who didn’t have a license to work as a mortgage broker, used Envizion’s name to arrange loans that were funded by New Century. Tornow was supposed to have been helping Arce identify potential applicants for loans, the suit said.

Tornow was helped in the fraud by his girlfriend, Susan Cridland, then a New Century employee, according to Arce’s suit. The jury awarded Arce damages of $25,000 against Tornow for breach of contract and $2,000 of compensatory damages against Tornow and Cridland for fraud, while finding New Century not liable.

New Century Mortgage, based in Irvine, is one of the country’s largest lenders to borrowers who have impaired credit histories or other difficulties getting credit. “We believe the jury’s decision today supports New Century’s position that it acted ethically and appropriately in all respects,” said New Century spokeswoman Erin Freeman.

Greg Brown, an attorney representing Arce, called the verdict “incredibly disappointing.” He had asked the jury to award damages of more than $1 million. New Century fired Cridland nine months after Arce sued, Brown said. New Century’s Freeman declined to comment on Cridland’s employment history with the company.

Judge Peter J. Polos will now decide whether Tornow must give up $237,000 in profits allegedly earned by using the name of Arce’s business. Polos also will decide whether to award punitive damages against Tornow and Cridland on the fraud claim.