In the following press release United States Attorney Mary Beth Buchanan announced on August 19, 2008, that on August 18, 2008, Joyce Davern, a resident of Pittsburgh, Pennsylvania, pleaded guilty in federal court to a charge of Wire Fraud Conspiracy.Davern, 37, pleaded guilty to one count before Chief United States District Judge Donetta Ambrose.

In connection with the guilty plea, Assistant United States Attorney Brendan T. Conway advised the court that Davern participated in a large mortgage fraud conspiracy that involved more than 75 loans and more than $4.6 million in loan proceeds.  Davern and other members of the conspiracy, including her daughter, Kelly Fields (see below), recruited borrowers to purchase properties at far above the true fair market values of the properties.  To secure financing to purchase the properties, Davern and Fields submitted loan applications to lenders on behalf of the borrowers that contained false representations about the borrowers’ financial condition.  In addition, Davern and Fields submitted fraudulent documents that supported the misrepresentations in the loan applications, including false pay stubs, false W-2s, false Verifications of Employment, and similar types of documents.  She also submitted false appraisals to the lenders that overstated the true market value of the properties that were to serve as collateral for the loan.

And finally, Davern and Fields would cause the loan proceeds to be distributed contrary to the representations made to the lender about how the loan proceeds would be distributed.  For example, she failed to disclose that the sellers of the properties were paying the buyers’ down payments, or that the sellers were otherwise kicking money back to the buyers and other members of the conspiracy.

Judge Ambrose scheduled sentencing for November 14, 2008.  The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both.  Under the Federal Sentencing Guidelines, the actual sentence imposed is based upon the seriousness of the offense and the criminal history, if any, of the defendant.

The Mortgage Fraud Task Force conducted the investigation that led to the prosecution of Davern.  The Mortgage Fraud Task Force is comprised of investigators from federal, state and local law enforcement agencies and others involved in the mortgage industry.  Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigations; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service.  Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.

Mortgage industry members with knowledge of fraudulent activity are encouraged to call the Mortgage Fraud Task Force at (412) 894-7550.  Consumers are encouraged to report suspected mortgage fraud by calling the Pennsylvania Attorney General’s Consumer Protection Hotline at (800) 441-2555.

Update on Thursday, August 28, 2008 at 07:32AM by The Editor - Ian Shuter

United States Attorney Mary Beth Buchanan announced today, August 8, 2008, that on August 7, 2008, Kelly Fields, a resident of Pittsburgh, Pennsylvania, pleaded guilty in federal court to a charge of Wire Fraud Conspiracy.

Fields, 36, pleaded guilty to one count before Chief United States District Judge Donetta Ambrose.

In connection with the guilty plea, Assistant United States Attorney Brendan T. Conway advised the court that Fields participated in a large mortgage fraud conspiracy that involved more than 75 loans and more than $4.6 million in loan proceeds.  Fields was employed by different mortgage brokers, and she recruited borrowers to purchase properties at far above the true fair market values of the properties.  To secure financing to purchase the properties, Fields submitted loan applications to lenders on behalf of the borrowers that contained false representations about the borrowers’ financial condition.  In addition, Fields submitted fraudulent documents that supported the misrepresentations in the loan applications, including false pay stubs, false W-2s, false Verifications of Employment, and similar types of documents.  She also submitted false appraisals to the lenders that overstated the true market value of the properties that were to serve as collateral for the loan.

And finally, Fields would cause the loan proceeds to be distributed contrary to the representations made to the lender about how the loan proceeds would be distributed.  For example, she failed to disclose that the sellers of the properties were paying the buyers’ down payments, or that the sellers were otherwise kicking money back to the buyers and other members of the conspiracy.

In the following press release United States Attorney David E. Nahmias announced that VIRGINIA ROSE NOVRIT, 67, of Hilton Head, South Carolina, CLARENCE LORENZO DAVIS, 68, of Hilton Head, South Carolina, GREGORY JEROME WINGS, JR., 25, of Atlanta, Georgia, OLYMPIA D. AMMONS, 31, of St. Louis, Missouri, and RONALD DENZIL MARTIN, JR., 37, of Lithonia, Georgia, were sentenced this week by United States District Judge Beverly B. Martin on charges of conspiracy, bank fraud, wire fraud, and money laundering related to a multi-million dollar mortgage fraud scheme.

United States Attorney David E. Nahmias said, “These defendants and their co-defendants are responsible for causing millions of dollars in losses to mortgage lenders by artificially inflating the sales prices on million dollar homes and submitting fraudulent loan applications to fund the purchases of these homes. In cooperation with federal, state, and local law enforcement agents, we will continue to vigorously investigate and prosecute mortgage fraud schemes in the metro Atlanta area.”

NOVRIT was sentenced to 3 years, 5 months in prison to be followed by 4 years of supervised release, and ordered to pay $839,585 in restitution. NOVRIT was convicted by a jury on November 26, 2007, after a three week trial.

DAVIS was sentenced to 4 years, 3 months in prison to be followed by 4 years ofsupervised release, and ordered to pay $839,585 in restitution. DAVIS was convicted by the same jury on November 26, 2007.

WINGS was sentenced to 10 years, 2 months in prison to be followed by 4 years of supervised release, and ordered to pay $8,577,845 in restitution. WINGS pleaded guilty on September 7, 2007.

AMMONS was sentenced to 5 years, 3 months in prison to be followed by 4 years of supervised release, and ordered to pay $7,549,044 in restitution. AMMONS pleaded guilty on October 2, 2006.

MARTIN was sentenced to 1 year, 1 day in prison to be followed by 3 years of supervised release, and ordered to pay $423,595 in restitution. MARTIN pleaded guilty on May 16, 2007.

According to United States Attorney Nahmias and the information presented in court: From late 2004 through early 2006, NOVRIT, DAVIS, WINGS, AMMONS, and MARTIN participated in a mortgage fraud scheme that involved millions of dollars in fraudulently inflated mortgage loans being provided to unqualified straw borrowers. The straw borrowers were paid as much as $600,000 per property from fraudulently obtained loan proceeds through shell companies. NOVRIT and DAVIS together obtained mortgage loans totaling more than $4 million within a six month period to purchase eight properties. WINGS obtained mortgage loans totaling over $1.2 million to purchase a single property by providing the lender with false qualifying information. WINGS also recruited a number of other unqualified buyers into the scheme and obtained a share of the fraudulently obtained loan proceeds from those transactions for doing so. AMMONS was a loan originator for “Ace Mortgage Funding,” a national mortgage brokerage firm.

AMMONS brokered fraudulent mortgages totaling over $7 million. MARTIN was paid $75,000 to act as a straw buyer and submit a fraudulent loan application for one property.

Four other defendants have already been sentenced to prison terms in related cases, and five more defendants await sentencing. This case was investigated by Special Agents of the Federal Bureau of Investigation. Assistant United States Attorneys Gale McKenzie, William L. McKinnon, Jr., and Douglas Gilfillan prosecuted the case.

In the following press release Hennepin County Attorney Mike Freeman announced the filing of charges in a $4.9 million mortgage fraud case. The fraud amount is the largest in a series of similar cases filed in recent weeks.

Charged with theft and racketeering in a 25 count complaint are Universal Mortgage, Inc., Universal President Donald Walthall, and Universal loan officers and agents Marlon Pratt, Rahmeen Underwood, Andre Bellfield and Cleveland Fields. Two of the defendants were taken into custody over the weekend and have been released from custody, however there are outstanding warrants for the remaining three defendants.

The complaint identifies 24 homes involved in the scheme, most of which are located in North Minneapolis and have gone into foreclosure. The complaint identifies five straw buyers used by Universal to purchase from 2 to 9 homes each.

The complaint alleges Universal Mortgage and its agents falsified the loan applications for its “straw buyers” to qualify them for bank loans. False statements in the applications concerned employment histories, incomes, assets, debts and intentions to reside in the purchased homes.

Freeman thanked several agencies including the U-S Postal Inspectors, the Minnesota Department of Commerce, the Minnesota Financial Crimes Task Force and the Federal Bureau of Investigations.

Resources:
Press Release

The following entry is reproduced from an article written by Steve Brandt for the Star Tribune.

A Minneapolis man sentenced on a federal mortgage fraud charge in 2001 now faces Hennepin County charges involving at least $1.2 million in mortgages that stretched from Bloomington to Blaine.

Larry D. Maxwell (pictured below), 52, was charged Monday with 10 counts in the alleged mortgage fraud, including racketeering. Also charged with nine counts of forgery, identity theft and theft by swindle was Realty Executive Advantage Plus Group. The real estate brokerage was operated from Maxwell’s north Minneapolis riverfront condo.

Larry Reed, Maxwell’s attorney, said that his client will plead not guilty. “Because Mr. Maxwell made a mistake in the past, they decided to go after him. He hasn’t done anything improper,” said Reed, who represented Maxwell in his federal case and said he had also bought a house from him.

The case is the fourth alleged mortgage fraud ring prosecuted under Hennepin County Attorney Mike Freeman. He said that the investigation is continuing in the case and that he couldn’t say if others would be charged.

The complaint against Maxwell lists four other uncharged conspirators in the racketeering count. They are Vickie Cox-Maxwell and Larry Scott, his wife and son and both agents of Realty Executive, mortgage broker Terrece Large of Worldwide Mortgage, Inc., where Maxwell was a loan officer, and Halisi J. Edwards-Staten, listed as the real estate broker for Realty Executive.

The complaint states that Edwards-Staten now lives in Georgia, which according to the complaint would violate state law requiring a licensed broker to monitor Realty Executive.

Edwards-Staten was an unsuccessful candidate for county commissioner in 1996. She resigned from a state supervisory position the following year after being suspended during an investigation into whether she had done anything improper in awarding a $50,000 contract to a nonprofit group run by her then-husband, former legislator Randolph W. Staten.

The complaint alleges that the criminal activity began about June 2006. That’s when Maxwell’s five-year probation would have expired from his 2001 admission that he submitted false documents so that a client could obtain a federally insured home loan.

The county complaint alleges that Maxwell’s transgressions came to light when a Plymouth man complained that his identity had been stolen to purchase properties, first in Minneapolis and later in Bloomington.

But Reed said, “They’re going after the wrong man in this case.” He said that the unidentified man came to Maxwell with a false identity and that when Maxwell found that out, he went to the mortgage company in an attempt to determine the man’s identity.

The complaint alleges that dozens of fraudulent loan applications were found after a search of Maxwell’s home and office last week. Maxwell was arrested the same day and bail was set at $250,000 on Tuesday.

It also said that Centennial Mortgage and Funding Inc. of Bloomington, a lender from whom Maxwell obtained loans, told investigators it suspected fraud in 10 property transactions.

In the following press release on November 16, 2007, the Office of U.S. Attorney for the Middle District of Tennessee, announced that Harold Stafford, Miles Jackson Black and Jeffrey Dunn Hathcock were indicted by a federal grand jury on Wednesday for conspiracy, wire fraud and bank fraud. In addition, Harold Stafford was charged with money laundering.

The fifty-one count indictment alleges that from January 2005 through October 21, 2005, Stafford, Black and Hathcock engaged in a mortgage fraud scheme that involved the purchase of approximately twenty-two luxury homes in Hendersonville and Gallatin by unqualified straw buyers. Stafford, Black and Hathcock caused the submission to mortgage lenders of false mortgage loan applications that overstated the straw buyers’ income, falsely stated that the homes would be the straw buyers’ primary residences, and failed to disclose other recent home purchases by the same straw buyers.

If convicted, Stafford, Black and Hathcock each face up to 30 years in prison, a $1,000,000 fine, and supervision for up to five years. However, any sentence following conviction will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and applicable federal statutes.

This case is being investigated by the United States Secret Service, the Internal Revenue Service Criminal Investigation Division and the 18th Judicial District Drug Task Force. The prosecution of this case is being supervised by Amul R. Thapar, United States Attorney for the Eastern District of Kentucky. Edward M. Yarbrough, United States Attorney for the Middle District of Tennessee has recused himself from this case due to his prior representation of an individual in matters related to this prosecution. The United States is represented in the case by Assistant United States Attorney Byron Jones.

The Tennessean further reports that the allegations are that the mortgage applications (1003):

1.     Overstated the straw buyers’ income

2.     Falsely stated that the homes would be their primary residences

3.     Failed to disclose recent home purchases by the same people.

According to the indictment, Stafford, the owner of Stafford Lease Group, Stafford Holding Group and Keys to Success, agreed with the builders and sellers of the 22 luxury homes to find buyers who would purchase the homes at prices that were $10,000-$165,000 more than their original asking prices. The builders and sellers agreed to pay Stafford any amount of the sale that exceeded the original asking prices of the homes, federal court records show.

Stafford recruited seven unqualified straw buyers with good credit histories to apply for first and second mortgages on multiple properties where the purchase price was greater than the seller’s original asking price, according to the indictment. He then instructed them to apply for mortgage loans through an office of Allied Mortgage Co., managed by Black and Hathcock.

Black and Hathcock reportedly required the straw buyers to fill out “Buyers Authorization Forms,” giving the company permission to check their credit reports. The pair and an unnamed employee then forged the buyers’ signatures on loan applications.

At Stafford’s request, some of the builders of the homes provided Allied Mortgage Co. with addenda to the real estate sales contract, describing the costs of additional improvements to the property to justify the increases in the contract sales prices, federal court records show. After closing, he informed the builders the buyers no longer wanted the improvements and instructed them to refund the costs of the work to the buyers or to himself, according to the indictment.

The builders and sellers paid Stafford kickbacks between $10,000 and $165,000 in the names of his three companies. He in turn paid the straw buyers some of that money, federal court records show.

Black and Hathcock received commissions on the mortgage loans they arranged for the straw buyers, based on false and misleading qualifying information and property valuations, and, on one occasion, they were paid a fee by one of the home sellers, according to the indictment.

In the following press release Eric Melgren, United States Attorney for the District of Kansas, announced that s ix people were indicted Wednesday on federal charges of taking part in a conspiracy to fraudulently obtain $14 million worth of loans on homes in the Kansas City area.

Named in the indictment were Wildor Washington, Jr., 37, Leawood, Kan.; Maurice Ragland, 33, Lee’s Summit, Mo.; Victoria Bennett, 34, Leawood, Kan.; Kara E. Robinson-Franks, 37, Grandview, Mo.; Scott Alexander, 69, Merriam, Kan.; and Terrence Cole, 41, Kansas City, Kan.

According to the indictment:

Washington owned Heritage Financial Investments, Legacy Enterprises, B&L Custom Development and Liberty Escrow. Through his companies, he prepared fraudulent loan applications submitted to lenders throughout the country including Hamilton Mortgage of Phoenix, Ariz; First Magnus of Overland Park, Kan.; Aegis Funding Corporation of Houston, Texas; National City Mortgage of Dayton, Ohio; Mortgage Solutions of Kansas City, Mo.; ABN Amro in Ann Arbor, Mich.; and Countrywide Home Loans in Overland Park, Kan.

Maurice Ragland owned TERM Appraisers, The Real Estate Group and JTF Enterprises, which created fraudulent property appraisal reports used to secure mortgage loans.

Bennett was a loan processor for Washington.

Robinson-Franks held herself out as a real estate agent and vice president of operations for Heritage Financial Investments and Legacy Enterprises.

Cole was chief financial Officer for Legacy Enterprises and Treasurer for Liberty Escrow.

Alexander was a licensed mortgage broker who owned Atlantic Mortgage.

According to the indictment, the conspiracy existed from January 2002 through January 2004 for the purpose of enriching the conspirators through obtaining artificially oversized home loans from lenders. Conspirators targeted home buyers with low incomes and limited experience in real estate. They told buyers they could obtain home loans regardless of their credit rating and financial situation.

The conspirators submitted fraudulently inflated real estate appraisals and false financial information to lenders. At or near the time of the closing, the conspirators imposed excessive and unexpected loan origination fees and higher interest rates on borrowers.

The conspirators obtained the identity of licensed appraisers by searching the Internet and appropriating their identifying information and state license numbers. The conspirators also used fictitious identities and license numbers.

Counts in the indictment include:

Conspiracy to commit mortgage fraud (Washington, Ragland, Bennett, Robinson-Franks, Alexander and Cole)

Wire fraud involving a property in the 200 block of Olive, Kansas City, Mo. (Washington, Alexander)

Wire fraud involving a property in the 4400 block of Virginia, Kansas City, Mo. (Washington, Alexander)

Wire fraud involving a property in the 500 block of Sharon Drive, Liberty, Mo. (Washington, Ragland, Alexander)

Wire fraud involving a property in the 4600 block of West 146^th Street, Leawood, Kan. (Robinson-Franks, Washington, Alexander, Bennett, Cole)

Another wire fraud involving a property in the 4600 block of West 146^th Street, Leawood, Kan. (Robinson-Franks, Alexander, Washington, Bennett)

Wire fraud involving a property in the 12400 block of East 58^th, Kansas City, Mo. (Washington, Alexander, Robinson-Franks, Cole)

Wire fraud involving a property in the 4600 block of West 146^th Street (Robinson-Franks, Washington, Alexander, Bennett)

Money laundering involving a property in the 500 block of Sharon Drive in Liberty, Mo. (Washington, Ragland, Alexander).

Money laundering involving a property in the 12400 block of East 58^th Street, Kansas City, Mo. (Washington, Alexander, Raglan)

Money laundering involving a property in the 4600 block of 146^th Street, Leawood, Kan. (Robinson-Franks, Bennett, Washington)

The Internal Revenue Service– Criminal Investigation, the Johnson County Sheriff’s Department, the Overland Park Police Department, and the U.S. Secret Service’s Financial Crimes Task Force worked on the case. Assistant U.S. Attorney Marietta Parker is prosecuting.

Resources:
Press Release

In the following press release David E. Nahmias, United States Attorney for Northern District of Georgia announced on October 17, 2007 that KEVIN G. WIGGINS, 41, of Ellenwood, Georgia pleaded guilty today in federal district court to charges related to a large-scale mortgage fraud scheme that targeted West End neighborhoods in Atlanta in 2001 and 2002. 

United States Attorney David E. Nahmias said of today’s guilty plea, “The use of a phony rehab scheme and straw borrowers to steal money from mortgage lenders on so many properties that were later foreclosed devastated an are of our community that was struggling to preserve its historic character.  This guilty plea, along with the prior guilty plea of a complicit appraiser, resulted from a committed FBI investigation supported by neighborhood activists. We will continue to aggressively investigate and prosecute those who promote such mortgage fraud schemes in North Georgia.”

FBI Special Agent in Charge Greg Jones said of the case, “The aggressive investigative and prosecutive team responsible for today’s guilty plea should be lauded for their efforts not only in this case but in other similar cases, which have had a tremendous impact in reducing the number of mortgage fraud schemes in the Metro Atlanta area. Today’s guilty plea should serve as a deterrent to others contemplating such schemes to defraud.”

According to United States Attorney Nahmias and the information presented in court:  WIGGINS contracted for the purchase of over 80 distressed properties primarily in Atlanta West End neighborhoods at their true value which ranged from $24,000 to $80,000. Then, before he actually purchased the property, he deeded the properties to unqualified straw borrowers, some of whom were relatives of his. Using false information about the, in fact, unqualified straw borrowers, arranged for financing for them and obtained a total of over $15 million in mortgage loans. When WIGGINS applied for those loans in the names of the straw borrowers, he inflated each property’s value by as much as $100,000 by falsely representing that the properties had been completely renovated or “rehabbed.” Furthermore, WIGGINS claimed the properties were occupied by tenants paying rent in excess of the projected monthly mortgage amount.  WIGGINS paid a co-defendant in the case, appraiser FRANK W. ASTWOOD, 37, of Hampton, Georgia, three times the legitimate appraisal fees to write appraisals that falsely reflected that each property had been rehabbed. 

In reverse order of the sequence of events in a legal real property transaction, WIGGINS purchased these properties after he had already “sold” them to the straw borrowers, using proceeds from the “sales” – which came from the fraudulently inflated mortgage loans obtained in the straw borrowers’ names – to buy the properties and to pay his appraiser, himself and other coconspirators.  WIGGINS operated this scheme through a number of companies he had established, such as “TWF,” and  “The Wiggins Family.” The lenders in this scheme suffered losses totaling approximately $7 million, and affected West End neighborhood property taxes doubled due in part to the fraudulently inflated property valuations.

WIGGINS, along with co-defendants ASTWOOD and LYDIA WIGGINS CHRISTOPHER, 59, of Union City, Georgia, were indicted by a federal grand jury in February 2007.

WIGGINS pleaded guilty today to one count of conspiracy and two counts of wire fraud.  He could receive a maximum sentence of 15 years in prison and a fine of up to $750,000 and be ordered to pay restitution of $7 million.  ASTWOOD pleaded guilty to this mortgage fraud conspiracy on June 14, 2007.  ASTWOOD could receive a maximum sentence of five years in prison and a fine of up to $250,000 and be ordered to pay restitution.  CHRISTOPHER has pleaded not guilty to the charges and awaits trial. No trial date has yet been set.

Sentencing is scheduled for WIGGINS and ASTWOOD, at January 31, 2008, at 10 a.m., before United States District Judge Jack T. Camp.

This case is being investigated by Special Agents of the Federal Bureau of Investigation.  The United States Attorney’s Office also wishes to thank residents of West End neighborhoods and the “30310 Mortgage Fraud Task Force” for their assistance and support. Assistant United States Attorney Gale McKenzie is prosecuting the case.

Update on Wednesday, August 27, 2008 at 08:10AM by The Editor - Ian Shuter

On July 27, 2008 it was announced that KEVIN G. WIGGINS, 41, of Ellenwood, Georgia; along with an appraiser, FRANK W. ASTWOOD, 37, of Hampton, Georgia, and an office manager, LYDIA WIGGINS CHRISTOPHER, 59, of Union City, Georgia were sentenced today by United States District Judge Jack T. Camp on charges related to a large-scale mortgage fraud scheme that targeted West End neighborhoods in Atlanta in 2001 and 2002.

United States Attorney David E. Nahmias said of today’s sentence, “This case started with concerns from neighborhood activists, which led to a diligent FBI investigation that revealed a scheme using phony rehabs and straw borrowers to steal
millions of dollars from mortgage lenders. But the lenders were not the only victims of these crimes: The multiple foreclosed properties had a devastating effect on neighborhoods known for their historic character. These criminals will now go to prison, and we will continue our work to bring to justice others responsible for mortgage fraud.”

WIGGINS was sentenced to 8 years, 4 months in federal prison. There is no parole in the federal system. He was also ordered to serve 3 years of supervised release, pay restitution in the amount of $6,477,164, and perform 200 hours of community service.

ASTWOOD was sentenced to 3 years in federal prison, to be followed by 3 years of supervised release, pay restitution in the amount of $4,289,575, and ordered to perform 150 hours of community service.

CHRISTOPHER was sentenced to 8 months in federal prison and 8 months to be served in home confinement, to be followed by 3 years of supervised release, pay restitution of $940,532, and ordered to perform 150 hours of community service.