Russell Todd McBride, Creve Coeur, Missouri, and Robert P. Wrolstad, O’Fallon, Missouri, have pleaded guilty to to federal charges of inflating the price of more than 250 properties, costing lenders $7 million to $20 million court in a mortgage scheme that artificially inflated appraisals, according to media reports.
As previously reported by Mortgage Fraud Blog, McBride and Wrolstad been indicted in a mortgage fraud scheme involving the sale of residential real estate located in Sikeston, Missouri. McBride and Wrolstad have been charged in a 34-count Indictment for their alleged involvement in the scheme.
According to the indictment, McBride was an operator of Century Mortgage and Finance, Inc., which was in the business of providing mortgage-related services, and had offices located in Sikeston, Cape Girardeau, St. Louis County and elsewhere. As a mortgage broker, Century Mortgage would locate and obtain prospective mortgage lenders for prospective borrowers. Employees and others associated with Century Mortgage would prepare mortgage applications and supporting documents for borrowers. Then, for a fee, Century Mortgage would find a mortgage lender to make the loan. Wrolstad is alleged to have worked with McBride and for Century Mortgage, providing services including assisting in closing real estate transactions and working with title companies.
The indictment alleges that the scheme, which occurred from at least July 2005 and continued though November 28, 2006, involved investors recruited by McBride and Wrolstad purchasing real estate primarily located in Sikeston, Missouri. The owners of the real estate would sell the properties at or near fair market value to investors recruited by and known to McBride and Wrolstad. However, the investors paid prices significantly greater than the actual selling price received by the sellers for the properties. The investors would purchase the property at a fraudulent and overvalued price by obtaining loans to purchase the property. As part of the scheme, McBride and Wrolstad obtained appraisals, which significantly overvalued the properties, which enabled them to personally obtain inflated loan proceeds despite having no interest in the conveyed real estate.
According to the indictment, McBride represented to investors that the residential real estate properties were good investment properties, that the rents would pay the mortgage, that the properties could be acquired with “no money down,” and that the properties could be sold, sometimes in approximately a year, at a profit. As part of the scheme, McBride and Wrolstad are alleged to have also paid monies to investors as an inducement for them to purchase residential real estate funded by loans brokered through Century Mortgage. For example, in one case a purchaser paid $66,000 for a property that the seller sold for $7,500.
The indictment alleges that, in many cases, purchasers of real estate secured by loans brokered by Century Mortgage as part of the scheme did not provide closing costs or down payments to acquire the real estate. McBride and Wrolstad, and others acting on their behalf, would provide the investors with the funds for the down payment and closing costs. McBride and Wrolstad are also alleged to have caused mortgage loan companies to send the loan proceeds by wire transfers in interstate commerce, and to have caused warranty deeds, deeds of trusts and other closing documents to be sent from the offices of the closing agents by commercial interstate carrier to the lenders and the Recorder of Deeds in Scott County, Missouri.
McBride and Wrolstad are alleged to have directed purchasers and closing agents to pay McBride and Wrolstad substantial sums of the mortgage loan proceeds by checks or wire transfers into their personal bank accounts or other bank accounts controlled by them. “Crimes of this nature are not victimless, and in the end consumers and entire communities share the cost of recovery,” said Postal Inspector James Ball, AIC for the St. Louis Field Office. He added, “Postal Inspectors are committed to ensuring the mail is not used for any type of fraud, large or small.”
The indictment charges McBride and Wrolstad with one count of conspiracy to commit wire fraud and mail fraud, 12 counts of wire fraud and 12 counts of mail fraud. In addition, McBride is charged with 6 counts of money laundering, and Wrolstad is charged with 3 counts of money laundering.