Ming Shan Zhu, 57, Katy, Texas, the owner of Catco Homes; Alvin Mark Eiland, 45, Houston, Texas, former owner of Future Mortgage Company Inc.; and Gary Leonard Robinson II, 28, Houston, Texas, a former employee of Future Mortgage Company Inc., have been charged with offenses arising from a scheme to defraud residential mortgage lenders of more than $7 million in loans in connection with home purchases in the Houston, Texas area.
According to the allegations in the indictment returned at the end of December 2009, over a two-year period beginning in August 2004, Eiland, Robinson and Zhu located properties for sale in the Houston, Texas area. Eiland and Robinson then recruited individuals with good credit to act as borrowers in applications for residential mortgage loans to purchase one or more of these homes. The borrowers were allegedly paid cash to use their name and credit and told that the homes would be rented out for a year. Eiland and Robinson, according to the indictment, would then sell the home at an inflated price determined by Zhu, resulting in a significant profit.
Eiland and Robinson, according to the allegations in the indictment, set up sham construction companies to which Zhu would facilitate the forwarding of money at closing. Eiland generally told each borrower he would buy the home in the borrower’s name, make any monthly mortgage payments, find others to live in the home and pay monthly rent, take the home out of the borrower’s name after a period of time and compensate the borrower. Eiland and Robinson then allegedly completed and caused to be completed Uniform Residential Loan Applications in the names of the borrowers that overstated their employment income and other assets, understated or omitted their debts and other liabilities, falsely represented that the borrowers leased the homes they resided in and received income from the rent and falsely claimed that the borrowers intended to occupy the newly purchased homes, all of which were material to the lenders’ decisions to approve the applications and fund the loans. In support of those fraudulent loan applications, Eiland and Robinson are accused of submitting and causing to be submitted false and fraudulent documentation, including sham lease agreements and bogus employment information.
At or near the closings for those home purchases, the indictment alleges Eiland, Robinson and Zhu caused title companies to disburse the fraudulently-induced loan proceeds to various individuals and entities, including Catco Homes and the sham construction companies. Eiland, Robinson and Zhu are accused of having represented to the title companies that the sham construction companies had been hired for projects to improve those properties when, in fact, the improvements were not made or were already in the home since the home purchased was a newly constructed home.
Zhu, Eiland, and Robinson are charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, and money laundering. Zhu and Robinson surrendered to federal authorities today. At hearing before United States Magistrate Judge Stephen Wm. Smith, Zhu and Robinson were ordered released. Zhu was ordered released upon posting a $5,000 cash deposit of a $50,000 bond into the registry of the court pending trial in this case. Robinson was ordered released on a $50,000 unsecured bond. Eiland has been ordered release upon his posting a $20,000 cash deposit of a $100,000 bond into the registry of the court. United States District Judge Lynn N. Hughes will preside over the case which has been set for trial in late March.
The maximum penalty, upon conviction, for each wire fraud and money laundering count is 20 years in prison as well as substantial fines. A conviction for money laundering carries the most significant fine of $500,000 or twice the value of the property involved in the transaction, whichever is greater.
The investigation leading to the charges was conducted by the FBI and IRS-CI. Assistant United States Attorney Jennifer Lowery is prosecuting the case.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.