3 More Guilty Pleas in $12.6 Million Mortgage Fraud Scheme

admin —  May 27, 2009 — 1 Comment

Steven M. Salas, 35, Hacienda Heights, Califfornia, has pled guilty before U.S. Chief District Judge Fernando J. Gaitan for his role in a $12.6 million mortgage fraud conspiracy that involved 25 upscale residential properties in Lee’s Summit, Missouri, and Raymore, Missouri.

James F. Simpson, 40, Lee’s Summit, Missouri, pleaded guilty to the conspiracy on May 4,2009, and Willie Charles Cadenhead, 39, Grandview, Missouri, pleaded guilty to the conspiracy on May 13, 2009. 

Of the 17 defendants previously indicted back in November 2008, Salas, Simpson and Cadenhead are among nine defendants who have pleaded guilty to the scheme to buy and sell new homes – all of which were built by Jerry R. Emerick, 39, Raymore – in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans for more than the actual sale price by providing false information to mortgage lenders, then kept the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from Emerick, with kickbacks ranging up to $125,000 on each house.

In total during the course of the conspiracy from June 2005 to May 2007, mortgage lenders approved loans for 25 homes totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders’ knowledge.

Simpson admitted that he purchased three properties in Raymore and one property in Lee’s Summit as part of the conspiracy. In obtaining mortgage loans to make the purchases, Simpson signed loan applications containing material misrepresentations upon which the lender relied. The misrepresentations included: income and employment, address, occupancy, and use of proceeds. Simpson did not intend these residences to be his primary residences. The resulting loans totaled $1,406,100. From the purchase of these properties, unbeknownst to the lenders, Simpson received $302,000 (paid to his company M-PEN Investments, Inc., and at his direction to Wells Fargo Home Loan).

Salas admitted that he purchased three properties on Southeast Snaffle Bit Court in Lee’s Summit as part of the conspiracy, in each instance making material misrepresentations upon which the lenders relied in making the mortgage loans totaling $1,645,390. From the purchase of these properties, and unbeknownst to the lenders, Salas received kickbacks totaling $255,000.

Cadenhead admitted that he purchased one property on Southeast Snaffle Bit Court in Lee’s Summit as part of the conspiracy. In obtaining mortgage loans to make the purchase, Cadenhead made material misrepresentations in the loan applications upon which the lender relied, including false income, asset and liability information, occupancy, false representation that he had not had a foreclosure in seven years and false representations regarding the use of the proceeds. The loans totaled $516,455. From the purchase of this property, unbeknownst to the lender, Cadenhead received $94,000 payable to his company, Awesome Innovations.

Emerick owns and operates Ty Construction and Residential Contracting, LLC, which is engaged in the business of residential construction, primarily in Lee’s Summit and Raymore. He pleaded guilty on April 9, 2009, to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines.

As previously reported back in April, 2009, Emerick admitted to participating in the fraudulent mortgage loans involving 22 residential properties in Lee’s Summit and three residential properties in Raymore. Emerick was aware that loan applications and supporting documentation containing material false and fraudulent representations and omissions of fact would be submitted to mortgage lenders. Emerick was also aware that buyers were creating false business entities in order to receive loan proceeds without the knowledge of the lender.

Emerick admitted that he submitted to title companies false documentation and made fraudulent material representations to title companies, in order for the buyers to receive funds from the loan proceeds; he also made payments to the buyers outside of closing.

As previously reported on Mortgage Fraud Blog, Stefan M. Guerra, 30, Lee’s Summit, and Daryle A. Edwards, 37, and Leon T. Jones, 42, both of Olathe, Kansas, pleaded guilty in March of 2009.

Guerra, a former mortgage loan officer at Midwest Equity Mortgage, admitted that he purchased one property from Emerick and acted as a broker on 11 other properties involved in the conspiracy. The loans on the 12 properties totaled more than $5 million.

Jones admitted that he purchased a property in Lee’s Summit from Emerick as part of the conspiracy, a purchase that involved Guerra. Jones also admitted that he made material misrepresentations upon which the lender relied in making the mortgage loans totaling $509,000. From the purchase of this property, unbeknownst to the lender, Jones received approximately $50,000 from Emerick.

Edwards also admitted that he purchased a property in Lee’s Summit from Emerick as part of the conspiracy, and that he made material misrepresentations upon which the lender relied in making the mortgage loans totaling $410,000. Edwards used a false Social Security number, a false address and false employment, and falsely claimed that he would occupy the property. Edwards also admitted that he made false representations regarding the use of loan proceeds; Edwards received a $76,600 check from Emerick that was payable to DAECO Construction, Inc., a company owned by Edwards, which was not disclosed to the mortgage lender or to the title company.

Judith W. Williams, 48, Bunkie, Louisiana, pleaded guilty on March 17, 2009, to her role in the conspiracy. Williams admitted that she purchased a property in Lee’s Summit from Emerick as part of the conspiracy, and that she made material misrepresentations upon which the lender relied in making the mortgage loans totaling $456,000. Williams admitted that she received a payment of $100,150 from Emerick, which was not disclosed to the mortgage lender or to the title company. The check was deposited into the bank account of People’s Construction, a business entity that she used in order to receive those proceeds.

As previously reported, Ronald E. Brown, Jr., 39, Gladstone, Missouri, pleaded guilty on Jan. 8, 2009, to his role in the conspiracy. Brown, a self-employed insurance agent doing business as The Brown Insurance Agency in Kansas City, Kansas, obtained insurance for the properties that were purchased. After purchasing two false Social Security numbers for $10,000, Brown used the false Social Security numbers to purchase three properties in Lee’s Summit from Emerick. In each case, Brown made material misrepresentations upon which the lenders relied in making the mortgage loans, which totaled $1,339,700. From the purchase of these properties, unbeknownst to the lenders, Brown received a total of $279,426 from Emerick.

Under federal statutes, Salas, Simpson and Cadenhead are each subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation.

Be Sociable, Share!

admin

Posts Google+

One response to 3 More Guilty Pleas in $12.6 Million Mortgage Fraud Scheme

  1. what did emerick get get charged with

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong> 

*