4 Sentenced in Multi-Million-Dollar Cash-Back Scam

Allison Tussey —  March 30, 2010 — Leave a comment

Jeffrey Todd Crandell, 32, Gilbert, Arizona, Jake David Abegg Whitman, 33, Gilbert, Arizona, Frederic Charles Crum, 37, Gilbert, Arizona, and Tyson Kent Young, 30, San Tan Valley, Arizona, were sentenced on March 26, 2010, by U.S. District Judge G. Murray Snow for their respective roles in a multi-million dollar mortgage fraud scheme.

Judge Snow sentenced the two leaders of the conspiracy, Crandell and Whitman, to 62 months’ imprisonment and 10 months’ imprisonment, respectively, with Whitman receiving a lesser sentence due to his early guilty plea and cooperation with the prosecution. Meanwhile, Crum received a sentence of four months’ imprisonment and Young received deferred prosecution. (One remaining defendant, Erin Michelle Leastman, 28, Gilbert, Arizona, is scheduled to be sentenced on April 1, 2010. Leastman acted as the escrow agent in all but one of the transactions.)

Crandell and Whitman were the leaders of the scheme. In 2005, they obtained the rights to various parcels of real estate located in Chandler, Gilbert, and Queen Creek, Arizona, obscured their interest in those properties by placing them in the name of relatives or in corporate shells, and then recruited friends and acquaintances to buy the properties for inflated prices-often hundreds of thousands of dollars more than the cost of the land. Crandell or Whitman also acted as the mortgage broker in most of the transactions. In that capacity, they were responsible for preparing the buyers’ loan applications. They included multiple lies in the applications in order to persuade the lender to approve the loans. Among other things, they inflated the buyers’ incomes and assets and stated-falsely-that the buyers would be making the down payment. In fact, at closing, Crandell or Whitman would supply the down payment on behalf of the buyer and also provide a cash kickback to the buyer. All told, this scheme caused federally-insured banks to provide more than $6 million in loans and to suffer more than $1 million in losses after the properties fell into foreclosure.

The remaining defendants played supporting roles in the conspiracy. Crum acted as the mortgage broker for three properties and, in that capacity, prepared false loan applications and created doctored financial statements that overstated the buyers’ assets. Young agreed to pose as the owner of several properties in order to obscure Crandell‘s interest.

This prosecution is part of an initiative called “Operation Cash Back” in which dozens of defendants-including many real estate professionals-were indicted between 2007 and 2009. To date, 49 have been convicted through guilty pleas or following trial.

Operation Cash Back is part of a nationwide initiative under the Financial Fraud Enforcement Task Force established by President Obama. In Arizona, Operation Cash Back represents the efforts of the U.S. Attorney’s Office, FBI, Internal Revenue Service-Criminal Investigation Division, U.S. Immigration and Customs Enforcement, Department of Housing and Urban Development Office of the Inspector General, U.S. Marshals Service, U.S. Postal Inspection Service, U.S. Secret Service, the FDIC-OIG, Arizona Department of Financial Institutions, Arizona Attorney General’s Office, county attorneys and local police departments.

The investigation in this case was conducted by the Federal Bureau of Investigation. The prosecution was being handled by Dominic Lanza, Raymond Woo, and Kevin Rapp, Assistant U.S. Attorneys, District of Arizona, Phoenix.

“These prosecutions assist in demanding accountability from an adrift mortgage industry, which caused great stress to our economy,” said Dennis K. Burke, U.S. Attorney for the District of Arizona. “We are grateful to the FBI-led Mortgage Fraud Task Force that continues to investigate these matters.”


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Allison Tussey

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