Matthew Paul Kay, 36, a British citizen who formerly lived in West Los Angeles and the Park La Brea district of Los Angeles, California, a former real estate agent and mortgage broker charged with running a multi-million dollar mortgage fraud scheme was ordered held without bond after arriving in the United States to face federal fraud, identity theft and tax charges.
Kay was ordered detained late today by United States Magistrate Judge Jay C. Gandhi.
After being named in a 25-count indictment returned by a federal grand jury, Kay was arrested August 20, 2011, and subsequently deported by authorities in the Independent State of Samoa, a Pacific island nation. Kay had been living and working at a beach resort on the Samoan island of Upolu since October 2010, when he left Los Angeles.
After arriving in Los Angeles last weekend, Kay was arraigned in United States District Court in Los Angeles, at which time he pleaded not guilty to the charges in the indictment. The case was assigned to United States District Judge Manuel L. Real, who scheduled a trial for November 1, 2011.
Kay and unnamed co-conspirators participated in a wide-ranging and sophisticated conspiracy from 2006 to 2007 to defraud mortgage lenders out of millions of dollars, according to the indictment. Kay, who ran a mortgage brokering company and a property management company, recruited “straw borrowers” to fraudulently obtain mortgages. Using the names and credit histories of the straw borrowers, Kay and his co-conspirators submitted loan applications that contained significant false information. For example, Kay and the others falsely stated that the straw borrowers were wealthy individuals with high incomes and that they intended to live in the homes being purchased. In reality, none of the straw borrowers was wealthy, successful, or intended to repay the loans, the indictment alleges. On the basis of these false statements, Kay and his co-schemers convinced the lenders to fund nearly $6 million in mortgages on five Southern California properties specified in the indictment.
According to the indictment, Kay profited from the scheme by collecting mortgage brokering fees and rent from tenants who lived in the homes after escrow closed. He also skimmed hundreds of thousands of dollars in equity in the homes by “flipping” them ““ selling them at increasingly higher prices.
Kay also allegedly stole the identities of some of the straw borrowers and used their names and credit in the scheme without their knowledge or approval. Two counts of aggravated identity theft alleged in the indictment are based on one such straw borrower, whose name and credit were used by Kay and others, without his knowledge or permission, to buy homes in Valley Village and Simi Valley.
Kay is also charged with failing to file a tax return for the year 2006, despite making hundreds of thousands of dollars in that year from the mortgage fraud scheme.
The indictment charges Kay with one count of conspiracy to commit wire fraud, 21 counts of wire fraud, two counts of aggravated identity theft, and one count of failure to file a tax return. If he is convicted of all counts in the indictment, Kay faces a maximum possible sentence of 430 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The charges against Kay are part of an ongoing investigation being conducted by the Federal Bureau of Investigation and IRS – Criminal Investigation.
Kay was returned to Los Angeles under escort by Special Agents of the FBI, which coordinated with the United States Embassy in Samoa to facilitate Kay‘s return to the United States. The United States Department of State provided substantial assistance during this process.