Justin W. Jeffries, 35, and Scott A. Jeffries, 59, were each sentenced to 5 years probation and restitution in the amount of $206,046.89 for their roles in the mortgage fraud scheme wherein they falsified the source of borrower down payments, among other things.
According to the plea agreements, from 2005 through the February of 2008, the defendants, owned and operated Ozark National Mortgage (ONM). While operating this mortgage brokerage house, ONM worked and was sharing office space with Greenleaf I.P Holdings, L.L.C, Greene County, within the Western District of Missouri.
During this period of time, Greenleaf would sponsor real estate investment seminars. These seminars were designed to recruit potential investors to apply for mortgage loans for the construction and sale of residential homes in the southwest region of Missouri and northwest region of Arkansas. The sales pitch that was made to potential investors by Greenleaf that included that that they would not have to put any of their money down and after two to three years, they would receive $10,000 per investment. Scott Jeffries was personally aware of these representations as they were present at several of these sales seminars and introduced several individuals to Greenleaf as prospective investors.
ONM, through Scott A. Jeffries and Justin W. Jeffries, would review the personal and financial information of each investor to determine whether each individual had sufficient assets and a credit score that would result in the approval of a loan with a lending institution. Once it was determined that the investor was eligible to obtain a loan, ONM would then create the necessary mortgage loan documentation to submit to a prospective lending institution for potential funding.
In each of these mortgage loan applications and specifically on the HUD-1 Settlement Statement, it was stated that the borrower, who is also the investor, was providing their cash as part of the closing transaction to obtain the loan from the lending institution. Prior to the closing of each mortgage loan, Greenleaf would transfer monies to an escrow account and a cashier’s check from such escrow account would be drawn in the name of the borrower. The cashier’s check drawn from the escrow account was in the exact dollar amount that the borrower owed at the time of the closing of the loan. The cashier’s check would then be presented at the closing as monies paid by the borrower, even though the true source of the monies was provided by Greenleaf.
Furthermore, all of the loan documents submitted by ONM, through Scott A. Jeffries and Justin W. Jeffries, to the lending institution indicated that the borrower was using their money as the source of the down payment. None of the loan documents, including the HUD-1, identified Greenleaf as providing any monies as the source of the down payment even though both Justin W. Jeffries and Scott A. Jeffries were aware that Greenleaf was the true source of the monies provided by the borrower at the time of the closing of the loan.
Officials with Flagstar Bank, one of the lending institutions that approved mortgage loans submitted by Justin W. Jeffries and Scott A. Jeffries through ONM, stated that they were misled as to the true source of the down payment provided by the borrower. A Flagstar Bank official stated that had they been aware that Greenleaf was the true source of the monies that were purported to have been provided by the borrower on each HUD-1 Settlement Statements, they would not have approved the funding on these loan applications.