Paxton Jeffrey Anderson, 44, Montevideo, Minnesota, and Joseph John Plany, 42, Hutto, Texas, were sentenced by U.S. District Court Judge Susan R. Bolton to eight years and four years in prison, respectively, and ordered to pay $3,270,425 in restitution. The defendants ran a scam wherein, unbeknownst to the borrowers, they forged and altered draw requests, and other documents, to withdraw money from the construction loans then used that money to buy racehorses and trips to the Kentucky Derby, among other things.
Anderson and Planey were convicted of multiple counts of bank fraud in June, 2014, after a three-week jury trial.
According to the evidence presented at trial, Anderson worked as a Phoenix-based general contractor between 2004-2007. During that time, and with the assistance of his bookkeeper Plany, Anderson made false representations to lenders to obtain construction loans for borrowers. Anderson used some of his friends and family as the borrowers for these fraudulently acquired loans. Unbeknownst to the borrowers, Anderson and Plany forged and altered draw requests, and other documents, to withdraw money from the construction loans.
Anderson and Plany would use the monetary draws for their own personal expenses instead of using the funds to construct homes for the borrowers. Some of these personal expenses included the purchase of racehorses and trips to the Kentucky Derby. As a result of the fraud, many borrowers were forced into bankruptcy because their homes were never completed and were foreclosed upon by lenders.
The investigation in this case was conducted by the Internal Revenue Service Criminal Investigation, U.S. Postal Inspection Service, and the Federal Bureau of Investigation. The prosecution was handled by Assistant U.S. Attorneys Kevin M. Rapp and Monica B. Klapper.
“This is yet another reminder of the damage that mortgage fraud has caused to our community,” said U.S. Attorney John Leonardo. “The defendants committed fraud at the expense of other homeowners and lenders, all in the name of greed.”
“The defendants orchestrated a multi-million mortgage fraud scheme that caused severe financial and emotional harm to numerous victim investors. Anderson was the mastermind who diverted hundreds of thousands of dollars to finance his love for horse racing and gambling, while Plany supervised the day-to-day details of the fraud and failed to alert unsuspecting borrowers to the illegal diversion of funds” said Dawn Mertz, Special Agent in Charge, Internal Revenue Service Criminal Investigation.