F. Jeffrey Miller, 49, Stanley, Kansas, a Kansas City builder, has been sentenced to 108 months in federal prison for conspiracy to commit bank fraud and money laundering in a $5 million mortgage fraud scheme. Miller was tried and convicted in 2008 on one count of conspiracy, one count of money laundering and two counts of criminal contempt. Also sentenced was co-defendant Hallie Irvin, 30, Lenexa, Kansas, who was sentenced to 24 months.
During trial, prosecutors presented evidence that Miller, a building contractor in Kansas, Missouri and other states, conspired with co-defendants to commit bank fraud. The conspiracy involved defrauding financial institutions that loaned money to people who purchased houses built by Miller or other home builders on lots owned and developed by Miller, who operated under the name Star Land Development. The lenders were defrauded by loan applications and house appraisals that overstated the borrower’s income, overstated the borrowers’ financial history and strength, inflated the value of the house through manipulated appraisals and overstated the contract price. The fraud also involved failing to inform lenders that the builders rather than the borrowers paid the down payments and/or closing costs for some buyers and covered the cost with a second mortgage.
The result was lenders extended loans, at a higher loan-to-value ratio than their loan documentation indicated, to borrowers whose incomes could not support the loan payments and whose credit history indicated that they were poor risks for payment. Most of the borrowers ultimately defaulted on the loans and foreclosure proceedings followed.
During trial, there was testimony characterizing Miller as the person in charge who directed the scheme and profited from it all. There was testimony that it was Miller who decided to target home buyers who had poor credit and to do “whatever it took” to get financing.
Miller also was ordered to pay a money judgment of $2.67 million.
Welch commended IRS-Criminal Investigation, Housing and Urban Development’s Office of Inspector General, Assistant U.S. Attorney Richard Hathaway, and Assistant U.S. Attorney Christine Kenney for their work on the case.
Thanks to mortgage fraud blog for detailing the schemes and trial of this major group of criminals. The “rumor mill” in Missouri attributes much more in the way of con games and fraud than came out in these trials to the people who were indicted. I hope that the FBI is looking beyond the mortgage frauds it documented to some of the other possible activities of this group and alleged connections to banks and attorneys, verbal fraud, and the hundreds of businesses and people who have been destroyed by such schemes. Following up on where the bulk of the money may have gone might reveal the rest of the story.