Friday, December 19, 2008
U.S. v. Miller, et al.
Thursday, December, 18, 2008
Verdict:
F. Jeffrey Miller Guilty of Conspiracy and Money Laundering
Steven Vanatta Guilty of Conspiracy , Money Laundering and Bank Fraud
Hallie Irvin Guilty of Conspiracy , Money Laundering and Bank Fraud
Sandra Jo Harris Not guilty- all counts
Thursday, December 18, 2008
US v. Miller, et al - Jury Deliberation Day 2
Wednesday, December, 17, 2008
The jury deliberated starting at 8:00 a.m.. At 11:00 a.m., they sent a question to Judge Robinson. The jury's question related to a reference to 'Advahome, LLC' and 'who was connected?'
A second question came at 1:40 p.m. requesting transcript of a conversation between Miller and James Sparks regarding the contract and loan in the Jordan purchase.
In both instances, Judge Robinson admonished the jury to deliberate based on their collective memory, that transcripts are not evidence and that the court is not inclined to hunt for specific portion(s) of transcripts. Further, the Judge told the jury that the court will not determine whether such evidence (they requested) exists.
During the afternoon, while the jury continued to deliberate, the court held a forfeiture conference. This determines what property will be forfeited upon the jury's guilty verdict.
The jurors were dismissed at 5:00 p.m. Deliberation will resume at 9:00 this morning, Thursday, December 18th.
Wednesday, December 17, 2008
U.S. v. Miller, et al
Wednesday, December 17, 2008
The jury received instructions and heard closing arguments Tuesday. Late in the afternoon, they received the case and began deliberations.
Jury deliberations will resume at 8:00 a.m. today.
Monday, December 15, 2008
US. v. Miller, et al
Monday, December 15, 2008
The government has rested. The defense called Steve Vanatta, and on Friday, December 12, 2008, F. Jeffrey Miller took the stand to testify.
Today, Mr. Miller resumes the stand and is being cross examined by Government Special Attorney, Hathaway. Miller is shown the Kerrie Jordan sales contract:
Question: 'Who signed Star Land and Development?'
Answer: 'I don't know'
Question: 'You did receive the $8000 down payment, right?'
Answer: 'Yes'
Question: 'Do you recognize the handwriting to be that of Sam Harris?'
Answer: 'No'
Question: 'But you received the benefit of this sale, isn't that right?'
Answer: 'Yes'
Mr. Hathaway then questioned Miller about Vanatta's prior criminal history.
Question: 'There came a time when you wanted Vanatta to get his Real Estate licenses in Kansas and Missouri, is that right?'
Answer: 'Yes'
Question: 'How did you think Vanatta was going to become licensed with 2 felony convictions and 2 misdemeanor convictions?'
Answer: 'I didn't know the requirements.'
Question: 'Well, when did you become aware?'
Answer: 'When we got indicted'
Question: 'You went after sub-prime buyers, didn't you?'
Answer: 'Yes'
Question: 'And you took toys (in trade) didn't you? You took cars, motorcycles in trade, didn't you? You even took a African Safari for four, didn't you?'
Answer: 'Yes'
Question: 'Did you take that safari?'
Answer: 'No'.......................'I did get the head, though.'
Mr. Hathaway then moved to creative financing that Miller provided to buyers. On the occasions that Miller provided the buyers with some or all of the down payment, the contract price would go up. Miller would change the sales price up to and until the time of closing. Asked if Miller told buyers that their contracted price could go up based on the appraisal, Miller replied, 'no.'
Mr. Hathaway introduces Miller's prior deposition, where he testifies that his ability to provide second mortgage money is, 'helping people and helping society.'
The defense of F. Jeffrey Miller rests.
Re-Cross by Atty. Rork (Vanatta):
Question: 'Do you recall that the MREC (Missouri Real Estate Commission) says that you can in fact, sell real estate in which you have an ownership interest in?'
Answer: 'Yes'
Question: So, Mr. Vanatta had a 10% ownership interest in the Ruestland subdivision, right?'
Answer: 'Right'
The defense attorney of Steve Vanatta rests.
New Witness called by Sandra Jo Harris defense:
Jeffrey Haywood, Greenwood, MO is a escrow closer for Synergy Title Services. He explains that an escrow closer is an unbiased third party. He estimates that he has performed over 1000 closings in his 6 years of experience. Atty. Huff questions Haywood extensively regarding the length of time a closing takes and how many documents are signed. He has no specific recall of specific closings and testifies that he has 'heard of Star Land and Development.
In his cross examination, Atty Hathaway asked the witness if he had testified before in Federal Court, before the Western District of Missouri on a mortgage fraud case? 'Yes', was his reply.
The defense of Sandra Jo Harris, rests.
New Witness called by the Government:
Pamela Spruk, Lisa's Tax & Bookeeping.
Ms. Spruk testified that she was the employee that met Steve Vanatta when he visited their office on January 23, 2006. Ms. Spruk answered the telephone and scheduled appointments. She is shown a two page document. The first page is a handwritten accounting of assets from Steve Vanatta that has several numbers and digits that have been modified, (i.e. insted of the written $8,000 asset, it is now $58,000). Mr. Vanatta was insistent that Ms. Spruk enter the figures for the incomplete financial 'statement'. Ms. Spruk felt 'intimidated' as Vanatta 'stood over her shoulder' while she entered his handwritten 'assets' . After printing the document, Vanatta instructed Spruk to fax the statement on letterhead stationery, to a fax number in Lake of the Ozarks, along with the incomplete and unfiled tax returns of Vanatta and Irvin. (These documents were used in consideration of the loan for 415 Regency Court, Four Seasons, MO)
Sur Rebuttal Witness called by Atty. Rork
Vanatta is called back to the stand to refute the testimony of Pamela Spruk. He testifies that he wasn't at Lisa's Tax and Bookkeeping, that he was at Lake of The Ozarks in January of 2006. He testifies that he doesn't know or recognize her.
Cross by U.S. Attorney Hathaway:
Question: 'The jury has had the opportunity to listen to your testimony and consider coming from a two time felon, didn't they?'
Answer: 'Thats what you say.'
Court recesses at 3:30 this afternoon. For the remainder of the afternoon, the attorneys will agree upon the jury instructions, which are lengthy with the numerous parties involved.
With the testimony and witnesses complete, Ms. Irvin leaves the courtroom in tears.
Present in the Courtroom today:
Nancy Seats (President of Homeowners of Deficient Dwellings)
Ginger and Rick Hayes (a Miller built homeowner)
Todd Earnshaw (indicted in Miller I, brother in law of Miller and a realtor)
Coming up tomorrow:
Jury Instruction, Closing arguments, Jury Deliberation
Sunday, December 14, 2008
US. v. Miller, et al
Wednesday, December 10, 2008
Angela Parenza is the next witness called. Parenza worked as Miller's office assistant from 1998 through mid 2006.
Miller's wife, sisters and brother in law are present in the courtroom. Mr. Hathaway stops the testimony of Ms. Parenza and asks the judge to admonish Hallie Irvin from raising up in her chair, trying to intimidate the witness.
Parenza is asked to examine the verification of employment of buyer, Franky Rowden. Although one of her duties was to manage Miller's rental properties, Rowden's VOE referenced an address that both didnt exist and was not a Miller owned property. The VOE, Parenza testified was signed by Steve Vanatta.
There was a significant break in testimony while Judge Robinson conferred at the bench about Grand Jury transcript of Sam Harris. Because there are references to charges in the Miller I indictment, the document required redacting (where certain information would be marked out). Both the defandants and the Government argued about what information should be redacted. It is not anticipated that Ms. Harris will testify. Judge Robinson ruled that the document should have been redacted and submitted in the pretrial phase of this matter. Ultimately, Judge Robinson denied allowing the Grand Jury testimony of Sam Harris.
Another VOE is handed to Parenza. The landlord is listed as 'Human Resources Department of Miller Enterprises'
Question: 'Was there a human resources department of Miller Enterprises?'
Answer: 'No'
Question: 'Was 2014 S. Florida Ave, Joplin, MO, one of Miller's rental properties?'
Answer:'No'
Parenza testified that Miller and Vanatta instructed her to have entries made to HUD statements for 'Construction Management Fees' payable to Vanatta. The witness was shown a check from Star Land Operating Account for $7500 payable to Steve Vanatta in the transaction involving buyers Jack and Michelle Justus.
Tuesday, December 09, 2008
US v. Miller, et al
Tuesday, December 9, 2008
Continuing Testimony: Steve Brown, Court Ordered Business Monitor
The Government introduced the transaction of 415 Regency Cove (an $800,000 home in Four Seasons, MO). Although under the monitoring agreement ordered by the Court, Miller mentioned this transaction after it was under contract to purchase and flip and three days prior to close. Brown testified that Miller mentioned the pending transaction at a meeting but failed to forward documents pursuant to the monitor agreement. Miller also told Brown that the property was being traded, therefore it didn't fall under the monitoring agreement. Further, Miller had signed no documents regarding this transaction; it was to be a 'flip'. Hallie Irvin was on the deed, however Miller was the guarantor of the loan.
The Government then introduced exhibits bearing Miller's signature. The Regency Cove home closed on September 30. 2006. There was a Deed of Trust and a Promissory Note, each bearing Miller's signature.
The Government moved to introduce real estate transactions with Jeffrey Miller's brother. Mr. Bradshaw objected.
Identifying the Assets
Meara, Welch & Brown worked with Miller and Abby Powers in an attempt to identify the assets of the various companies. Brown testified that he questiones Miller; 'How do you know who owes who what?' Miller's answer; 'I just know.'
In December, 2006, Meara, Welch & Brown approached the US Attorney's Office with concerns over the court ordered monitoring agreement. The firm needed more personnel to sort through records they termed, 'in disarray'. The court ordered a new monitoring agreement.
The Government introduced a sales contract between Miller and Irvin/Vanatta for the sale of a 45 foot Sea Ray.
Cross Examination by Atty. Bradshaw (Miller)
Mr. Bradshaw asked the witness whether this was a 'considerable forensic engagement'. The witness agreed. Mr. Brown testified that to date, Miller had paid his company $480,000 to comply with the court's monitoring agreement.
Mr. Brown testified that they had compiled a database of over 10,000 documents. They have detailed 146 transactions. Of the transactions monitored, 96 were approved 'without objection'.
Recess
Upcoming Witness: Angela Parenza (former Miller office assistant).
Tuesday, December 09, 2008
US v. Miller, et al
Tuesday, December 9, 2008
New Witness: Steve Brown, Court Ordered Business Monitor
Stephen Brown, Principal of Meara, Welch & Brown was called by the Government as this mornings first witness. He and his company were selected to monitor the business dealings of Miller's companies as a condition pending his trial. They entered into this 'Forensic Engagement' in June, 2006. At the onset, Brown testified, 'basic documents could not be found' and 'there was a great deal of trouble finding bank statements' citing there were 25 bank accounts and 20 or so credit cards.
Although the engagement began with one person assigned to Miller companies, Meara, Welch & Brown soon assigned 4 or 5 people that 'worked almost full time'.
Many real estate documents could not be found. Title companies were called upon to furnish missing documents. As part of the court ordered engagement, the company performed an appraisal review of the Kerrie Jordan purchase in Lone Jack, MO. The transaction was flagged when because the original appraisal performed by Driscoll & Associates used other Miller built properties as comparables although they had not been reported through MLS.
An independant appraisal valued the home at $185,000, instead of the $220,000 that was paid by the Jordans. Mr. Brown testified that there were no recorded sales of a Miller built home in the subdivision exceeding $180,500, that was verifiable.
Tuesday, December 09, 2008
US v. Miller, et al.
Monday, December 8th - Afternoon Session
New witness: Abby Powers (former assistant to F. Jeffrey Miller)
Ms. Powers met Miller after her parents purchased a Miller built home. Through her step-father, Powers found a job with Miller in his office. Powers testified that her predecessor, Angela Parenza had left Miller's employment and she was trained by Sandra Jo Harris. Soon after, Powers started a business; Powers, Chambers & Creighton. (Creighton was the middle name of her brother-there was no one named Chambers..).
The business had two purposes. One was as a notary. The name that Powers used as a notary was her maiden name, Taverner. The other business purpose was as a 'collection agency' of Miller's second mortgages. Powers worked for Miller beginning in June, 2006. The terms that Miller and Powers agreed to were:
$500 per month
10% of second mortgage payments collected, less than 90 days in arrears
20% of second mortgage payments collected more than 90 days in arrears.
After being served Government supoenas, for Miller and Starland records, Sandra Jo Harris faxed her supoena to Powers at Miller's office. Powers testified that Miller and Miller's attorney, Pete Smith, insisted that the supoena concerned the Jordan file. Powers testified that under the direction of Miller, she made a copy of the Jordan file for the Government and left it on a table in the office for Agent Glaser to pick up. Agent Glaser spoke with Powers and advised her that the supoena included 'all loan files', not just the Jordan file.
The Government introduces an email sent by Harris to Powers. Harris asks how Power's is feeling and says 'sorry you missed the file cleaning party, last night..'.
Cross examination by Atty. Bradshaw (Miller):
Atty Bradshaw attempted to have Abby Powers testify that the reference to the 'file cleaning party' was the Federal Agents seizing all the files in Miller's office. Power's was questioned extensively about her interpretation of the Harris email.
Re-Cross by Atty. Hathaway (US):
Hathaway referred Powers to her previous two appearances and testimony regarding the 'file cleaning party' incident. Asked if she had met with Bradshaw to prepare her for this testimony, Ms. Power's at first said that she met with Bradshaw in early November. When further questioned, Powers testified that she spoke with Bradshaw, yesterday. Atty. Hathaway vigorously questioned Power's about the 'file cleaning party'. He accused Powers of changing her testimony from previous hearings. Power's became upset while being questioned. She wants to see a transcript of her prior testimony. Crying on the stand, Judge Robinson takes a 10 minute recess for the witness to compose herself.
When court reconvened, Atty Hathaway further questioned the witness about a visit she had made to the Perello home. 'They were really complaining', she testified, referring to shoddy construction of their home in Lone Jack. Power's did a walk through of their home close to Halloween of 2006. When she arrived, she found decorative headstones in the yard of the Perello home, one saying 'RIP Jeff' , the other 'RIP Steve'
In the Courtroom today:
Todd Earnshaw (Miller's brother in law)
Nancy Seats (President of Homeowners Against Deficient Dwellings)
Jeff Miller's sisters and Mother.
Reynelle Miller (Miller's wife)
Upcoming Witnesses:
Kris Kanakares (HUD Investigator)
Steve Brown (Court assigned business monitor, Meara King)
Angela Parenza (former assistant to F. Jeffrey Miller)
Tuesday, December 09, 2008
US v. Miller, et al.
Monday, December 8th
New witness: Steve Middleton (Steven Craig Middleton):
Middleton testified that he met Miller late in high school and owned a home construction business called Center Point Construction. That company declared bankruptcy.
Middleton operated Somerset Homes from Miller's office at 10777 Barklay, Overland Park, KS, but his articles of incorporation indicated a fictitious address near that location.
The Government entered exhibits of HUD (Closing Statements) for real estate, and invoices from Sandra Jo Harris for 'Construction Management Services' payable to Vanatta and Irvin or their LLC's. Middleton testified that one time, in lieu of the 'payment', he deeded the Vanatta's a jet ski.
An invoice for $7700 from Innovative Design was shown to the witness:
Question: 'Did anyone provide Construction Management Services or design services at the home at 617 Walnut Lane?'
Answer: 'No'
The Government introduces a letter on Somerset letterhead authorizing Steve Vanatta to sign closing papers.
Question: 'Is that your signature?'
Answer: 'No'
The closing statement of homebuyer, Brandon McCord was introduced. McCord entered into a purchase agreement for 107 Whispering Hills, Lone Jack but couldnt come up with a down payment. The government entered an exhibit showing a loan from Starland and Development of $21,700 to buyer Brandon McCord. Two days later after the home closed, Middleton wrote Miller a check for the repayment of the down payment.
Next, the Government introduced evidence of a home purchase in Lenexa, KS, for Hallie Irvin and her husband Steve Vanatta. 10109 Thieden Circle was a home constructed by Middleton-Somerset Homes and priced at $340,000. The closing statement indicated a second mortgage of $51,000 that was 'not applicable' to Irvin and Vanatta. Middleton testified that he sold them the home for cost. The sales contract was introduced and the witness was asked to hold it up to light and answer whether the sales price had been whited out. Middleton answered that the whited out price was $250,000.
Question: 'Did you authorize this change in price?'
Answer: 'No, never.'
Middleton testified that Irvin/Vanatta have never made a payment on the second mortgage. Upon examination of the sales contract for the home, Middleton is asked if the signature is his. 'No'. Of note on the contract is the misspelling of Middleton's business.
Cross examination by Atty. Bradshaw (Miller)
Question: 'Would you agree that it is not uncommon to have misspellings in a real estate contract?'
Answer: 'No' (it isn't uncommon)
Re-Cross by Atty Hathaway (Government):
Question: 'Do you know how to spell the name of your company?'
Answer: 'Yes'
Next witness: Abby Powers
Monday, December 08, 2008
US v. Miller, et al.
Wednesday, December 3, 2008 - Morning Session
Franky Rowden was called by the Government. Rowden purchased a Miller home in Carl Junction, MO. He spoke with Steve Vanatta and they agreed on a purchase price of $150,000 for the home. Rowden moved into the house early and then had difficulty securing financing. Vanatta met Rowden one day and instructed him that a verification of employment was needed (VOE). Vanatta told Rowden to go to Silvers Auto Body, a place where he never worked. The fictitious VOE was submitted to the mortgage company. Rowden admitted to making up a fictitious pay stub. Questioned by the Government, Rowden said he created fictitious W-2's at the direction of Steve Vanatta.
At closing, the documents indicated a sales price of $185,000. The Government introduced evidence that the signature page of the original contract had again been interleaved with a new contract.
Question: 'Did you sign a Real Estate Sales Contract for $185,000?' Answer: 'No' .
Question: 'Did you authorize your signature to be attached to this document?' Answer: 'No, I did not'
Rowden's income was inflated to $6300 per month on the mortgage application. Rowden testified that he was a truck driver making about $2300-$2500.
Rowden also testified that Miller/Vanatta had trouble obtaining an occupancy permit from the City of Lone Jack (MO) and that he was urged to move into the home early.
A 'friend letter' was needed by Rowden in order to purchase the home. The letter would state that Rowden was living and paying rental income on time.
Question: 'Did you know that this letter would be used to process your loan?'
Answer: 'Yes, I did.'
Rowden's home has been foreclosed.
Next witness: Jennifer Perrello
Thursday, December 04, 2008
US v. F. Jeffrey Miller
December 2, 2008 - Morning Session
Re-Cross Examination of US witness, Ed Hyne, MetLife Custodian of Records (formerly First Horizon Mortgage)
US Prosecuting Attorney Kenny introduced First Horizon's corporate appraisal review of the Jordan home purchase of 211 E. Whispering Oaks, Lone Jack, MO. Over objection by Attorney Bradshaw (Miller), overruled Mr. Hyne testified that an appraisal analysis would not detect comparables used in the appraisal being built by the same builder.
New Witness: Steve Carlson, Carlson Homes
Direct Examination by US PA Kenny
Mr. Carlson is the owner of Carlson Homes, a construction business. Started in late 2003, Mr. Carlson was searching for capital, when he telephoned his childhood friend, Steve Vanatta. Vanatta arranged a meeting with himself, Miller and Carlson. They discussed a development that was for sale in Carl Junction, MO., Near Joplin, Missouri, the development was called Ruestmont Heights. The three formed a partnership and purchased the development. The business agreement was proceeds of the sale of constructed homes: 50% to Miller, 25% to Vanatta and 25% to Carlson. Carlson would oversee the construction of the homes.
Mr. Carlson testified that he did not set the price nor market the homes in Ruesmont Heights. When asked whether he was paid his 25% share on each home he constructed, he answered, 'No'. If a buyer only qualified for an 80% loan and required Star Land and Development to hold a second mortgage on the home, then the mortgage proceeds would need to pay off the construction loan and closing fees.
At times, Mr. Carlson would deal with Sandra Jo Harris, trying to get bills approved for payment by Star Land. Carlson testified that he never authorized payment of 'Construction Management Fees' or paid fees to HCI, Innovative Designs, or Hallie Irvin. Nor did these companies or people do any construction work on the homes.
New Witness: George Njau, purchaser of a Carl Junction, MO home.
Direct Examination by US PA Kenney
Mr. Njau saw a Star Land and Development advertisement in the Joplin (MO) Globe newspaper. He spoke with Steve Vanatta about a home in Carl Junction, MO. Vanatta advised Njau that his wife could not participate in a mortgage application because of her outstanding student loans. He testified that the price of the home they elected to purchase was changed from $175,000 to $195,000. His income as a graphic designer was $1600 per month.
Attorney Kenny presented 3 sales contracts to the witness. Mr. Njau testified that two of the contracts had his forged signature on them.
The first home that the Njau's considered was 404 Hodge. When they toured this home, Mr. Njau testified, they found painted signs on the wall, calling the developer a crook. They also noticed cracking in the basement floor and foundation. Although they first considered purchasing the home, they eventually moved on to 402 Angel Lea, another Miller home in the same development.
Cross Examination of George Njau by Attorney Reible (Miller)
Ms. Reible reviewed three different sales contracts signed by the Njau's. Mr. Njau testified that he hadnt seen the forged Sales Contracts until Federal Agents became involved: "The agents came to my house. They showed me the documents that I had never seen before." They had moved in early to the home and had no where else to move. The title company was 'Synergy Title Services' and Njau testified that that was a Miller related company.
Upon closing three months after moving into their home, the Njau's questioned the price increase in the home to $195,000 from the agreed upon $175,000, the title agent told them that the paperwork would be held, pending the questions they had.
Ms. Reible asked about the 2nd mortgage note held by Jeff Miller and Star Land and Development. Mr. Njau testified that the 2nd mortgage has never been recorded with Jackson County, MO. and that he has never made a payment on the second mortgage.
The Njau's 'walked out' of their home in November, 2007. He testified that before purchasing the home, he had good credit and when they left the home, his credit wouldnt qualify him to apply for a rental home.
Tuesday, December 02, 2008
Monday, December 1, 2008
Cross Examination of Witness Kerrie Jordan
Attorney Vanessa Reible (Miller) detailed the second mortgage held by F. Jeffrey Miller in the Jordan purchase. Terms: Amount: $36,000 @ 8% with a clause discounting the amount by 50% if refinanced and paid early.
After Jordan agreed to withdraw the Attorney General complaint, Miller and Vanetta offered to reduce the 2nd mortgage from $36,000 to $18,000 with the interest rate of 1.9%.
Jordan was asked about a letter from her attorney to the Miller attorney, Pete Smith. Jordan's attorney asked Mr. Smith to forgive the 2nd mortgage altogether. Mr. Smith countered by offering to rescind the purchase of the home altogether, not just the second mortgage alone. When asked if the Jordans accepted this offer, Ms. Jordan replied, 'No'. Per Ms. Joran, the Jordans still wanted the home, but not under the terms offered by Miller.
Cross Examination by Attorney Rork (Vanatta):
After 45 minutes of cross examination of the witness and no new information, Judge Robinson asked Attorney Rork to approach the bench. Judge Robinson admonishes attorney Rork to 'wrap this up' and to 'move things along'.
Court was recessed for its afternoon break. Before doing so, Judge Robinson asked Rork how much longer he would be. The reply was 15 minutes. However, when court reconvened, Mr. Rork did not have exhibits organized and court was recessed again. Mr. Rork mutters and talks to himself, as he walks around the courtroom.
New Witness called by the US: Edward Hyne
Mr. Hyne is the Custodian of Records and Litigation Analyst for Metropolitan Life. MetLife is the new owner of subsidiary First Horizon Mortgage Loan Company, which underwrote the Jordan mortgage. Mr. Hyne testified that First Horizon relies on the accuracy of loan application information provided by borrowers, to adequately assess borrower credit worthiness. Hyne is questioned as to whether the inaccuracies on the Jordan loan application, would be of concern to a federally insured lending institution. Hyne testifies that 'yes', they would be.
Cross Examination by Attorney Bradshaw (Miller):
After a 15 minute direct examination by the US, Mr. Bradshaw questioned witness Hyne about mortgage backed securities and sub-prime lending. After the US objected that this was outside the scope of their cross examination, Judge Robinson asked Bradshaw how long would his cross examination of this witness be? Bradshaw responded, '2 hours'.
The day ended with the attorney's agreeing to convene at 8:30 am and attempt to agree to a stipulation agreement involving this witness.
Monday, December 01, 2008
Monday, December 1, 2008
Kerrie Jordan direct examination (Hathaway)
Kerrie Jordan continued her direct testimony. Shortly after closing on their Lone Jack home, Jordan filed a complaint with the Missouri Attorney General's office about the shoddy construction of her home.
On August 6th, 2006, Ms. Jordan received an email from Sandra Jo Harris, asking if Jordan would drop the complaint in exchange for fixing all the items on Jordan's list. Oddly, the signature of Ms. Harris' email indicated that her employer was 'HCI Mortgage Loans'.
In mid-August, 2006, Ms. Jordan was further complaining about the construction of the home and phoned Jeff Miller. She inquired why the sales price had been changed from $200,000 to $220,000. Miller told her that he had a 'signed and dated' contract at 220K. Although Jordan was promised a copy of that contract to be sent in the mail the following day, she has never received a copy of the 'new' contract.
August 31, 2006, an attorney in the office that Jordan worked, drafted a letter to F. Jeffrey Miller's attorney, Pete Smith. The letter was read into the record and detailed the forged sales contract.
Ms. Jordan testified that she has never made a payment on the second mortgage held by Miller. Miller has neither sued nor made a demand for payments from the Jordans.
At the end of direct examination of Ms. Jordan, US Attorney, Rich Hathaway, questioned Ms. Jordan about her prior convictions. Jordan testified that she had plead guilty to one count of felony identity theft.
Monday, December 01, 2008
Wednesday, November 26, Morning Session
Kerrie Jordan is the next witness to be called by the government. She and her husband were the purchasers of 211 E. Whispering Hills Blvd, in Lone Jack, MO from Jeff Miller and Star Land Development.
Ms. Jordan testified that in April, 2006, her husband saw an online ad for homebuyers with poor credit. They had had a bankruptcy and struggled with some bounced checks and late payments. Jay Jordan telephoned and spoke with Steve Vanatta. Vanatta told him where the homes were in Lone Jack, that several were under construction, unlocked and encouraged the Jordans to go pick out the one they liked.
The Jordans looked at the homes for sale. There were Star Land and Development throughout the Whispering Hills subdivision. From the home at 211 Whispering Hills, they called Vanatta and subsequently Miller's office, speaking with Sandra Jo Harris (Sam). Sam indicated there were two other couples looking at this home and she could only hold it for them until 4:00 p.m. that day. Harris faxed a contract to Ms. Jordan's place of employment. The jury is shown the contract whose terms were a sales price of $200,000 and an $8,000 dollar down payment payable to Hallie Irvin's LLC, HCI. After they got off work that day, the Jordans met Harris at the Whispering Hills home and gave her a check for $8000, telling Harris not to cash it until Jay Jordan could fund it with a loan from his 401K.
At the urging of Sandra Jo Harris, the Jordans notified their landlord that they would be moving before May 31,2006. They were referred to James Sparks to apply for a loan. Qualifying for the loan became difficult. Unbeknownst to the Jordans, the appraisals for the property did not support the purchase price. Sparks was having trouble getting approval because of the credit problems.
Despite not having a loan committment, the Jordan's moved into the Whispering Hills home on May 27, 2006.
Ms. Jordan is shown a certificate of occupancy by the City of Lone Jack (MO). It is dated June 8, 2006. Asked whether the Jordans were present when the Building Inspector came to the house, Ms. Jordan replied, no.
Kerrie Jordan testified that they noticed construction defects in the house; the sewer line was not connected causing sewage to leak into their yard, the plumbing leaked into carpeted rooms, the kitchen island wasn't attached, the deck swayed side to side and was not fastened to the house, no screens for any windows or sliding doors, there was paint on the floors and windows, holes in the drywall, missing trim and a gap in the front door.
Miller attorney Bradshaw objected to Ms. Jordans' testimony of shoddy construction and after counsel met with Judge Robinson, she admonished the jury that this matter did not include charges of consumer or construction fraud.
By June 15th, 2006 there was still no loan approval for the Jordans. Sandra Jo Harris was communicating regularly with the Jordans and told them they would need to pay $54.25 a day to Star Land as rent. Ms. Jordan testified that the delay was that one appraiser called the home a one bedroom above grade while the other appraiser called it a 3 bedroom home. The same floorplan next door appraised for $30,000 less than the selling price of the Jordans' home.
Mr. Hathaway introduces a second sales contract for 211 Whispering Hills. The price is $220,000. Ms. Jordan is asked whether the signature on the second contract is hers. 'No and that is not the signature of my husband, either.'
Monday, December 01, 2008
Tuesday, November 25, Afternoon Session
Lisa Hartsfeld, owner of Lisa's Tax & Bookkeeping Service is next to testify.
Ms. Hartsfeld was first contacted by Vanatta and later met with both Vanatta and Irvin. The Vanattas wanted Hartsfeld to prepare a financial statement for them. There was an urgency, she testified, that made Ms. Hartsfeld uncomfortable.
Vanatta and Irvin left the initial meeting with a 'homework' project; to review bank statements and compile a list of assets and categorize their business and personal expenses. The homework was never completed. The rough draft of the initial fianancial statement showed that Hallie Irvin had assets of $2.2 million, liabilities of $625,000- a net worth of over $1,500,000. The rough draft also showed that Irvin's adjusted gross income was $566,000 in 2004 and $821,379 in 2005. These figures were supported by W-2's supplied by Irvin but not further supported with any other documentation.
A couple of months later, Vanatta unexpectedly arrived at the office of Lisa Hartsfeld in Kansas City, Kansas. Ms. Hartsfeld was not in the office. Vanatta demanded that the part time employee who was there, fax the incomplete financial statement. The employee complied using company letterhead as a cover sheet.
PA Attorney Hathaway Question: 'Do you believe that an employee faxing a rough draft financial statement using your company letterhead was upright and forthright?'
Ms. Hartsfeld Answer: 'No, I was incensed. I was angry.'
Re-direct of James Sparks by PA Hathaway.
Mr. Sparks is questioned about the changing prices of purchase contracts. The US introduces for the jury, two contracts for the same property in Lone Jack, MO. Page one of the contract indicates the purchase price to be $233,000, the second at $260,000.
PA Attorney Hathaway Question: 'Mr. Sparks. Would you removed pages of certain contracts and replace them with pages reflecting a higher sales price without the buyers knowledge or signature?'
Mr. Sparks Answer:'Yes, I did'
Sparks testified that buyers would often have no knowledge of price changes until after they moved into their new home, a common practice in Star Land Development purchases.
Mr. Hathaway folded the signature pages of both contracts and stacked the two sets of signatures, one over the other. The signatures are the same indicating that the sales price had changed, but the buyers did not sign the 'new contract with the higher price'.
PA Attorney Hathaway Question: 'Would this be an example of a document that would be doctored up?'
Mr. Sparks Answer: 'Yes.'
Thursday, November 27, 2008
Tuesday, November 25, 2008
The Goverment called witness, Janet Carder-Missouri Real Estate Comission (MREC) Executive Director.
Ms. Carder gave testimony about the Real Estate Salesperson Application of Steve Vanatta. The application was received by the MREC on November 29, 2005. The application was returned to applicant for lack of fees.
The application and proper fees were returned to the MREC on December 18, 2005. The application for a Real Estate Salesperson licence in Missouri, requires the disclosure of any civic or felony conviction.
The application for Steven Vanatta failed to disclose any conviction.
Later, Mr. Vanetta faxed the commission a statement about his answer of 'no' regarding any prior convictions.
The admission refers to a felony conviction of Mr. Vanatta.
Atty. Rork (Vanatta) offered that Vanatta was confused as to whether the felony conviction of a check written by his business, constituted answering 'yes' to the question of any felony convictions, on the MREC application.
Ms. Carder testified that an answer of 'yes' of a conviction would not automatically disqualify an applicant for a Missouri real estate license.
PA Kenney re-crossed Ms. Carder.
Asked whether 2 felonies and 2 misdemeanors would be a relevant disclosure for Vanatta's application, Ms Carder replied that it certainly would.
Next Witness: Lisa's Tax and Bookkeeping Service
Tuesday, November 25, 2008
Monday, November, 25, 2008
The cross examination of former mortgage broker James Sparks resumed Monday.
Attorney Rork (Vanatta) introduces an exhibit; an invoice from Vanatta to Sparks for 'Construction Management Fees'. The invoice covered painting, marketing, trim and punch list work. The invoice total, Sparks testified, would equal the 'yield spread' of the loan procurred by the buyer.
Attorney Bradshaw (Miller) cross examines Sparks. He questions how extensively Sparks knows Jeff Miller. Sparks testifies that he met Miller on two occasions and spoke on the telelphone with him 'a few times', but most of the time, he worked with Vanatta.
Sparks testified that he worked as a mortgage broker for 1 1/2 years before he did anything fraudulent with a loan.
For the Kerrie Jordan loan, Sparks testified that he copied her bank records, removed NSF entries and pasted extra digits to deposits. Sparks used white out to modify her 1003 loan application. When asked how he came up with the fictitious salary amount, Sparks replied that he took the loan to value (LTV) the lender was requiring and did the math backwards, arriving at first a $6800 and then a $7600 monthly income.
Leah Swicegood was called as a witness. Ms. Swicegood is an IRS agent and a full time court witness. Ms. Swicegood testified that as of November 18th, 2008, neither Vanatta nor Irvin had filed their income taxes for 2004 or 2005.
Jeffrey Tulley was called as a witness. Mr. Tulley is a bank examiner with the FDIC. He testified that the banks involved in this matter; 1st National Bank (Camdenton, MO), First Horizon, and Hillcrest Banks were all federally insured lending institutions.
Observing in the courtroom today are: Todd Earnshaw (indicted real estate agent in Miller I) and Nancy Seats, founder of Homeowners of Deficient Dwellings - HADD
The cross examination of James Sparks will conclude Tuesday, Novermber 25th.
Monday, November 24, 2008
Friday, November 21st
James Sparks resumed his position on the stand this morning. He was questioned about the payment arrangement for mortgages that were referred to him by Vanatta and Miller.
Mr. Sparks testified that at first, he paid 50% to Vanatta, but later negotiated it at 40%. However, because of Vanatta's prior offenses involving checks, he paid monies to his wife, Hallie Irvin. Ms. Irvin had two 'companies'; 'HCI' and 'Innovative Designs'. The court introduced a canceled check in the amount of $10,000. It was written from a Star Land + Development account and is payable to Innovative Design.
Mr. Sparks testified that as a result of the federal investigation of the business dealings of Star Land, Miller, Vanatta, Irvin and Harris, Mr. Sparks agreed to a monitored telephone call with Mr. Vanatta. The court then introduced the audio version and written transcript of this monitored call. Towards the end of the call, Mr. Vanatta became suspicious. He drove to the offices of Mr. Sparks and encountered the federal agents that were monitoring the call. 'You're recording me?', Vanatta said to Sparks? Sparks replied, 'They got us, Steve'
The Government then introduced audio evidence of Hallie Irvin's subsequent 3 telephone calls to Mr. Sparks, demanding money owed to her and files that were in his possession. Those files had altered and fraudulent documents in them according to Sparks.
The Government direct examination ended by introducing and reviewing the advertising that Miller/Vanatta ran in newspapers in Joplin, MO.. 'No credit? No problem' was included in the ad copy. Two phone numbers are included in the ads-both belonged to Vanatta.
Mr. Sparks testified that in the Kerrie Jordan purchase, he and Vanatta falsified; her income, her verification of rent (VOR) history, her verification of employment (VOE), her W-2's and her pay stubs.
The loan applications produced by the Government indicate Ms. Jordan's income between $6800 and $7200 per month. Ms. Jordan was an an office assistant for a firm in Kansas City. Her actual income, according to Mr. Sparks, was $1900 per month.
Monday, November 24, 2008
Thursday, November 20th - 9:00 a.m.
The Government calls their first witness, James Sparks. Mr. Sparks has previously plead guilty to conspiracy and money laundering in this matter. Sparks is now a car salesperson in Kansas City. He had worked as a mortgage broker for two companies from 2002 through 2006. In 2004, he became aquainted with Steven Vanatta after Vanatta contacted him after seeing Spark's magnetic sign advertising his mortgage business, while driving in traffic. Mr. Sparks stands up and is asked to identify each of the defendants. At each identification, Mr. Hathaway stands behind the defendant's chair in the courtroom.
The Government introduced the plea agreement that had been signed by Sparks and reviewed it for the jury.
Mr. Sparks was questioned about appraisals in Miller related loans. He stated that oftened times they used or directed appraisers to use other comparable homes of Miller's that were already inflated.
Mr. Sparks is asked about a particular buyer, Kerrie Jordan. Did he recall that purchase? 'Yes'. The government introduces into evidence the first of two purchase contracts for a property at 211 E. Whispering Hills Blvd in Lone Jack, MO. The contract was signed by 'Star Land + Development' as the seller and Kerrie Jordan as the purchaser. The price in the contract is $200,000. The down payment is shown to be $8,000 to be paid to 'HCI'. The goverment then introduces the exhibit of the check for the downpayment. It is payable to Star Land + Development.
Mr. Sparks testified that he was having problems getting a loan approval for the Jordans. Mr. Hathaway asked the witness, "well, explain to the court the problems you were having'. Sparks replied that Kerrie Jordan had a low credit score and her husbands was even worse. And further that he couldn't get the house to appraise. Sparks and Vanatta had 'ordered it at $220,000'. Sparks then testified that he couldn't prove income through Ms. Jordan's employment as an office assistant in a Kansas City law firm, to support the mortgage. So he falsified the loan application to indicate that Ms. Jordan's income was $6800 per month.
The witness stated that Miller and Vanatta weren't satisfied with the $200,000 purchase price. Another loan application was introduced. It is unsigned. The purchase price is now $220,000 with a loan amount of $176,000. This loan application indicated monthly income for Kerrie Jordan at $7600 per month.
The Government then introduced to the court, the HUD 1 or closing statement for the Jordan purchase of 211 Whispering Hills, Lone Jack, MO. There are two line items with charges for appraisals of the property. The first is $75.00 for Quality Appraisals. The second was for $350 for Driscoll & Associates. Since it was the second appraiser, that successfully appraised the property for the new selling price, they were paid the higher fee. Quality Appraisals did not come up with the expected appraisal, the fee was for their 'time and trouble'.
Mr. Hathaway introduces a series of emails between Sparks and buyer Kerrie Jordan. All defense attorney's voice objection to the exhibit. Their objections are overruled and the exhibit is introduced. Ms. Jordan is questioning Mr. Sparks as to 'what the numbers are'. Subsequently, in reply to Sparks email of the 'loan numbers', Ms. Jordan questions why the sales price is now $220,000?
Late in the day, Mr. Sparks is questioned what other builders he was working with. Mr. Sparks replies, that there were three others; Steve Middleton, Brock Burdett, and one other that he couldn't recall.
Court adjourned for the day and will reconvene on Friday, November 21st at 9:00 a.m.
Monday, November 24, 2008
Tuesday, November 18th - 1:00 p.m.
Opening arguments began after the lunch recess.
Ms. Kenney on behalf of the Government began. The 'mug shot' photos were shown on the 6 lcd screens in the courtroom. Among the charges that would be proven, Ms. Kenney said, were false production of W-2's, altered bank statements, false rent history and paycheck stubs. Also that Mr. Vanatta passed himself off as a licensed Real Estate agent when in fact he was not licensed. Ms. Kenney stated that Vanatta was a former painter of Miller's, working on his new homes. The government would prove that Vanatta (and his wife Hallie Irvin)was paid kickbacks in the form of 'Construction Management Fees' from mortgage broker's through Miller.
Further, the government alleges, that Hallie Irvin was the owner of two shell companies; 'HCI, Inc.' (her initials) and 'Innovative Designs'. Irvin left harrassing messages for James Sparks demanding loan files to be returned and created fictitious tax returms for a year that she did not work and did not have an income.
Sandra Jo Harris worked in Miller's office at 10777 Barklay, Overland Park, KS. She answered telephones from prospective buyers and was a participant in the 'file cleaning party' in which some or all of the defendants were directed to destroy damaging and fraudulent documents.
Mr. Bradshaw's opening arguments included bigraphical information about his client, F. Jeffrey Miller. He is a lifelong Kansas Citian, married with two teen age children. He is the owner of several companies and built homes in 3 price categories ranging from $150,000 to $1-2 million dollars at Lake of the Ozarks. He stated that it is not unusual for a builder to take back and second mortgage on a property. Mr. Bradshaw said there was 'no connection' between Miller and James Sparks and doubted that Sparks would be able to pick out Mr. Miller in the courtroom. As for Vanatta, he was an audio visual sub contractor of Miller's, for Miller construction projects in Lake of the Ozarks, Carl Junction, MO and Lone Jack, MO. Additionally, the court will hear testimony from a lender at the Lake who worked with Miller to purchase a home at 415 Regency Cove Dr., Four Seasons, MO and the factual and truthful nature of the application for a mortgage on that property.
Finally, Mr. Bradshaw stated that the court will hear testimony about Mr. Miller and another attorney, Pete Smith, 'bending over backwards' to satisfy the court assigned monitoring company, Meara King.
Mr. Rork, attorney for Steve Vanatta was next. He states that Mr. Vanatta never portrayed himself as a licensed Realtor. And although he had taken a real estate licensing course, there was a problem when he applied for his license in Kansas and Missouri; Mr. Vanatta had been convicted of a felony, passing a bad check. And because it was a 'company check', Mr. Vanatta failed to disclose the prior conviction to the Real Estate Commissions in Kansas and Missouri. Mr. Rork further stated that the reason his client wanted the mortgage files back from Sparks, was that Sparks was 'getting out' of the mortgage business.
Hallie Irvin's attorney said that Irvin worked for Miller for 3-5 months, she and Vanatta live in a home in Lenexa, KS and have a couple of kids. Irvin and Sandra Jo Harris worked in Miller's Overland Park office and did the 'grunt work'. He stated that the money paid to Irvin (and or her companies) were not kickbacks.
Ms. Harrises' attorney stated that Sam had worked in the Miller office for 7-8 months in 2006. There, she answered the phones and fielded inquiries from buyers. She filled out paperwork and sales contracts. Ms. Harris had no formal training in the real estate or construction business and learned it through 'on the job training'. She also stated that Harris had no involvement in the 415 Regency Cove transactions and although she is accused of violation of her monitoring agreement, she was simply doing 'what she was told to do'.
Court adjourned for the day and will resume on Thursday, November 20th at 9:00 a.m.
Wednesday, November 19, 2008
Synopsis of Day 2 - Tuesday, November 18, 2008
Seating the Jury
The jury selection process was the order of business in day 2 of the USA v. Miller, et al. Court began at 1:00 p.m. The jurors had filled out a questionaire the previous day. The 56 person pool was narrowed to 42 people whose names were called by the court clerk. Of the initial 42 potential jurors, 27 are women, 15 are men. The remaining 14 sat in the observation area with me.
The side of the courtroom is divided by an aisle. The Government is to the left of the aisle, along with the jury box. The defendants are on the right side of the aisle. The choice of which side to sit on can be assumed as 'support' of one side or the other. When the jury pool returned from a break, they all filled the left side of the observation area (where I sat) and almost begrudgingly filled the right side.
For the better part of the afternoon, Judge Julie Robinson questioned the jurors about whether they had served on a jury before (including any civil matters against banks. Interestingly, this was the only question in which none of the potential jurors raised their hand), their prior criminal or civil history, among other things.
Many of the jurors had previous jury experience. None had been forepersons on those juries. Those jurors' previous cases included:
Criminal murder case: Result: Acquittal
Criminal drug case: Result: Conviction
Criminal drug case: Result: Conviction
Criminal drug case: Result: Conviction
Criminal DUI case: Result: Conviction
Kidnapping case: Result: Conviction
On a few occasions, Judge Robinson excused a juror due to answers given, such as financial hardship over the course of the trial from loss of income. One juror explained that he had a close relationship with Court prosecutors due to his sitting through a murder trial of his nephew. He was unsure whether he could be impartial. When the judge would excuse a juror, the clerk would then call the next name of the 14 remaining jury pool members.
The 42 were then given a sheet and asked to stand and tell the Court about their education, job, marital and family status, hobbies, favorite TV shows, military history, and what clubs they belonged to. This took the longest part of the day as some of the members spoke at length.
Mr. Vanatta remains in custody. He enters and leaves the courtroom with law enforcement officers. The two officers sit 3 feet away from
Vanatta during the court proceedings.
Mr. Vanatta clearly struggles to keep up with reviewing jury questionaires unlike the other defendants who are free pending the outcome of this trial.
Hallie Irvin sits across from
Mr. Vanatta. They continue to chat and exchange notes throughout the day.
Samantha Harris has no conversation with her tablemate,
F. Jeffrey Miller.
Harris's attorney sits between the two.
I am unsure whether the jurors have yet to identify Miller. He is better dressed than his lawyers and appears to be an attorney.
There is a jury consultant in the court room. Aside from myself, he was the only non-jury pool member in the observation area of the courtroom. One of
Miller's attorneys', Mr. Bradshaw, appears to be bothered by my presence in the courtroom. On Monday, he approached me in the courtroom. I told him I was simply there to observe the trial. On Tuesday, at one point Mr. Bradshaw 'squared his chair' towards me.
Court is not in session today, Wednesday, November 19th.
On Thursday, court will reconvene at 9 am. The attorneys will be allowed to ask further questions of the 42. In case of conflict, the remaining 14 are required to return to court as well. Then, the jury members will be selected.
The opening statements are much anticipated. Judge Robinson says they will begin mid-morning on Thursday.
-article by field reporter, Anne Mitchell, Crazy Fish Realty
Wednesday, November 19, 2008
Jury Selection Continues in Miller II Trial
Jury selection continued on Tuesday but was not completed. The court recessed at 5:15pm.
Jury selection will reconvene at 9 a.m. Thursday morning. Opening arguments are expcted to begin Thursday after the jury is seated.
Monday, November 17, 2008
Jeffrey Miller Trial Begins in Topeka, Kansas
The trial of the
United States v. F. Jeffrey Miller began today in the Federal Courthouse in Topeka, Kansas. Coverage of the trial will be provided for Mortgage Fraud Blog by Anne B. Mitchell, Broker/Owner of
Crazy Fish Realty in Lake Of The Ozarks, Missouri.
Miller, a developer, and his co-conspirators in
Kansas are on trial after having been indicted in connection with an alleged scheme involving the sale of homes constructed by
Miller to homebuyers that would otherwise not qualify, through the use of false documents and inflated appraisals. Also on trial are
Stephen W Vanatta,
Hallie Irvin and
Sandra Joy Harris.
James Sparks previously pled guilty.
The jury pool of approximately 60 people was asked to fill out Questionnaires. Jury selection will occur tomorrow and it is expected that the jury will be seated tomorrow, Tuesday, November 17th. Court will reconvene at 1:00 pm, In Topeka, KS. Opening statements are expected to begin Thursday morning.
Housekeeping issues before the court included how
Vanatta's clothing would be brought to court each day.
Hallie Irvin's counsel petitioned for a per diem from the court to cover her commuting expenses. Defendants
Irvin and
Vanetta are sharing the same consel table in the courtroom. During today's session they exchanged notes and, at times, were overheard giggling.
On an unrelated side note, members of the Westboro Baptist Church picketed in front of the courthouse. According to court personnel, they picket a couple of times a week, staying about fifteen minutes and then leaving.
Coverage will pick up tomorrow as the jury is seated.
Rachel Dollar is an attorney and Certified Mortgage Banker who handles fraud recovery litigation for lenders and secondary market investors nationwide. She is a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is licensed to practice law in California and maintains offices in Santa Rosa, California. 
