Monday, November 03, 2008

17 Indicted In Huge Scheme Involving 25 Properties

A real estate agent and two former loan officers in Lee’s Summit, Missouri, are among 17 defendants indicted by a federal grand jury for their roles in a $12.6 million mortgage fraud scheme that involved 25 residential properties in Lee’s Summit, Missouri, and Raymore, Missouri. The defendants include:

Angela R. Clark, 40;

James F. Simpson, 39;

Cynthia D. Jordan, 41; and

Stefan M. Guerra, 30; all of Lee’s Summit;

Ronald E. Brown Jr., 39, Gladstone, Missouri;

Enrico J. McClain, 36, Kansas City;

Daryle A. Edwards, 37, and

Leon T. Jones, 42, both of Olathe, Kansas;

Gerald D. Williams, 47, and his wife,

Judith E. Williams, 47, both of Omaha, Nebraska;

Willie Charles Cadenhead, 38, Grandview, Missouri;

Jerome Shade Howard, 39, Anaheim, California;

Michael Conrad Smith, 47, Lancaster, California;

Cheryl Ann Romero, 50, Santa Fe Springs, California;

Anahit Nshanian, 29, Long Beach, California;

Mark Whitney Jackson, 48, Woodland Hills, California; and

Steven M. Salas, 35, Hacienda Heights, California, were charged in a 34-count indictment returned by a federal grand jury in Kansas City.

“This is one of the largest mortgage fraud cases ever prosecuted in our district, and illustrates that this is a problem that affects not only low-income neighborhoods, but also more affluent suburbs,” U.S. Attorney for the Western District of Missouri John F. Wood said. “Mortgage fraud poses a significant economic threat and directly impacts the well-being of our neighborhoods. A number of financial institutions suffered significant losses and innocent homeowners in the targeted subdivisions continue to experience the fallout of this alleged scheme as many of these houses are now sitting empty, neglected and in foreclosure. We will continue to vigorously prosecute those who engage in mortgage fraud, and our efforts should help restore the integrity of the housing market.”

Today’s indictment alleges that Clark, a real estate agent, along with Jordan and Guerra, former mortgage loan officers at separate Lee’s Summit, firms, were involved in a conspiracy with 14 property buyers – including six California residents – to defraud mortgage lenders between June 2005 and May 2007.  According to the indictment, the defendants were involved in buying and selling new homes in the Raintree and Belmont Farms subdivisions of Lee’s Summit and the Eagle Glen subdivision in Raymore.  Buyers allegedly purchased the homes at inflated prices, obtaining mortgage loans by providing false information to mortgage lenders, then keeping the extra proceeds.  Buyers created shell companies for the purpose of receiving those kickbacks from builder Jerry Emerick, doing business as Ty Construction and Residential Contracting LLC, the indictment says, with kickbacks ranging from $60,000 to $125,000 on each house.  Emerick will be charged separately for his role in the scheme.

“The FBI views mortgage fraud as a significant and growing crime problem and an area of concern,” said FBI Assistant Special Agent-in-Charge Daniel D. Jones. “Combating significant fraud in this area is a priority because mortgage lending and the housing market have a significant overall effect on the nation’s economy.  The FBI continues to work closely with its government and industry partners to ensure pertinent data is shared in a timely fashion.  We strongly support joint investigations to effectively utilize all of our limited resources while strengthening investigations by tapping into each agency’s expertise.”

According to the indictment, Emerick determined the actual sales prices he wanted for the new homes, based on the cost of construction plus a reasonable profit.  Clark then listed the new homes for sale at inflated sales prices, in order for the buyers to obtain loan proceeds in excess of the sales prices that Emerick wanted to receive.  Clark and Emerick structured the sales in a way that the buyers would receive money from the loan proceeds without the knowledge or consent of the lenders.  Buyers created fictitious business entities, the indictment says, opening bank accounts in the names of those entities.  They allegedly submitted fraudulent invoices and other documentation to title companies closing the loans, and to mortgage lenders, claiming that they had provided work and services for which they were entitled to receive loan proceeds.

Mortgage lenders approved 25 loans totaling $12,616,990, according to the indictment.  From that total, the indictment says, buyers received approximately $2,343,337 without the lenders’ knowledge.  Clark allegedly received approximately $381,495, and mortgage brokers received commissions.

Clark and Howard solicited potential buyers for the residential properties.  Howard also obtained false Social Security numbers for buyers to use in obtaining loans, the indictment alleges, and purchased two properties from Ty Construction, as well as other properties from other sellers.

Brown, a self-employed insurance agent doing business as The Brown Insurance Agency in Kansas City, Kansas, obtained insurance for properties purchased.  Brown also obtained and utilized two false Social Security numbers and purchased three properties from Ty Construction, as well as other properties from other sellers.

Simpson purchased four properties from Ty Construction.  Salas purchased three properties from Ty Construction.  Smith, Nshanian and Romero each purchased two properties from Ty Construction.  Jackson purchased one property from Ty Construction, as well as three other properties from others.  Edwards purchased one property from Ty Construction, as well as another property from another seller.  McClain, Jones, Cadenhead and the Williams each purchased one property from Ty Construction.

In addition to the mortgage fraud conspiracy, the indictment charges various defendants with 13 counts of interstate transportation of money obtained by fraud and 12 counts of wire fraud, all related to financial payments conducted during the conspiracy.  Howard also is charged with four counts of money laundering, Clark with two counts of money laundering, and Simpson and Salas with one count each of money laundering, all related to financial transactions of funds derived from unlawful activity.

Today’s indictment also contains a forfeiture allegation against Howard, which would require him to forfeit to the government any property derived from the proceeds of the alleged offenses, including $12,616,990.

U.S. Attorney Wood cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt.  Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall.  It was investigated by the FBI and Internal Revenue Service-Criminal Investigation.

mortgage fraud

1. see docket and all pleadings at:
   www.juris99.com/California

   Posted by  on  04/04  at  08:32 AM