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Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of Smith Dollar, PC, is licensed to practice law in California and maintains offices in Santa Rosa, California. Email Ms. Dollar
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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.
Failed Mortgage Firm Trustee Allowed $50,000 in Fees Union Leader
U.S. Bankruptcy Court Judge J. Michael Deasy will approve $50,000 in legal fees for the trustee of failed mortgage brokerage businesses Financial Resources Mortgage Inc. and CL&M Inc.
Bend Oregon Event to Help Homeowners Prevent Foreclosures Oregon.Gov
As part of an ongoing effort to help homeowners avoid foreclosure, state agencies are organizing a foreclosure-prevention event in Bend on Saturday, March 27, 2010.
Shelbyville Man Gets 2-Year Sentence For Loan Fraud Chattanoogan.Com
Prosecutor Gary Humble said the lost was approximately $2.3 million in the mortgage fraud involving hundreds of homes in the Shelbyville area.
Lend America, VP Ashley Banned from FHA Housing Wire
Michael Ashley, the embattled former vice president of Federal Housing Administration (FHA)-backed mortgage originator Lend America, and the company he worked for, were permanently banned from doing business in the industry last week.
Countrywide Tries to Pin Blame on Insurer Court House News
Countrywide Home Loans demands $111 million from Triad Guaranty Insurance, claiming Triad is trying to blame mortgage lenders for the insurer's role in the housing bubble and collapse.
Investors Say They Were Swindled in Property Scheme Fox 13 Now
Utah Division of Consumer Protection is joining forces with a few investors who claim they have been cheated by an agency called "Utah Mini Ranches.
Greenfield Man Accused of Housing Scam The Republic
A former real estate agent conned at least eight people by renting them properties actually owned by a federal agency and then running off with their deposits, prosecutors said.
Appraisal Institute Opposes Obama Administration's Plan for Homeowner 'Short Sales' PR News Wire
Citing concerns about increased mortgage fraud, four organizations representing more than 35,000 real estate appraisers today voiced their opposition to changes to an Obama administration program that will encourage "short sales" of homes.
Ownership Rights to Get Another Look TBO.Com
State lawmakers may beef up protections of property owners' rights by rewriting a law this spring that is at the center of a case of alleged fraud in Pasco County.
Thursday, February 18, 2010 F. Jeffrey Miller Trial Continued Testimony
As reported by Anne Mitchell, who viewed the trial:
Angela Parenza worked for Jeff Miller as the office manager for 7 or 8 years beginning in 1998. Parenza was indicted along with Miller and pled guilty to conspiracy to commit bank fraud and money laundering. Parenza testified that Miller or his contractors allegedly preferred to build all the...
Wednesday, February 10, 2010 F. Jeffrey Miller Trial Coverage Continued - Witness Testimony
Steve Middleton Testimony - Coverage Provided by Anne Mitchell
The Government continued in its cross examination of Steve Middleton. He was shown several HUD-1 statements involving sales of homes located in Overland Park, KS, and Olathe, KS. The HUD statements each allegedly showed line items of payments to (James) Moser & Associates, LLC's...
Monday, February 01, 2010 F. Jeffrey Miller Trial Coverage - Continued Witness Examination
According to Anne Mitchell, who is present in court for the trial:
Next Witness: Kelly Sanford
Kelly Sanford of the Federal Reserve was a short witness for the Government. Sanford manages electronic payments between banks and member financial institutions. He was shown copies of wire transfers and asked whether they coincided with the counts in...
Wednesday, January 27, 2010 F. Jeffrey Miller Trial - Prosecution Witnesses Continued
According to Anne Mitchell, who is viewing the trial:
January 13, 2010
Witness: Rick Hayes
Rick Hayes testified that on the day that he closed on his Miller Enterprise home, he received a phone call from the Kansas Banking Commission informing him that his loan was fraudulent. After the Hayes responded to a classified ad, they met with John...
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The information and notices contained on Mortgage Fraud Blog are intended to summarize recent developments in mortgage fraud cases and mortgage banking matters nationwide. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about mortgage banking, mortgage fraud matters or who believe they require legal counsel should seek the advice of an attorney. The creators, editors and sponsors of Mortgage Fraud Blog do not intend to create a confidential relationship or an attorney-client relationship by communication via or arising from this site.
Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of 
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