Thursday, March 06, 2008

2 Charged With Mortgage Fraud Involving 36 Properties

Beverly Ross, 49, and Donella Locke, 58, were arrested after being indicted on January 30, 2008, by a federal grand jury sitting in Indianapolis for wire fraud and conspiracy to commit wire fraud. Ross was also indicted separately for six felony counts relating to bankruptcy fraud.

The indictment alleges that Ross and Locke conspired together to find buyers for 36 high dollar houses in the Hamilton, Hancock, and Marion County, Indiana areas. They purportedly told buyers that they needed to use their credit for several months to buy the house, but that the buyers would not actually be making any payments because Ross and Locke had different occupants who would rent the house and make the payments. Ross and Locke then allegedly caused fictitious documents to go to the lending institutions, including false statements about buyers bringing down payment funds and inflated income amounts of the buyers. Ross and Locke also purportedly knew that double settlement statements were created, specifically, one that showed the true sales price given to the sellers of properties, and one with an inflated sales price given to the lending institution for the purpose of obtaining more money. With many of the properties, the lenders thought that Ross and Locke were going to do construction work on the property raising its value. After closing, Ross and Locke benefitted from these transactions. No construction work was ever done. Few payments were actually made. Buyers did not bring down payment funds. Buyers did not authorize their incomes to be inflated on applications to the lenders.

Ross was associated with the business names Design Masters, Rose Ross Realty, and Ross and Ross Investments. Locke was associated with Locke and Key Investments, and variations of this name such as L&K Interior Designs, Locke & Key Real Estate, and L&K Investments.

In Ross’s separate bankruptcy fraud indictment she is alleged to have filed five separate petitions for bankruptcy, but then failing each time to follow-up with schedules as required by the

bankruptcy process. Her motive for four of them was to stop sheriff’s sales on properties that she had purchased in her name, or properties purchased in a relative’s name, because she had not

made payments. Ross failed to list all the prior filings for bankruptcy in the previous eight years as required by the petitions she filed.

“These schemes are complex and take an enormous amount of investigation along with expertise to secure evidence and prosecute,” Indiana Attorney General Steve Carter said. “Our

Homeowner Protection Unit is taking action against licensed appraisers and real estate agents that are related to this scheme and will pursue others licensees found to be involved. The pursuit

of the individuals who masterminded this specific scheme and harmed numerous individuals in the process is a positive step in Indiana’s fight against foreclosures and mortgage fraud.”

mortgage fraud

1. I think we need to see how much this type of activity played a part in the current lending crisis affecting the real estate industry.

   Posted by  on  03/07  at  05:32 AM

2. So what is the relief that the people who were targeted received?  The consumers that this ultimately affects.  Did they have to file bankruptcy?

   Posted by  on  03/27  at  07:21 AM

3. Instead of reacting to mortgage fraud,real estate and mortgage professionals should take a proactive approach. Many tool’s have been developed to raise fraud’s red flag,this could have been prevented on the first house.

   Posted by  on  04/15  at  09:22 AM

4. What is KSDK? (something tells me it’s a dumb question:D)

   Posted by  on  05/09  at  06:49 AM

5. Friday Sept. 18 2009, Donella Locke was found guilty on all 5 counts of interstate wire fraud, for which she was charged in Indiana’s U.S. District Court, under Judge McKinney.

   Posted by  on  09/20  at  09:21 AM