Friday, February 15, 2008

3 New Indictments In Pennsylvania Straw Buyer Scheme

The following three defendants were indicted:

Michael McFerron Pope, 43—Conspiracy, Money Laundering
James Andrew Spike, 43—Conspiracy
Marlin Sprouts, Jr., 52—Conspiracy

The grand jury returned separate but related indictments charging Michael Pope, Marlin Spouts, Jr., and James Spike with participating in a Mortgage Fraud Conspiracy.  Pope was also charged with two counts of Money Laundering.

All three indictment are related to similar charges filed against Tiffany Sprouts.  Sprouts previously pleaded guilty to the information and is awaiting sentencing.  Pope and Tiffany Sprouts operated Pope Financial Services and Sprouts Mortgage out of an office building located on Lewis Run Road in the Pleasant Hills, Pennsylvania area.

The indictments allege that Pope, Spike, and Marlin and Tiffany Spouts participated in a mortgage fraud and property flipping scheme.  Pope and Tiffany Sprouts, through Sprouts Mortgage and Pope Financial Services, recruited at least six different straw buyers with favorable credit scores to separately apply for mortgage loans from various financial and mortgage lending institutions to obtain funds and to purchase residential real estate selected by Pope and Tiffany Sprouts.  Pope and Tiffany Sprouts created and obtained false and fraudulent documents in connection with the mortgage loans, including the following:

(a) applications;
(b) financial statements;
(c) verifications of deposit;
(d) verifications of rent or mortgage;
(e) verifications of employment;
(f) property leases; and
(g) wage statements.

Pope and Sprouts created and obtained the false and fraudulent documents to inflate the straw buyers’ employment and financial condition, to overstate income and assets, in order to increase the dollar amount that could be borrowed against the properties.  They also used appraisals with an inflated opinion of market value of the properties in order to increase the dollar amount that could be borrowed against the properties.

In addition, Pope and Tiffany Sprouts temporarily deposited funds into bank accounts of the straw buyers to make it appear that the straw buyers had sufficient assets to qualify for the loans and to make the down payments.  They also created false lease agreements purporting to show that the straw buyers would be renting to others the properties the straw buyers owned to conceal the true domicile of the straw buyers and to make it appear that the straw buyers had a source of income.

The indictment alleges that Pope and Tiffany Sprouts repeatedly engaged in this conduct over a four and a half year period from June 2002 to December 2006, involving millions of dollars of loans.  The properties involved were located, among other places, in Peters Township and Upper Saint Clair, Pennsylvania.

James Spike and Marlin Sprouts, Jr., according to their indictments, participated in the conspiracy by agreeing to act as the buyer and borrower, knowing that the loan applications submitted on their behalf contained fraudulent information.

Michael McFerron Pope Indictment;
James Andrew Spike Indictment;
Marlin Sprouts, Jr Indictment; and
Tiffany Sprouts Information

mortgage fraud