Friday, June 20, 2008

8 Arrested In Texas For Elaborate Flip/Straw Buyer Scheme

Eric Rulack Farrington, Jr., 55, Irving, Texas, President of Prestige Capital Corporation, which did business as Farrington Mortgage Group, Farco Construction, Inc., and EFC Investments, LLC, which also did business as EFC Management Company. Farrington was also the principal of Eric Farrington Seminars, Inc.;
Regis Lamont Williams, 43, Dallas, Texas, a Texas certified real estate appraiser who did business as Executive Certified Appraisal;
Kevin Ray Sanderson, 33, Irving, Texas, Vice President of Farco Construction, Inc., Dallas, who worked under the direction of Farrington;
Tony Earl Anderson, 51, Dallas, Texas, business associate of Farrington;
James Edward Jones, 42, Dallas, Texas, business associate of Farrington;
Edwin Terrence Bell, 41, Fort Worth, Texas, principal of The Togetherness Group, Inc., a/k/a TTG, Inc.;
Robert John Mason, 53, Oak Leaf, Texas, employee of Prestige Capital Corporation who worked under the direction of Farrington; and
Christopher N. Williams, 41, Flower Mound, Texas, business associate of Farrington, were charges in a 51-count indictment returned by a federal grand jury in Dallas on May 21, 2008, and unsealed June 17, 2008.  These defendants, along with three additional defendants named in the Indictment who were not arrested with the above eight defenants, face various charges related to a mortgage fraud scheme they allegedly operated in the Dallas, Texas area from March 2002 to January 2006.

The three defendants who were not yet arrested are:

Marcus Allen Parker, 33, Rowlett, Texas, business associate of Farrington;
Micheal (sic) Lewis Andrews, 48, Plano, Texas, did business as Second Chance Mortgage; and
Janice Little Shepherd, 50, Irving, Texas, a mortgage broker who did business as EFC Capital Mortgage, Dallas.

All defendants who were arrested have made their initial appearance before U.S. Magistrate Judge Irma C. Ramirez. The government does not anticipate moving to detain any of the named defendants and expects that all will be released on conditions pending trial. It is anticipated that the remaining three defendants will surrender to federal officials within the week.

All 11 defendants are charged with conspiracy to commit wire fraud and all are charged with criminal forfeitures. All are charged in various substantive counts, including wire fraud, bank fraud, money laundering and engaging in a monetary transaction with criminally derived property. The maximum penalties for conspiracy to commit wire fraud and the wire fraud and aiding and abetting counts are 20 years in prison and a $250,000 fine per count. The maximum penalty for bank fraud and aiding and betting is 30 years in prison and a $1 million fine per count. The maximum penalty for money laundering and aiding and abetting is 20 years in prison and a $500,000 fine per count. The maximum penalty for engaging in a monetary transaction with criminally derived property and aiding and abetting is 10 years in prison and a $250,000 fine per count.

Eric Rulack Farrington, Jr. is charged with one count of conspiracy to commit wire fraud, one count of bank fraud and aiding and abetting, 15 counts of wire fraud and aiding and abetting, 10 counts of money laundering and aiding and abetting, and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, he faces a maximum statutory sentence of 600 years in prison, a $13.75 million fine and restitution.*

Janice Little Shepherd, is charged with one count of conspiracy to commit wire fraud, 13 counts of wire fraud and aiding and abetting, and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, she faces a maximum statutory sentence of 330 years in prison, a $4.75 million fine and restitution.*

Rejis Lamont Williams is charged with one count of conspiracy to commit wire fraud, one count of bank fraud and aiding and abetting, nine counts of wire fraud and aiding and abetting, and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, he faces a maximum statutory sentence of 280 years in prison, a $4.725 million fine and restitution.*

Kevin Ray Sanderson is charged with one count of conspiracy to commit wire fraud, one count of bank fraud, seven counts of wire fraud and aiding and abetting, and one count of money laundering. If convicted, he faces a maximum statutory sentence of 210 years in prison, a $3.5 million fine and restitution.*

Tony Earl Anderson is charged with one count of conspiracy to commit wire fraud, seven counts of wire fraud and aiding and abetting, and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, he faces a maximum statutory sentence of 210 years in prison, a $3.25 million fine and restitution.*

James Edward Jones is charged with one count of conspiracy to commit wire fraud and ten counts of wire fraud and aiding and abetting. If convicted, he faces a maximum statutory sentence of 220 years in prison, a $2.75 million fine and restitution.*

Edwin Terrence Bell is charged with one count of conspiracy to commit wire fraud, five counts of wire fraud and aiding and abetting, and two counts of engaging in a monetary transaction with criminally derived property and aiding and abetting. If convicted, he faces a maximum statutory sentence of 140 years in prison, a $2 million fine and restitution.*

Marcus Allen Parker is charged with one count of conspiracy to commit wire fraud, one count of bank fraud and aiding and abetting, and three counts of wire fraud and aiding and abetting. If convicted, he faces a maximum statutory sentence of 110 years in prison, a $2 million fine and restitution.*

Micheal Lewis Andrews, Robert John Mason, and Christopher N. Williams are each charged with one count of conspiracy to commit wire fraud and two counts of wire fraud and aiding and abetting. If convicted, each would face a maximum statutory sentence of 60 years in prison, a $750,000 fine and restitution.*

According to the indictment, the defendants ran a scheme in which they located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence. In some cases, they would create a bogus outstanding mortgage lien to be discharged. They recruited individuals to act as nominee or straw purchasers or straw borrowers and falsely represented to them that the property would be managed by the defendants and rented by a suitable tenant; that the mortgage, interest, taxes, insurance and property maintenance would be paid from the rental income; and the straw purchasers/borrowers would have no expenses. The straw purchasers/borrowers had no intention to live in the property and did not have sufficient income to repay the loans.

The indictment also alleges that the defendants prepared and submitted fraudulent loan documents in the names of the straw purchasers/borrowers and obtained loans in inflated amounts based on these fraudulent loan documents. Then they used the fraudulently obtained surplus loan proceeds to pay the sellers kickbacks, to conceal the fraud, and distributed the bulk of the proceeds among themselves. They would then allow the loan to go into foreclosure after a few payments were made on the loan.

Residences listed in the indictment that were used in the scheme are:

1420 Travis Circle South, Irving, Texas
6231 Azalea Lane, Dallas
7730 Cliffbrook Drive, Dallas
10907 Cinderella Lane, Dallas
7617 Arborgate Drive, Dallas
13735 Ashridge Drive, Dallas
6824 Winterwood Lane, Dallas
6840 Winterwood Lane, Dallas
6915 Winterwood Lane, Dallas
7012 Creek Bend Road, Dallas
1509 Appalachian Drive, Allen, Texas.

While the indictment doesn’t indicate the total amount of the fraud, Count 51 of the indictment, the criminal forfeiture allegation, requires the defendants to forfeit $4,500,070 to the U.S. should they be convicted on Count One, the conspiracy count. The forfeiture allegation also requires the defendants, upon conviction of any of Counts Two through 17, to forfeit various sums of money, that total $3,909,539, as listed in Count 51 of the indictment.

An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty.

U.S. Attorney Roper praised the investigative efforts of the FBI and Internal Revenue Service - Criminal Investigation. Assistant U.S. Attorney Joseph Revesz is prosecuting the case.

mortgage fraud