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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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ABN AMRO Mortgage Group, Inc. filed a civil lawsuit in Kansas City, Missouri federal court against:
Pearl Mortgage Group Inc., Kansas City, Missouri;
Midtown Real Estate Holdings LLC, Kansas City, Missouri;
Jonathan Jennings Realty LLC, Kansas City, Missouri;
Jonathan Jennings, Lee’s Summit, Missouri;
Brighter Homes East Inc., Kansas City, Missouri;
Nathan Brinkle, Blue Springs, Missouri;
Adam Kerr, Lee’s Summit, Missouri;
Lee Ullman, Leawood, Missouri;
Equitable Title LLC, Overland Park, Missouri;
Platinum Mortgage Group II Inc., Kansas City, Missouri;
David L. Peterson, Overland Park, Missouri;
Daniel R. Peterson, Leawood, Missouri;
Peterson Appraisal, Leawood, Missouri;
Mary Jennings, Kingman, Arizona;
DDL Investment LLC, Overland Park, Missouri;
Phillip Thomas, Lee’s Summit, Missouri;
Thomas Appraisal Services Inc., Kansas City, Missouri.
The lawsuit alleges that the defendants engaged in a flipping scheme in the greater Kansas City area, Missouri. ABN AMRO purchased 943 loans from Pearl Mortgage and Platinum Mortgage between 2000 and 2002 and that at least 156 were fraudulent.
The complaint identifies several categories of participants as follows:
a. Property Speculators: These actors masqueraded as legitimate property owners. The Speculators acquired distressed real estate then resold the properties to buyers at inflated prices, often based upon pledged improvements to the property that were never made. They promised buyers profitable investment properties with no money down. Brinkle, Jennings, Brighter Homes and Jonathon Jennings Realty played this role;
b. Front Men: These actors conspired with Property Speculators and advanced money to prospective buyers to be applied as down payments so that buyers could acquire distressed properties, primarily through foreclosure sales. These bad actors also devised schemes to assist uncreditworthy buyers to make a down payment on the subject property. From June 2000 until mid-December 2001, the Front Men made unreported cash payments on subject properties, enabling otherwise unqualified buyers to make a down payment and obtain a mortgage. From mid-December 2001 until October 2002—fearing the cash down payment scheme risked exposing their malfeasance—the Front Men began using so-called “contract-for-deed” transactions in lieu of cash down payments. In contract-for-deed transactions, the Front Men would issue a warranty deed to a prospective buyer in exchange for a promissory note guaranteeing repayment within a specified term, often the very day the note was executed. Immediately thereafter, the buyer would obtain a “refinance loan” (a misnomer because no “original” mortgage was ever recorded) then use the proceeds to extinguish the promissory note. Both schemes—cash front payments and contracts-for-deeds—allowed otherwise unqualified buyers to obtain mortgage financing through ABN. Upon information and belief derived from interviews with former associates of the Flipping Enterprise, Ullman and DDL Investments played this role in most transactions; Kerr, Brinkle and Jennings played it in others;
c. Mortgage Hustlers: Pretending to be legitimate mortgage brokers, the Mortgage Hustlers assisted the buyer to find a mortgage lender to finance the sale of subject properties at inflated prices. Adam Kerr, Platinum II, and Pearl Mortgage played this role;
d. Appraisal Inflators: These persons inflated the appraisal value of subject properties to substantiate inflated and prearranged purchase prices in closing documents. Peterson Appraisal, Dan Peterson, David Peterson, Phillip Thomas and Thomas Appraisal played this role; and
e. Enabling Title Companies: With impressive corporate names, these actors provided a legitimate veneer to this scheme. The Enabling Title Companies prepared documents for closing (often with false, incomplete, and inaccurate information) and disbursed checks to RICO participants (often certifying the disbursement of checks despite knowing that the closing documents contained false information). Equitable Title Company played this role.
According to the lawsuit, each fraudulent transaction began with the acquisition of a property, usually through a foreclosure sale - often another party fronted a down payment. Defendants would make cosmetic repairs and quickly resell the property to an unwitting buyer for a much higher price. Defendants sometimes misrepresented that the properties as sound investments capable of paying for themselves through rental income. To support the claim, Defendants submitted fraudulent income and expense statements, which forecasted rent proceeds by using “comparable” properties that were larger, in appreciably better condition, and in more desirable locations. The Property Speculators then steered unwitting buyers to affiliated mortgage companies. The Mortgage Hustlers completed relevant paper work and arranged financing on the properties. Many buyers were not creditworthy and buyer financial information was misrepresented. Many buyers also lacked capital to make a down payment on the property and defendants fronted down payments. Beginning December 2001, according to the lawsuit, the defendants also arranged unreported contract-for-deed transactions, which also allowed otherwise unqualified buyers to acquire subject properties without making a down payment. The Appraiser Inflators appraised the properties at prearranged, highly inflated prices and manipulated comps and chose comps that were incomparable.
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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