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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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Frederick Earle Deen, III, 29, Minneapolis, Minnesota, pleaded guilty to one count of wire fraud and one count of tax evasion in connection with a mortgage fraud scheme. He entered his plea July 1, 2009, before United States District Court Judge Richard Kyle. Deen was charged on April 21, 2009.
According to Deen's plea agreement, he admitted that from September 2005 to July 2007 he, along with four unnamed individuals, knowingly and willfully engaged in a scheme to commit wire fraud. Deen was a loan officer and part-owner of Legacy Lending, a mortgage brokerage company in Minnesota. The others involved in the mortgage fraud scheme include the co-owner of the mortgage brokerage company, a residential real estate appraiser, a real estate agent and someone who recruited individuals to act as "straw buyers" for real estate transactions in which mortgage loans were obtained for dollar amounts substantially in excess of the purchase price.
Deen admitted that payments from those mortgage loan proceeds were concealed and diverted to himself and his co-conspirators through the use of fraudulent underwriting and closing documentation which they submitted to lenders to induce the lenders to provide mortgage loans. The funds in excess of the purchase price were then misappropriated by the scheme's participants.
Deen also admitted that he acted as the loan officer on most of the transactions, causing fraudulent loan application documentation to be provided to potential lenders for purposes of loan underwriting. The fraudulent documentation misrepresented the true terms of the proposed transaction, such as falsely identifying the purchaser; falsely indicating that the property would be "owned-occupied;" inflated the borrower's income and/or assets; inflated the purchase price of the property; inflated the appraised value of the property; failed to disclose to the lenders that funds in excess of the actual purchase price would be misappropriated by the co-conspirators; and concealed payments that were to be made from the loan proceeds to Deen and others.
The false representations and omissions were material because mortgage lenders rely on the actual purchase price paid by the buyer to assure that the loan is fully collateralized by a real property of a sufficient value. The fraudulent payments of loan proceeds to the co-conspirators were also concealed from the lenders. Individual B owned the mortgage brokerage company through which most of the fraudulent mortgage transactions were conducted. In every transaction, in addition to the concealed payments, Deen admitted that he and Individual B received substantial fees for arranging the fraudulent transactions. In order to support the falsely overstated purchase price, the conspirators obtained fraudulently inflated appraisals from Individual C, the real estate appraiser. As a result, Individual C was paid funds in excess of a standard appraisal fee. Individual D acted as the buyer's real estate agent on multiple real property transactions, and knew that the documents submitted to the lenders falsely identified the straw buyers as the purchaser of the properties when in fact the actual purchaser was Individual E. Individual D was paid substantial commission payments on these fraudulent transactions. Individual E recruited straw buyers and was paid a portion of the funds misappropriated by the scheme's participants.
Deen admitted participating in 27 separate fraudulent real estate transactions, worth approximately $18 million in total loan proceeds. There was at least $2 million made in fraudulent concealed payments. In order to effect the scheme, Deen admitted that on Oct. 17, 2006, in furtherance of the scheme he knowingly transmitted by means of wire communications more than $575,000 in mortgage loan financing for the purchase of a residence in Otsego. During tax years 2006 and 2007, Deen also admitted that he evaded his personal income taxes on approximately $200,000 in taxable income and owes more than $50,000 in income tax.
Deen faces a potential maximum penalty of 20 years in prison on the wire fraud count and five years on the tax evasion count. Judge Kyle will determine Deen's sentence at a future date.
This case is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorneys Timothy C. Rank and Christian S. Wilton.
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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