Monday, May 25, 2009

Newport News Man Convicted for Mortgage Fraud

Richard N. Garries, 45, Newport News, Virginia, has been found Guilty by a federal jury sitting in Newport News. Garries was convicted on all 24 charges of a Second Superseding Indictment, filed in April of 2009.  The charges related to an elaborate mortgage fraud scheme, including conspiracy, wire fraud, mail fraud, money laundering, structuring and making materially false statements charges.

Garries and co-defendant Terrance K. Boothe were both Indicted in May 2008 as part of Operation Malicious Mortgage, a nationwide crackdown on mortgage fraud ranging from March to June of 2008.  Overall, more than 400 defendants were involved in Operation Malicious Mortgage. 

In August 2008 a Superseding Indictment was filed soley against Garries, after Boothe pled Guilty to count one of the indictment, charging him with Conspiracy to Commit Mail and Wire Fraud, in violation of Title 18, United States Code, Section 1349.  The maximum penalties for Boothe are a term of twenty (20) years of imprisonment, a fine of $250,000, full restitution, a special assessment, and three (3) years of supervised release.  At the time of this posting, Boothe is scheduled to be sentenced June 19th, 2009.

According to court records and evidence introduced at trial, from the summer of 2005 to May 2008, Garries conspired with others to make money through the resale - or "flipping" - of residential properties to buyers he brought in through false promises that the properties had been renovated, renters had been arranged for the properties, buyers would not have to spend their own funds, and that buyers would be provided with cash back at closing.

Garries was employed as a mortgage loan broker / loan originator for Security First Funding Corp. ("Security First"). In this capacity, Garries assisted clients in finding and obtaining mortgage loans. Garries performed these services out of his personal residence. Security First paid Garries a set commission for each loan he secured. Boothe worked for Garries as a loan processor in Garries' residence in Newport News, Virginia. Boothe assisted Garries in processing loans and was paid by Garries through the commissions Garries received for closing each loan.

As part of the loan approval process, Garries required clients to provide their financial information, including employment, monthly income, assets and debts in a loan questionnaire. Boothe would use this information to complete a loan application for the client and send the application to mortgage loan companies in an effort to obtain financing. 

To secure mortgage loans for buyers, evidence showed that Garries inflated the buyers' income levels and bank account balances on loan applications and provided them with money to make it appear the buyers had more funds available to qualify for a loan and/or to have the necessary funds to proceed with closing on the property. Garries arranged for buyers to use lenders selected by him to obtain loan financing, for which Garries received a commission. Garries also structured over $200,000.00 in various bank accounts he controlled.

At the time of the offense Garries was on probation from a previous federal conviction for wire fraud for which he received a 25 month sentence. Following his release, Garries, who is originally from New York, lived in Newport News. While on supervised probation, he made numerous false statements to his probation officer concealing income and assets.

The trial began on May 6, 2009, in the United States Courthouse in Newport News. Following the presentation of more than 25 witnesses and 300 exhibits over two weeks, the jury found Garries guilty on all 24 counts of the indictment. Sentencing is scheduled for Aug. 31, 2009, at 2:30 p.m. in the Newport News Courthouse. Garries faces a maximum sentence of 20 years on the conspiracy, wire and mail fraud, and money laundering convictions, a maximum sentence of eight years on the structuring conviction, and a maximum of five years on the conviction for making a false statement.

Dana J. Boente, United States Attorney for the Eastern District of Virginia, made the announcement after the jury returned its verdict before United States District Judge Rebecca Beach Smith.

mortgage fraud