Thursday, July 20, 2006

Sentence in Maryland Mortgage Flipping Scheme

Heather Maynard, 45, Clinton, Maryland was sentenced to a year and a day in federal prison followed by 3 years of supervised release for conspiring to commit mail fraud and bank fraud in relation to a mortgage flipping scheme. Maynard was also order to pay restitution of $25,378.

According to the statement of facts presented to the court at her guilty plea, from July 1999 to February 2000 Maynard and others, including Waldo Eli Alicea, 45, Fredericksburg, and Reginald Derrick Greene, 41, Bowie, Maryland, executed a scheme to defraud mortgage lenders using “flip” transactions involving fraudulent mortgages for the purchase of single family homes in Charles and Prince George’s counties, Maryland.

Although Maynard is not a licensed mortgage broker, she maintained business relationships with brokers under which they would pay her a portion of, or all of, any mortgage broker fee earned by them on loans she brought the borrower to them as a client. Maynard and her co-conspirators contracted to purchase a foreclosed or bank-owned property at a depressed price. They then entered into a second contract to sell the property at a much higher price to a straw purchaser.

The ‘flip’ was typically accomplished through the use of fraudulent appraisals prepared by Alicea, which created the false impression that the property was worth the much higher price. The flip was also often accomplished through the use of fraudulent documents submitted in support of mortgage loan applications.

Maynard approached various individuals to serve as straw purchasers, assuring them that they could purchase properties at little or no personal financial risk. Maynard supplied lenders with false information about the straw purchasers’ personal financial circumstances, thereby enabling the straw purchaser to qualify for a mortgage loan based on the artificially inflated price. Maynard collected information about the borrower’s financial circumstances and history for the lender’s review.

Alicea and Greene also pled guilty to the mail and bank fraud conspiracy. Alicea was sentenced to 15 months in prison. Greene, an attorney, was sentenced to one year and one day in prison. Greene was employed as a settlement agent for DHC Title Company, Inc., handling real estate settlements and closing services for Maryland properties and serving as an agent for title insurance companies. Both Alicea and Greene were also ordered to pay restitution of $191,984.

mortgage fraud