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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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Katheryn Shields, former Jackson County Executive, and her husband, Phillip Cardarella were acquitted following a two week trial. The verdict forms for Shields and Cardarella indicate they were found not guilty of count 1, conspiracy to commit wire fraud, and count 12, wire fraud.
As previously reported by Mortgage Fraud Blog, Shields and her husband were among those indicted by a federal grand jury for conspiracy and wire fraud for their role in a scheme to engage in mortgage fraud. A day after being indicted, Katheryn Shields filed to run for mayor of Kansas City, Missouri. Shields was quoted as saying that the federal charges were ”a political witch-hunt conducted by the US Attorney’s office” intended ”to create maximum embarrassment for me.”
Charged in the 12-count indictment returned by a federal grand jury were:
Katheryn J. Shields, 60, Kansas City, Missouri
Phillip F. Cardarella, 59, Kansas City, Missouri
James Elliott Coleman, 58, Kansas City, Missouri
Raymond Walter Zwego, Jr., 58, Kansas City, Missouri
James R. Rhoades, 48, Kansas City, Missouri,
Larry E. Barshaw, 56, Kansas City, Kansas
Linda M. Thompson-Barshaw, 57, Kansas City, Kansas,
Monty J. Kinman, 25, Overland Park, Missouri
Rick A. Peterson, 32, Lenexa, Kansas
Jeremy A. Plagman, 29, Lee�s Summit, Missouri, and
Michael Rodd, 52, Olathe, Missouri
“This case represents another tragic example of intelligent individuals - including lawyers and prominent elected officials - thumbing their noses at the law in the pursuit of quick and easy cash,” Bradley J. Schlozman, United States Attorney for the Western District of Missouri said.”We will continue to aggressively target white collar criminals with a relentless vigilance.”
Shields is a former Jackson County Executive and an attorney who is married to Cardarella, an attorney in private practice. Coleman is a Certified Public Accountant who formerly served as president of the board of a Kansas City magnet school. Zwego owns and operates Xpress Car Sales, Xpress Car Rental, North Mission Investments, Cobalt Blue, LLC, and Indigo Blue in North Kansas City, Missouri Thompson-Barshaw is the owner of Colormarc, Inc., a remodeling business that employed her husband, Barshaw.
The indictment alleges that, from early September through November 17, 2006, all of the co-defendants participated in a conspiracy to defraud Fieldstone Mortgage Corporation. According to the indictment, Shields and Cardarella attempted to sell their home at a fraudulently inflated price to the Barshaws, acting as straw buyers for the benefit of Zwego, who hoped to pocket the difference between the loan amount and the true sale price.
Further, according to the indictment, Zwego, the Barshaws, Kinman, the regional manager and a loan officer at Soldi Financial in Overland Park, Missouri, and Rodd, a real estate agent doing business as Heartland of America, Inc., in Olathe, Missouri, agreed that Rodd would identify properties from which, if purchased, they could obtain loan proceeds in excess of the actual purchase price. Zwego and Rodd approached Shields and Cardarella in September 2006, after their residence at 5034 Sunset Drive, Kansas City, Missouri, had been on the market for about 18 months. Zwego and Rodd allegedly conspired with the Barshaws, who enjoyed a good credit rating, to serve as straw buyers for the purchase in return for a share of the proceeds. The Barshaws never intended to live in the home or have any financial obligation for the property, the indictment alleges.
Although the house was listed for $699,950, a drop of more than $150,000 from the original asking price, Zwego and his assistant, Rhoades, prepared a fraudulent real estate sales contract purporting to show a sale of the residence from the Cardarellas to the Barshaws for more than $1.4 million. In reality, the indictment alleges, Shields and Cardarella were to receive $707,000 from the sale.
Zwego and Kinman allegedly utilized Plagman, an appraiser doing business as JET Appraisals in Lee’s Summit, Missouri, to obtain an inflated appraisal of the property. Plagman refused to provide an appraised value of $1.4 million, the indictment says, but agreed to provide an appraisal for $1.2 million, although in his opinion the property was worth significantly less.
Zwego, Kinman and Rhoades, an employee of Zwego at Xpress Car Sales, allegedly arranged for a series of false and fraudulent financial statements regarding the Barshaws’ finances to be sent to the lender. These documents, the indictment says, misrepresented the Barshaws’ assets and liabilities. Zwego and Kinman allegedly arranged for Coleman to provide a number of fraudulent letters attesting to the Barshaws’ creditworthiness, including a letters falsely stating that he had prepared their taxes in two separate years and falsely claiming that the Barshaws had asked him to draft a letter verifying that they had owned a remodeling business for more than two years.
Kinman prepared and the Barshaws signed loan applications for $1 million for a first mortgage and $400,000 for a second mortgage in connection with their proposed purchase. In the loan applications and supporting documentation, the indictment alleges, the Barshaws knowingly provided false information, including false asset and liability information such as false income and rental income information, the false representation that they would occupy the property as their primary residence, and false representation of the number of properties they owned.
According to the indictment, Cardarella met with Zwego and Rodd at his law office. Zwego and Rodd allegedly explained to Cardarella that the sales price of the home shown on the documents submitted to the lender would falsely list the price as much higher than the asking price and true value of the home. Cardarella and Shields would still receive their asking price of $707,000, but the difference between the asking price and the loan amount would go the Zwego as a management fee. Cardarella allegedly assured Zwego that he understood, that he wanted the $707,000 and hoped Zwego made tens of millions of dollars from the transaction, and that he understood there would be an invoice falsely reflecting that Zwego or his company was entitled to loan proceeds.
At one point, the indictment alleges, Zwego expressed his concern to Cardarella whether Cardarella’s wife, Shields, understood the nature of the transaction so that everything would go smoothly at closing. Cardarella allegedly indicated that would not be a problem and that Shields would sign the fraudulent documents.
In the days leading up to the closing, Zwego allegedly arranged for Peterson, employed as a closer at Freedom Title, LLC, in Kansas City, Missouri, to have a false and fraudulent settlement statement showing the purchase price for the Cardarella’s home at $1.2 million with a management fee of $414,580. Peterson faxed this document to the Cardarella’s home with a cover sheet stating that they should contact him if there were any problems. On the same day, Peterson also secured signatures from the Barshaws on the closing documents.
Shields and Cardarella went to the offices of Freedom Title for the closing. Cardarella arrived first, reviewed the documents, made some changes, and then signed. Shields arrived shortly thereafter and signed all the documents, including the settlement agreement falsely stating that the purchase price of the home was $1.2 million.
“In doing so,” Schlozman said, ”Shields and Cardarella both knowingly signed false and fraudulent documents relating to the sale of their home. By this time, the FBI was fully cognizant of this mortgage fraud scheme, and took efforts to ensure that the loan being sought by the Barshaws did not fund.”
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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