Wednesday, March 04, 2009

Straw Buyer Sentenced to Probation

Marlin Sprouts Jr., 53, Uniontown, Pennsylvania, was sentenced in federal court in Pittsburgh on a felony charge that he conspired with his daughter and others to commit mortgage fraud.  Sprouts received 36 months probation, ordered to pay $697,500.00 in restitution and a $100.00 special assessment. US Attorney Mary Beth Buchanan filed a motion for downward departure of the sentencing guidelines due to Sprouts' admission that he was a straw buyer and his assistance and cooperation in the case against ring leader Michael Pope.  Pope ultimately pleaded guilty to the charges in light of Sprouts' intended testimony against Pope at the trial. 

As previously reported by Mortgage Fraud Blog, the separate indictments alleged that Pope, James Andrew Spike, Sprouts and Tiffany Sprouts participated in a mortgage fraud and property flipping scheme.  Pope and Tiffany Sprouts, through Sprouts Mortgage and Pope Financial Services, recruited at least six different straw buyers with favorable credit scores to separately apply for mortgage loans from various financial and mortgage lending institutions to obtain funds and to purchase residential real estate selected by Pope and Tiffany Sprouts.  Pope and Tiffany Sprouts created and obtained false and fraudulent documents in connection with the mortgage loans, including the following:

(a) applications; (b) financial statements; (c) verifications of deposit; (d) verifications of rent or mortgage; (e) verifications of employment; (f) property leases; and (g) wage statements.

Pope and Sprouts created and obtained the false and fraudulent documents to inflate the straw buyers’ employment and financial condition, to overstate income and assets, in order to increase the dollar amount that could be borrowed against the properties.  They also used appraisals with an inflated opinion of market value of the properties in order to increase the dollar amount that could be borrowed against the properties.

In addition, Pope and Tiffany Sprouts temporarily deposited funds into bank accounts of the straw buyers to make it appear that the straw buyers had sufficient assets to qualify for the loans and to make the down payments.  They also created false lease agreements purporting to show that the straw buyers would be renting to others the properties the straw buyers owned to conceal the true domicile of the straw buyers and to make it appear that the straw buyers had a source of income.

The indictment alleges that Pope and Tiffany Sprouts repeatedly engaged in this conduct over a four and a half year period from June 2002 to December 2006, involving millions of dollars of loans.  The properties involved were located, among other places, in Peters Township and Upper Saint Clair, Pennsylvania.

James Spike and Marlin Sprouts, Jr., according to their indictments, participated in the conspiracy by agreeing to act as the buyer and borrower, knowing that the loan applications submitted on their behalf contained fraudulent information.

mortgage fraud