Tuesday, October 28, 2008

Texas Man Gets 24 Years For Mortgage Fraud

Michael D. Goodson, 40, Houston, Texas, was sentenced to 293 months imprisonment and ordered to pay $3 million in restitution for engaging in a scheme to defraud mortgage lenders, United States Attorney Don DeGabrielle announced. U. S. District Judge Lynn N. Hughes imposed the sentence. 

As previously reported by Mortgage Fraud Blog, Goodson was convicted in July 2007of engaging in a conspiracy to commit mail and wire fraud, three counts of mail fraud and five counts of wire fraud. During the course of the two-day trial, the United States presented evidence proving that Goodson induced numerous residential mortgage lenders across the country to loan in excess of $11 million from early 2003 into early 2005 by using false and fraudulent representations in loan applications. The conspirators falsely represented on loan applications and other loan documents that the borrower was employed in the name of fictitious businesses and/or inflated the income of the borrower the lenders on loan applications to establish the creditworthiness of the borrowers. Additional fraudulent documents were provided to the lenders by Goodson and his co-conspirators to support the applications for loans. 

As part of the scheme, Goodson located residential properties to purchase and negotiated a sales price at the highest value. With the high sales price, Goodson would receive a substantial payment from the seller’s proceeds at closing based on a fraudulent invoice which indicated his business was being paid for work done to the property. Goodson also recruited individuals to pose as the purchaser of the house and to represent to the lender they were buying the home as their residence. Goodson convinced the borrowers he was willing to pay them to simply lend their good credit to a legitimate real estate investment, and promised that the transaction would pose no financial risk to the borrower because he would cover all the costs of purchasing and maintaining the property, including paying the mortgage, insurance and taxes. Ultimately, however, Goodson allowed all the loans to fall into default and the properties were foreclosed by the mortgage companies.

Goodson’s co-conspirators, Nancy Booth, also known as Nancy Campbell, 46, and Leslie R. Tarrance, Sr., 62, have both been convicted for their respective rolls in the scheme and pending sentencing in Jan. 2009. Booth, a loan officer at American Mortgage Group who coordinated the loans for the purchase of properties and prepared the false and fraudulent loan documents, pled guilty in October 2006 to conspiracy to commit mail and wire fraud and to two counts of mail fraud. Tarrance, who operated Ultra Classic Custom Homes, a custom home building company, sold eight properties at agreed upon inflated prices to Goodson which were used in the fraud scheme and financially benefitted both men, pled guilty on July 17, 2007 to the conspiring to commit mail and wire fraud.  Both remain free on bond pending their respective sentencing hearings.

In addition to prison term, the court further ordered Goodson pay restitution in the amount of $3,060,790, and serve a three year term of supervised release.  Goodson has been in custody since March 2006 and will remain in custody to begin serving his sentence.

This case was investigated by the Federal Bureau of Investigation and United States Postal Inspection Service, and was prosecuted by Assistant U. S. Attorney Melissa Annis.

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