Friday, February 02, 2007

Three Defendants Sentenced in Mississippi Flipping Case

Kristy N. Packer, Marcy Irby and Jafus Jones Jr. were sentenced to probation terms ranging from three to five years and ordered to pay restitution ranging from $101,673 to $191,888 to Countrywide Mortgage, which was defrauded in a Hattiesburg, Mississippi flipping scheme.

Phillip N. Weary was sentenced to 19 months in prison and ordered to pay $925,540 in restitution to Countrywide.

William Vaston Fairley was sentenced to 14 months � seven months in prison and seven months at a halfway house. Fairley must also participate in a drug rehabilitation program while at the halfway house and pay $355,475 restitution.

Other participants � Richard Lucas, Kimberly Castle, Kenneth Stalnaker, Kenneth Fairley, Michael Cox, Loretta Champ and Jacqueline B. Mosley are expected to be sentenced February 20, 2007.

Those charged in the original indictment and named in the superseding indictment were:

Kenneth Fairley, Jr., alleged to be a nominal buyer for the purpose of obtaining mortgage loans for the purchase of property.
Richard B. Lucas, alleged to be the controlling person for Lucas Development and Investments and its affiliates including C&J Properties, Southwest Trust Co., the Mellon Group, Lucas & Castle Properties and the Auto Marketing Group
Phillip N. Weary, alleged to have been an employee of Lucas Development or its affiliates
Kimberly Castle, Mississippi lawyer alleged to have handled real estate settlements for Lucas
Kenneth Stalnaker, real estate appraiser doing business as Accurate Appraisals
Loretta Joy Champ, real estate appraiser doing business as J&J Appraisal Services
William V. Fairley aka Vaston, alleged to have been an employee of Lucas Development or its affiliates
Jafus Jones Jr. , alleged to have been an employee of Lucas Development or its affiliates
Kristy N. Packer, alleged to have been an employee of Lucas Development or its affiliates and a straw buyer

The superseding indictment charged all of the defendants with one count of bank fraud, one count of bank and wire fraud conspiracy and nine counts of wire fraud. Lucas, Castle and Weary were also charged with money laundering conspiracy.

Malcolm C. Clark, alleged in the original indictment to have been an employee of Lucas Development or its affiliates and Marcy R. Irby, alleged in the original indictment to have acted as a straw buyer, both pled guilty to the original indictment and neither was named in the superseding indictment.

The superseding indictment alleged:

From December 2000 through November 2002, Lucas, Weary, William Vaston Fairley, Jones and others acquired distressed properties in Hattiesburg and Laurel, Mississippi and elsewhere.  Lucas arranged to produced inflated appraisals for properties acquired in the names of Weary, William Vaston Fairley and Jones.  Stalnaker, Champ and others prepared inflated appraisals. William Vaston Fairley, Kenneth Fairley, Jr., Packer and others submitted false mortgage loan applications to finance their purchase of properties from Weary.  Lucas and Jones would recruit purported investors to acquire properties from Weary and others knowing that the investors would not be required to make any down payments.  Lucas and Jones represented to potential investors that Lucas Development or its affiliates would lease the houses to tenants, collect the rents, make the monthly mortgage payments and handle all maintenance and repairs. Lucas caused mortgage loan applications to be made on behalf of the investors and on behalf of the nominal buyers, Packer and Kenneth Fairley, Jr., which falsely represented the income and assets of the borrower. 

Castle would conduct the real estate closings knowing that the borrowers routinely did not make the down payment reflected on the settlement statement.  Lucas would prove funds due from borrowers at settlement. 

The indictment identified transactions involving loan proceeds of almost $600,000.

mortgage fraud