Brandon Hanly, 32, Redding, California, was found guilty by a federal jury of wire fraud, mail fraud, and money laundering following a six-day mortgage fraud trial.
According to the evidence presented at trial, from September 2005 to April 2006, Hanly and co-defendants Jerad Maggi and Douglas Heald participated in a scheme to defraud mortgage lenders. Maggi and Heald pleaded guilty before trial. Another defendant, Joshua Gervolstad, also pleaded guilty in a related case.
The object of the scheme was to get cash out of a house beyond its equity while still appearing to be a “rate and term” refinancing. A “rate and term” refinancing is one that changes only the interest rate and length of the loan but does not result in cash out to the borrower. It is typically easier to obtain than a cash-out loan.
The defendants were able to get large loans because they provided the lender with altered appraisals, inflated by up to $350,000. The title reports were altered to place a fake lien on the title in the name of a shell company, TPG Investments Inc. Then the defendants gave the lender and escrow officer instructions to pay off the lien to TPG. Gervolstad controlled TPG and used it to direct the cash to himself, Hanly, and the other participants in the scheme. Although Hanly testified at trial that he was a victim of the scheme, the evidence showed that he personally received more than $300,000 as a result of his participation.
Hanly is scheduled to be sentenced by U.S. District Judge William B. Shubb on February 11, 2013. He faces a maximum statutory penalty mail fraud and wire fraud of 20 years in prison and a $250,000 fine. The maximum statutory penalty for money laundering is 10 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. Sentencing for Maggi and Heald is scheduled for December 10, 2012. On July 10, 2010, Gervolstad was sentenced to three years in prison and ordered to pay $1,485,000 in restitution.
United States Attorney Benjamin B. Wagner announced the jury’s verdict.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorneys Matthew Segal and Jared Dolan are prosecuting the case.