Derrick Reuben Smith, 46, Midwest City, Oaklahoma, has been found guilty by a jury of conspiracy to commit wire fraud in connection with mortgage loans. The jury returned its verdict after four days of trial.
According to an indictment returned in July of 2010, Smith recruited two individuals to buy two new homes in the Raintree Acres Addition, Edmond, Oaklahoma, in mid-2006 and early 2007. The homes sold for $425,000 and $435,000. The evidence at trial showed that the builder of both homes-Dodson Custom Homes, LLC-agreed that T&T Realty, a real estate brokerage operated by Trina Tahir, would receive large commissions and bonuses totaling $51,950 and $77,950. After the closings, T&T Realty wrote checks to Michael Gipson, an agent at T&T Realty, for $27,059.86 and $58,000. Gipson then wrote checks in those same amounts to “MP Service,” a business that Smith operated. In short, Smith induced lenders to fund mortgages based on inflated real estate prices and misrepresented the distribution of excessive loan proceeds to himself as commissions and bonuses paid to T&T Realty. The houses ultimately went into foreclosure. Each sold for over $100,000 less than the inflated loans that Smith had the buyers receive.
The evidence showed that on one of the houses, Smith and Dodson Custom Homes agreed to a $21,250 seller-carry second mortgage that was released without any payments shortly after closing. The jury also heard that for the downpayment on one of the houses, Smith borrowed $28,042.42 from an acquaintance and paid the loan back immediately after closing, even though he knew that the loan application stated that none of the downpayment would be borrowed. And the evidence included altered bank statements that Smith had submitted to a lender to support income figures for one of the loan applications.
At sentencing, Smith faces a maximum punishment of 20 years in prison and a fine of $250,000. He will also owe restitution to victim lenders and be subject to forfeiture.
Two co-defendants entered guilty pleas before trial. On April 6, 2011, Trina Tahir pled guilty to money laundering in connection with a property that Gipson purchased in May of 2006. She admitted that she provided Gipson with downpayment assistance through an intermediary company and received the money back right after the closing. The transaction involved money laundering because, as Tahir acknowledged during her plea hearing, it concealed the downpayment assistance and allowed Gipson to present the downpayment at closing as if it were his own money. Tahir faces a maximum punishment of 20 years in prison and a fine of $500,000, in addition to restitution and forfeiture.
On March 30, 2011, Gipson pled guilty to conspiracy and money laundering. Both charges related to the Raintree Acres properties that were at issue in Smith‘s trial. Gipson also faces a maximum punishment of 20 years in prison and a fine of $500,000, in addition to restitution and forfeiture.
Sentencings will take place in 90-120 days.
Sanford C. Coats, United States Attorney for the Western District of Oklahoma, announced the verdict.
These convictions are the result of an investigation conducted by the Criminal Investigation Division of the Internal Revenue Service and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorneys Scott E. Williams and Chris M. Stephens.
Reference is made to public filings for further information.