Missouri Builder Sentenced for Mortgage Fraud

Jerry R. Emerick, 39, Raymore, Missouri, the former owner of a residential construction business in Raymore, Mo., was sentenced in federal court for his role in a $12.6 million mortgage fraud scheme that involved 25 upscale residential properties in Lee’s Summit, Mo., and Raymore.

Emerick was sentenced by U.S. Chief District Judge Fernando J. Gaitan to two years and six months in federal prison without parole. The court also ordered Emerick to pay $5,289,819 in restitution.

On April 9, 2009, Emerick pleaded guilty to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines. Emerick owned and operated Ty Construction and Residential Contracting, LLC, which was engaged in the business of residential construction, primarily in Lee’s Summit and Raymore, Missouri.

Seventeen defendants who were charged in a related federal indictment have pleaded guilty to their roles in the mortgage fraud conspiracy; 11 of those defendants have been sentenced. They were involved in buying and selling new homes—all of which were built by Emerick— in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans for more than the actual sale price by providing false information to mortgage lenders, then kept the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from Emerick, with kickbacks ranging up to $125,000 on each house.

Emerick admitted to participating in the fraudulent mortgage loans involving 22 residential properties in Lee’s Summit and three residential properties in Raymore. Emerick was aware that loan applications and supporting documentation containing material false and fraudulent representations and omissions of fact would be submitted to mortgage lenders. Emerick was also aware that buyers were creating false business entities in order to receive loan proceeds without the knowledge of the lender.

Emerick submitted false documentation and made fraudulent material representations to title companies in order for the buyers to receive funds from the loan proceeds; he also made payments to the buyers outside of closing.

In total during the course of the conspiracy from June 2005 to May 2007, mortgage lenders approved 25 loans totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders’ knowledge. Lenders sustained actual losses totaling $6,434,043.

Beth Phillips, United States Attorney for the Western District of Missouri, announced the sentence.

This case is being prosecuted by Assistant U.S. Attorneys Linda Parker Marshall and Kate Mahoney. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation.