Missouri Man Sentenced in Major Mortgage Fraud Scheme

admin —  November 17, 2009 — 2 Comments

Russell Todd McBride, Creve Coeur, Missouri, was sentenced on a mortgage fraud scheme involving the sale of residential real estate located in Sikeston, Missouri.  McBride was sentenced to 135 months on a 34-count indictment for his involvement in the scheme.

As previously reported on Mortgage Fraud Blog, McBride was an operator of Century Mortgage and Finance, Inc., which was in the business of providing mortgage-related services, and had offices located in Sikeston, Cape Girardeau, St. Louis County and elsewhere. As a mortgage broker, Century Mortgage would locate and obtain prospective mortgage lenders for prospective borrowers. Employees and others associated with Century Mortgage would prepare mortgage applications and supporting documents for borrowers. Then, for a fee, Century Mortgage would find a mortgage lender to make the loan. Robert Wrolstad worked with McBride and for Century Mortgage providing services, including assisting in closing real estate transactions and working with title companies.

The scheme, which occurred from at least July 2005 and continued through November 28, 2006, involved investors recruited by McBride and Wrolstad purchasing real estate primarily located in Sikeston, Missouri. The owners of the real estate would sell the properties at or near fair market value to investors recruited by and known to McBride and Wrolstad. However, the investors paid prices significantly greater than the actual selling price received by the sellers for the properties. The investors would purchase the property at a fraudulent and overvalued price by obtaining loans to purchase the property. As part of the scheme, McBride and Wrolstad obtained appraisals, which significantly overvalued the properties, which enabled them to personally obtain inflated loan proceeds despite having no interest in the conveyed real estate.

McBride represented to investors that the residential real estate properties were good investment properties, that the rents would pay the mortgage, that the properties could be acquired with “no money down” and that the properties could be sold, sometimes in approximately a year, at a profit. As part of the scheme, McBride and Wrolstad also paid monies to investors as an inducement for them to purchase residential real estate funded by loans brokered through Century Mortgage. For example, in one case a purchaser paid $66,000 for a property that the seller sold for $7,500. In another real estate transactions, the purchaser paid $54,000 for property that the seller sold for $15,000.

In many cases, purchasers of real estate secured by loans brokered by Century Mortgage did not provide closing costs or down payments to acquire the real estate. McBride and Wrolstad, and others acting on their behalf, provided the investors with the funds for the down payment and closing costs. McBride and Wrolstad also caused mortgage loan companies to send the loan proceeds by wire transfers in interstate commerce, and caused warranty deeds, deeds of trusts and other closing documents to be sent from the offices of the closing agents by commercial interstate carrier to the lenders and the Recorder of Deeds in Scott County, Missouri.

McBride and Wrolstad directed purchasers and closing agents to pay McBride and Wrolstad substantial sums of the mortgage loan proceeds by checks or wire transfers into their personal bank accounts or other bank accounts controlled by them.

There were approximately 341 other transactions involving the sale of residential real estate located in the Eastern District of Missouri during the past six years, in which McBride and Wrolstad fraudulently obtained mortgage loan proceeds causing losses to lenders and purchases of between $7 million and $20 million. McBride was ordered to pay restitution exceeding $9 million to the lenders and investors defrauded and victimized by the mortgage fraud scheme.

McBride was sentenced on one count of conspiracy to commit wire fraud and mail fraud, 12 counts of wire fraud and 12 counts of mail fraud. In addition, McBride was sentenced on 6 counts of money laundering. After sentencing, the district court remanded McBride to the custody of the United States Marshals to commence serving his sentence.

Acting United States Attorney Michael W. Reap announced today. After sentencing, the district court remanded McBride to the custody of the United States Marshals to commence serving his sentence.

Reap praised the Postal Inspection Service, Federal Bureau of Investigation, the Internal Revenue Service and Assistant United States Attorney Paul W. Hahn, who handled the prosecution for the Government.

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2 responses to Missouri Man Sentenced in Major Mortgage Fraud Scheme

  1. Does this seem ludicrous to anybody but me? I me, seriously, in 2005 or 2006 a lender actually closed on a property with a true value of $7,500 but purportedly worth $66,000? And the investor/purchaser thought it could be sold at a profit in a year? Did the purchaser never see the property? Did the lender not check the tax valuation or ever hear of Automated Valuation Modules?

    Good grief – if this story is accurate, the perp should go to jail, but SOMEBODY involved in the transaction should have done some due diligence.

  2. Ask the kansas city broker – Ken Flaspohler November 17, 2009 at 1:02 pm

    Just read an instance of fraud on the kansas city side of the state so it seems this type of activity occurs everywhere.

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