Mortgage Company Owner Sent to Prison for $1.3M Fraud Scheme

Allison Tussey —  August 5, 2014 — 1 Comment

Shola Risikat Balogun, 48, Upper Marlboro, Maryland, was sentenced by U.S. District Judge Peter J. Messitte to 37 months in prison followed by three years of supervised release for conspiring to commit wire fraud in connection with a mortgage fraud scheme that she organized and managed, which resulted in over $1.352 million of actual losses to mortgage lenders.

Judge Messitte also entered an order that Balogun pay restitution and forfeit $1,352,378, the amount lost by mortgage lenders.

According to her plea, Balogun was a licensed mortgage broker and sole proprietor of Newgate Mortgage. Balogun and others contacted individuals who wished to purchase homes. The buyers typically had moderate to low incomes, and provided the conspirators with accurate income and employment information.

The conspirators then typically inflated the buyer’s income and created bogus employment information in an effort to qualify these individuals for loans that they otherwise were unqualified to secure. In some cases, no payments were made and the property went swiftly into default. In other cases, the borrowers attempted to make mortgage payments for a period of time until they could no longer make payments. Balogun and others profited from these fraudulent transactions by collecting origination fees, commissions, yield spread premiums and broker’s fees from each loan that closed. Balogun was a leader of the scheme.

Balogun admitted that as the result of Newgate brokering at least 20 fraudulent transactions, mortgage lenders lost $1,352,378.

Emeka Udeze, 39, Bowie, Maryland, a licensed mortgage broker who worked at Newgate and other companies, previously pleaded guilty to his participation in this conspiracy, as well as to a separate fraud scheme. Udeze’s sentencing has not yet been scheduled.

The sentence was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Kathy A. Michalko of the United States Secret Service, Washington Field Office; Special Agent in Charge, A. Derek Evans, of the Federal Deposit Insurance Corporation Office of Inspector General; and Special Agent in Charge Cary A. Rubenstein of the Housing and Urban Development Office of Inspector General – Office of Investigations.

United States Attorney Rod J. Rosenstein commended the U.S. Secret Service, FDIC and HUD-OIG for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Sujit Raman, who prosecuted the case.

Allison Tussey

Posts Google+

One response to Mortgage Company Owner Sent to Prison for $1.3M Fraud Scheme

  1. Clearly shows what the license is worth.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>