Chad Evans, 37, Brookville, Indiana, was sentenced by U.S. District Judge James Moody to 70 months in federal prison for conspiracy to commit wire fraud, bank and mail fraud, and money laundering for his role in a straw buyer scheme. This term of imprisonment is to be followed by five years of supervised release. As part of his sentence, the court also entered a money judgment in the amount of $12,804,070, which represents the proceeds of the conspiracy.
As previously reported by Mortgage Fraud Blog, from November 2004 through October 2006, in the Middle District of Florida, the defendant conspired with others to buy approximately fifty houses through fraudulent methods. Evans and his conspirators paid individuals to act as straw purchasers. These individuals were not real home buyers, but instead bought five or more properties each, and were generally paid approximately $5,000 per property for their respective roles.
In addition to paying the straw purchasers to act as legitimate buyers, Evans and his conspirators illegally and secretly provided the straw purchasers with the down payments directly, or by subtracting the down payment amounts from their profits from the sale of the properties. This process is what is sometimes called a simulated down payment.
As part of the scheme, the conspirators then took the difference between the respective loan amount and the sale price, less the down payment and the fee to the straw purchaser, as their profit. This is what is known as an equity skim. Evans‘ roles in the conspiracy were to identify properties to use in the scheme, and act as principal in two corporations – Shorefront Ventures, LLC, and Tye Funding, LLC. After October 2006, the scheme in Florida collapsed, causing $6,591,159 in losses.
Pursuant to the collapse of the Florida scheme, Evans left Florida and moved to Ohio. In October 2007 and continuing through May 2008, Evans committed substantially the same crime. Using a new company, TC Funding, Evans fraudulently provided down payments to straw purchasers to purchase approximately 20 low-value properties and skimmed equity out of those transactions through purported payoffs for construction loans for improvements to the properties. Some of the equity skimmed was used to make payments on properties that had been purchased in the Florida scheme. Eventually, the Ohio scheme also collapsed, causing $892,114.71 in losses.
The Ohio scheme was accepted for prosecution in the Middle District of Florida.
Attorney Robert E. O’Neill announced the sentenced.
These cases were investigated by Federal Bureau of Investigation (FBI) in Florida and the Internal Revenue Service – Criminal Investigation, in Ohio.
The cases were prosecuted by Assistant United States Attorneys Thomas N. Palermo of the Middle District of Florida, and Timothy S. Mangan of the Southern District of Ohio.