Jake David Abegg Whitman, 33, Mesa, Arizona, pleaded guilty on August 18, 2009, to one count of Conspiracy to Commit Bank Fraud and seven counts of Bank Fraud.
According to the indictment, Whitman played a leadership role in the underlying conspiracy, which involved 19 unimproved residential properties in the greater Phoenix area. The objective of the conspiracy was to obtain mortgage loans that were substantially larger than the actual value of the properties-often by hundreds of thousands of dollars. Whitman owned 10 of the properties and served as branch manager of the mortgage broker, Academy Mortgage, that processed the loans.
As part of the conspiracy, Whitman worked with a hand-picked appraiser to obtain inflated appraisals for the properties. He also recruited buyers to purchase the properties at those inflated prices. The buyers typically lacked the income and assets to provide the down-payment or to make the mortgage payments. To overcome this, Whitman secretly supplied the down-payment to the buyers (without disclosing this arrangement) and also provided “cash back” to the buyers at closing. The properties eventually went into foreclosure and cost lending institutions nearly $1,000,000 in losses. Whitman is cooperating with authorities in the prosecution of others.
Sentencing is set before U.S. District Judge G. Murray Snow on October 26, 2009. Each conviction for Conspiracy to Commit Bank Fraud and Bank Fraud carries a maximum penalty of 30 years in federal prison, a $1,000,000 fine, or both. In determining an actual sentence, Judge Snow will consult the U.S. Sentencing Guidelines, which provide advisory sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.
Whitman‘s plea is part of an initiative called “Operation Cash Back” in which 40 defendants were indicted and arrested, including many real estate professionals, in June 2008. To date, 18 have entered guilty pleas.
The investigation in this case was conducted by the Federal Bureau of Investigation. The prosecution is being handled by Kevin M. Rapp and Dominic Lanza, Assistant U.S. Attorneys, District of Arizona, Phoenix.