North Texas Woman Sentenced to 18 Years for Mortgage Fraud

admin —  May 22, 2009 — Leave a comment

Karen Hayes, 58, Kemp, Texas, has been sentenced to 18 years in prison for her involvement in a complex mortgage fraud scheme that defrauded the federal government.

Hayes pleaded guilty to engaging in organized criminal activity and falsifying statements to obtain property or credit. Hayes was taken into custody at the Kaufman County Sheriff’s Office and will be transferred to the Texas Department of Criminal Justice, which operates the state prison system.

According to the 88-paragraph indictment, and as previously reported on Mortgage Fraud Blog, Hayes falsified supporting documents involving the sale of manufactured homes. Evidence showed she tampered with buyers’ rent payment verification statements, monthly expense reports, and Social Security Administration benefits data, among other items. In March, a jury sentenced Hayes‘ sister, Kandace Marriott, 53, Gun Barrel City, to 99 years in prison for her role in the mortgage fraud scheme. Marriott’s husband, Darrell L. Marriott, 56, and daughter, Kally Marriott, were also indicted and are currently awaiting their own trials.

According to prosecutors, the four defendants sold manufactured homes through their Navarro County real estate business, One Way Home & Land. The defendants closed that business after litigation and investigations were opened in late 2005. However, they moved their enterprise to Kaufman County under a new assumed name, Torenia Inc., which did business as Energy Homes.

After executing search warrants last August, investigators with the FBI and the U.S. Department of Housing and Urban Development (HUD) seized numerous assets that belonged to the defendants, including more than 90 plots of land. Authorities also shut down the defendants’ Kaufman County business.

According to investigators, the defendants illegally forged homebuyers’ signatures and inaccurately completed customer loan applications. Court documents filed by the state indicate that the defendants’ conduct was intended to ensure that unqualified home buyers loans were approved by mortgage lenders.

The scheme involved predominantly low-income purchasers whose residential loans were guaranteed by HUD. As a result, when the unqualified buyers defaulted on their home loans, their mortgage lenders did not suffer financial losses. Instead, HUD – and therefore taxpayers – covered the default costs. Investigators believe the defendants’ scheme cost taxpayers more than $3 million.

The multi-county criminal conspiracy was uncovered by Cpl. Mark Nanny of the Corsicana Police Department. Cpl. Nanny engaged HUD officials and the FBI’s Dallas Office, which later referred the case to local authorities and the state.

The Office of the Attorney General received assistance from the Kaufman County Criminal District Attorney’s Office, the FBI and the HUD Office of Inspector General. Attorney General Abbott’s Criminal Prosecutions Division is leading the prosecution of the four defendants with the cooperation of district attorneys’ offices in Navarro, Henderson and Ellis counties. Assistant Attorney General David Glickler and Shane Attaway are prosecuting the case for the Attorney General’s Office.

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