Carol Smith, Aurora, Ohio, was sentenced to five years in prison for her role in a mortgage fraud scam, according to media reports.
As previously reported by Mortgage Fraud Blog, Smith was indicted on the following charges: Theft by Deception (F3), Receiving Stolen Property (F4), Falsification (F3), Money Laundering (F3), Telecommunications Fraud (F3), and Securing Writings by Deception (F4).
Arnold Patterson, a codefendant, fraudulently obtained a $495,000 loan from Argent Mortgage to purchase the newly built house at 35900 Sedge Circle, Solon, Ohio. Patterson signed and submitted a false loan application which included false wage information, stating he was a supervisor earning $106,944 annually. Patterson actually earned $43,337.80 working as a repairman for the Cleveland Water Department. He also inflated his monthly rental lease payments by $275 a month, signed a fraudulent promissory note which was never repaid, and signed two different HUD statements.
Carol Smith, who set up the scam, signed a fraudulent work order indicating she completed $125,000 in improvements, though the house was newly built. Smith received and endorsed a disbursement check for $2,216.99 which was part of $64,500 fraudulently disbursed at closing.
Smith directed the monies to go to Patterson, and two other codefendants, Cox and Watkins. At closing, Patterson received $20,000, Cox $32,283.01, and Watkins $10,000. Cox also fraudulently opened a telephone account using personal identification information of a friend without her approval. The remaining balance of the bogus $125,000 home improvements was used to inflate the value of the house to flip it a second time.