William E. McKanry, 70, Warrenton, Missouri, was sentenced to 27 months in prison on multiple conspiracy and fraud charges involving the multi-million dollar sale of 12 local properties.
William E. McKanry owned, operated and managed USA Properties, LLC; his son, William C. McKanry owned, operated and managed USA Title, LLC; and Paula Enders, was a licensed mortgage broker. She operated under the mortgage brokerage company known as Foundation Mortgage, Inc.
As previously reported on Mortgage Fraud Blog, according to testimony presented at trial, between December 2005 and January 31, 2006, the McKanrys’ sold 12 real estate properties through Enders. The properties are located in Florissant, St. Charles, O’Fallon, Hazelwood, Lake St. Louis, Ballwin, St. Louis City and County, and the total sale price of the properties was approximately $2.7 million.
Enders would shop on-line to obtain mortgage financing for all of the 12 properties. On the loan applications for these properties Enders falsified that the source of the down payments, settlement charges and subordinate finances were to be made by the buyer of these properties, when they were actually made by William E. andWilliam C. McKanry, the sellers of the properties. All closings were made at USA Title, LLC, St. Louis County, and documents falsely showed the buyer as making cash payments that were actually made by the McKanrys.
At the closings, Enders received $226,000 above her commission fees as the mortgage broker to buy Foundation Mortgage, Inc. On the seller’s settlement statement these monies were falsely represented to be construction rehab costs on the particular properties. Money would be going to Paula Enders at the closings as construction rehab on these properties when they actually were to be used to purchase Foundation Mortgage, Inc.
Since the closing on the twelve properties at USA Title, 11 out of 12 properties ended up in foreclosure and were resold for $1.2 million for a loss of approximately $1.5 million. USA Properties, LLC maintained and provided a list of their “for sale” properties to area brokers and real estate agents. The list identified the particular property address and corresponding “retail value” and “sale price.” In order to sell the properties, USA Properties, LLC was willing to sell these properties below the purported appraised value to buyers. This market of favorably priced real estate to which Paula Enders, William C. McKanry and William E. McKanry had access provided an opportunity. By matching USA Properties, LLC with buyers, they exploited the difference between what USA Properties, LLC was willing to take for a property “sale price” and what a prospective investor, induced by special deals, willing to pay, i.e., the “spread” or “retail value.”
William E. McKanry was convicted of one felony count of conspiracy to commit bank, wire and mail fraud; one felony count of making false statements; four felony counts of wire fraud; and three felony counts of mail fraud on October 9, 2009 after a five-day trial before United States District Judge Charles A. Shaw. In addition to his prison sentence, he was also ordered to pay restitution of $752,000.
William C. McKanry, 44, St. Albans, MO; pleaded guilty to related charges and was sentenced October 15, to three years probation and restitution of $248,877. Paula Enders, 38, Florissant, MO, also pleaded guilty and was sentenced November 10 to one year and one day in prison.
Reap commended the work on the case by the Missouri Department of Insurance, the United States Postal Inspection Service, and the Federal Bureau of Investigation; and Assistant United States Attorneys Tom Albus and Jeff Jensen, who prosecuted the case for the U.S. Attorney’s Office.