Real Estate Agent Sent to Prison for Defrauding Lenders

Allison Tussey —  September 20, 2011 — 1 Comment

Kevin Powers, 51, Albuquerque, New Mexico, a real estate agent, was sentenced in United States District Court to a 56-month term of imprisonment for his conviction on 17 counts of wire fraud in connection with an unlawful scheme to defraud mortgage lenders and to obtain over $5.5 million in loan proceeds through false pretenses, misrepresentations and omissions.

Powers will be on supervised release for three years after he completes his prison sentence. The judge will hold another hearing to determine the amount of restitution that Powers will have to pay to the victims of his crimes. The judge allowed voluntary surrender, and Powers is required to surrender to a federal correctional institution to be designated by the U.S. Bureau of Prisons.

On April 20, 2011, a federal jury convicted Powers on all counts of a 17-count wire fraud indictment after a two-week trial. The indictment alleged that Powers devised a scheme to defraud various mortgage lenders and obtain their money or property by means of false or fraudulent representations. Although the indictment alleged 17-counts of wire fraud, the scheme involved only nine real estate transactions in Albuquerque, New Mexico, occurring in 2006 and 2007, eight of which involved two loans. Because the loan proceeds were wired separately for each loan, each wire was charged as a separate count.

The trial evidence established that from March 2006 through April 2007, Powers was a real estate agent and broker. Initially, Powers was employed as the Albuquerque branch office manager for AAA Worldwide Mortgage, a mortgage brokerage company, but in late 2006, he formed his own mortgage brokerage company, Powers Mortgage. For all nine transactions charged in the indictment, Powers acted as both the real estate agent and mortgage broker for the buyers in that he represented them in buying the homes and he sought financing for them for the purchases.

The buyers who participated in Powers‘ scheme testified that Powers helped them invest in residential real estate in Albuquerque even though they had no money to invest by finding houses for them to buy with 100 percent financing. Powers returned approximately 20 percent of the loan proceeds, totaling approximately $1.2 million, to the buyers after closings, and they primarily used the money to make mortgage payments until the houses could be resold.

The buyers testified that after Powers identified a house to be purchased as part of the scheme, he told the seller that he had a buyer who wanted to undertake renovations and remodeling, and asked the seller to raise the sales price so it would include adequate funds for the improvements. After the seller raised the sales price, Powers obtained an appraisal at the higher price and submitted a loan application on behalf of the buyer. The loan application contained false information about the buyer’s income and the intended purpose of the purchase by falsely representing that the buyer was purchasing the house as a primary residence when in fact that buyer primarily was purchasing an investment property.

Bank officials testified that they relied on the falsified loan applications in deciding to finance the purchase of the houses. They said that they would not have approved the loans if they had known that the buyers’ income figures were significantly inflated and that the houses were being purchased as investments, and if they had known that cash kickbacks were being made to the buyers after closing. The evidence showed that all of the buyers ultimately defaulted on the residences purchased as part of Powers‘ scheme because the resales did not cover the loans.

United States Attorney Kenneth J. Gonzales announced the sentence.

The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorneys Mary L. Higgins and George C. Kraehe.

Allison Tussey

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One response to Real Estate Agent Sent to Prison for Defrauding Lenders

  1. So if you think someone has defrauded a lender who do you contact with that information?

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