Archives For South Carolina

Dana Q. Roush, 40, and her husband Michael “Bubba” Roush, 56, both of Greenville, South Carolina were sentenced to a total of seventeen years in federal prison and ordered to pay back more than $2.5 million after a jury found them guilty of conspiracy to commit mail fraud and equity skimming.

Evidence presented at trial showed that Dana and Bubba Roush owned and operated Kingdom Connected Investments, LLC (“KCI”).  They marketed their company as a Christian organization and promised to create “win-win” situations for home sellers and buyers. They sought homeowners who often owed more on their home than the property was worth, and buyers who lacked good credit and thus could not obtain a conventional mortgage.

KCI promised to relieve the homeowner from the burdens of mortgage payments by “buying” the home and placing a new buyer in the home who would rent-to-own.  KCI promised to make all the sellers’ mortgage payments.  KCI misled sellers to believe that they would be immediately removed from the property’s title and that they were no longer responsible for the original loan.

KCI promised the buyers an easy road to homeownership.  In exchange for the down payment (typically ten percent of the purchase price), the buyers were told that they were renting-to-own and building up equity.  KCI further concealed from the buyers that a third party – the seller – had an existing mortgage on the property that KCI was responsible for paying.

Rather than using the down payments and rents received from the buyers to pay the sellers’ mortgage payments, Bubba and Dana Roush used the money for personal expenses and to expand their real estate business.

The sellers, many of whom believed they were off the title and note, received foreclosure notices.  They learned that KCI, despite having a renter in the home, had stopped paying on the mortgage.  Buyers often learned they had no real ownership interest when the home was purchased by a third-party at a foreclosure sale and the new owner started eviction proceedings.

Victims of the scheme suffered myriad injuries including loss of money, shattered dreams, and ruined credit.  Special Agent Matt Jacobson of the Federal Bureau of Investigation (FBI) testified that KCI received $2.6 million from buyers and only paid $1.4 million in mortgage payments.  Approximately 130 properties were involved in the scam and Agent Jacobson testified that in only two instances did a buyer actually become a homeowner and a seller not face foreclosure and ruined credit.

Mrs. Roush was sentenced to more than eleven years, while her husband was sentenced to six and a half years.

United States Attorney Peter M. McCoy, Jr., made the announcement.

These defendants here stole more than money. They robbed their victims of the American dream,” said U.S. Attorney McCoy. “For so many South Carolinians, times are tough right now. That these two defendants exploited that difficulty to line their own pockets is reprehensible, and this office will not tolerate it. I appreciate the jury’s verdict and the sentence handed down by the judge. I am especially thankful for the hard work form our federal partners in this case.”

The fraud perpetrated by the defendants allowed them to steal millions of dollars from people who could not afford to lose any money,” said FBI Special Agent in Charge Jody Norris.  “The victims were robbed of their life savings, their homes, and the futures they had planned.  The Special Agents from the FBI and the investigators from the Department of Housing and Urban Development (HUD) who brought these defendants to justice, should be commended for their dedication and demonstration of our resolve to fully investigate these fraudulent schemes in South Carolina.

The core of our mission is to protect the Department of Housing and Urban Development from those that would seek to defraud its programs for the sole purpose of enriching themselves at the government’s expense,” said Wyatt Achord, Special Agent in Charge, HUD Office of Inspector General (OIG). “We remain committed toward working with the U.S. Department of Justice to pursue any individual who attempts to defraud the government.

United States District Judge Timothy M. Cain sentenced Mrs. Roush to 136 months in federal prison, to be followed by a three-year term of court-ordered supervision. Judge Cain sentenced Mr. Roush to 78 months in federal prison, to be followed by a three-year term of court-ordered supervision. There is no parole in the federal system. Judge Cain also ordered the defendants to pay $2,664,796.69 in restitution.

The case was investigated by the FBI and HUD OIG. Assistant U.S. Attorney Bill Watkins

 

Richard Earl Jeffcoat, 52, Pelion, South Carolina was sentenced today to six months in federal prison and six months of home confinement after pleading guilty to Conspiring to Commit Bank Fraud.

Facts presented in court established that Jeffcoat is an accountant who was producing false documentation in support of loan applications and giving that information to an Arthur State Bank loan officer.  The officer than facilitated approvals for mortgages and other loans using the fake documents.  Some of the loans were for Jeffcoat’s family members.

Jeffcoat was involved in a total of six loans valued at $529,000.  Several are still current.  The value of the loss-to-date is approximately $45,000.

Senior United States District Court Judge Terry L. Wooten of Columbia imposed the sentence and ordered Jeffcoat to pay over $45,000 in restitution to the victim, Arthur State Bank.

United States Attorney Sherri A. Lydon made the announcement.

The United States Secret Service investigated the case.  Assistant United States Attorney Winston D. Holliday, Jr., of the Columbia office prosecuted the case.

Joseph W. Witkowski, 70, former New Jersey lawyer, Flemington, New Jersey, was sentenced to 48 months in prison for participating in a conspiracy that caused lenders to release $40.8 million based on fraudulent mortgage loan applications and laundered the proceeds of the fraud.  Witkowski previously pleaded guilty to an indictment charging him with one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering. U.S. District Judge Joseph H. Rodriguez imposed the sentence in Camden federal court.

According to documents filed in this case and statements made in court:

Witkowski and his conspirators located oceanfront condominiums overbuilt by financially distressed developers in Wildwood Crest, New Jersey; premier real estate in vacation destinations in Georgia and South Carolina; and properties in New Jersey owned by financially distressed homeowners facing foreclosure. They then recruited “straw buyers” – people with good credit scores but lacking the financial resources to qualify for mortgage loans – to purchase those properties.

Witkowski and his conspirators created false documents, including fake W-2 forms, income tax returns, investment statements, and rental agreements, to make the straw buyers appear more creditworthy than they actually were. They also established numerous telephone lines for companies owned by some of the conspirators so that when a lender contacted the telephone number, the conspirators could falsely verify that a straw buyer was employed by the company listed on his or her fraudulent loan application.

Witkowski also caused fraudulent mortgage loan applications in the name of the straw buyers and supporting documents, which attributed to the straw buyers inflated income and assets, to be submitted to mortgage lenders. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Witkowski and his conspirators had some of the funds wired or checks deposited into various accounts that he and his conspirators controlled.

In addition to the prison term, Judge Rodriguez sentenced Witkowski to three years of supervised release and ordered restitution of $13,105570. As part of his plea agreement, he must forfeit $2,412,899, representing the proceeds of the fraud.

U.S. Attorney Paul J. Fishman announced the sentence.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher; and special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Diana Carrig of the U.S. Attorney’s Office in Camden.

Defense counsel: Maggie Moy Esq., Assistant Federal Public Defender, Camden

Darlene Henderson, 60, Leesville, South Carolina, pled guilty and was sentenced in federal court in South Carolina, for Wire Fraud in connection with a mortgage fraud scheme. United States District Judge Joseph F. Anderson, Jr., of Columbia sentenced Henderson to eight months of home confinement, to be followed by five years of probation. Henderson also was ordered to pay almost $130,000 in restitution to the U.S. Department of Housing and Urban Development.

Evidence presented at the hearing established that between November 2011 and December 2013, Henderson assisted Michael Yant, who previously pled guilty to the same scheme and was sentenced to five months incarceration, commit mortgage fraud on a number of Federal Housing Administration (FHA) loans. Specifically, Yant engaged in a prohibited rent-to-own scheme, and Henderson used her position at the bank to approve these loans, despite suspicious borrower information being relayed to her. A number of these loans are now delinquent or in default.

United States Attorney Beth Drake announced the sentencing.  The case was investigated by the United States Department of Housing and Urban Development, Office of the Inspector General, the United States Postal Inspection Service, and the Federal Bureau of Investigation. Assistant United States Attorney Winston Holliday of the Columbia office prosecuted the case.

Shayne Harrison Smith, Myrtle Beach, South Carolina, was sentenced to 63 months imprisonment in federal court in connection with his role in a loan modification scheme.

In July of 2015, Smith was charged by Information and pled guilty to Wire Fraud. After Smith completes the term of imprisonment, he will be on federal supervised release for 5 years. Smith was also ordered to pay $2,213,307.99 in restitution to the victims in his case. United States District Judge R. Bryan Harwell, of Florence, imposed the sentence.

Information presented at an earlier hearing established that Smith was involved in a loan modification scheme.  According to the Information, he convinced distressed home owners that he could negotiate better terms of repayment with their lenders. Smith required the victims to pay him advance fees and continue to pay him over time to compensate him for his services. He encouraged some of the home owners to cease communicating with their lenders and stop making payments to the lenders, because he would take care of everything. Smith never successfully renegotiated any of the mortgages.

Acting United States Attorney Beth Drake announced the sentence.  The case was investigated by the FBI. Assistant United States Attorney John C. Potterfield of the Columbia United States Attorney’s Office prosecuted the case.

John D. Harrison, Jr., 53, Greenwood, South Carolina, Henry A. Dorn, 63, Greenwood, South Carolina, Kevin Dempsey, 45, Greenwood, South Carolina, and C. Jody Hazel, 42,Greenwood, South Carolina, pled guilty in federal court in Greenville, South Carolina, to conspiracy to commit bank fraud.  United States District Judge Bruce Howe Hendricks, of Charleston accepted the pleas and will impose sentence after she has reviewed the presentence report which will be prepared by the U.S. Probation Office.

Evidence presented at the change of plea hearing established that Harrison was a real estate developer who developed high end residential properties in North Carolina, South Carolina and Georgia. Dorn, Dempsey and Hazel were accountants for the accounting firm that prepared Harrison’s financial statements and tax returns. Dorn primarily serviced Harrison’s account.  Harrison obtained loans from numerous banks and individuals to fund his real estate developments. A review of Harrison’s financial statements that were provided to banks from August 31, 2000 until May 31, 2008, indicated that Harrison significantly understated his total debt—that is, the financial statements contained false information and this false information was material to the lenders and was meant to influence the actions of the lenders.  Dorn prepared these financial statements for Harrison. In essence, Dorn kept two sets of books for Harrison: one with false numbers and one with accurate numbers.

Harrison also entered into Accommodation Borrowing Agreements with Dorn, Dempsey and Hazel in which these three men served as straw purchasers for Harrison.  The agreements allow for Harrison to sell the property to Dorn, Dempsey and Hazel and continue to develop and sell the properties. The interest payments would be paid by Harrison and the loans would be paid off when Harrison sold the property. The profit or loss would belong to Harrison and Harrison would pay a fee to Dorn, Dempsey or Hazel totaling 3% of the loan amount. The agreements were not disclosed to the banks until after the loans went past due.

In addition to the undisclosed agreements, Dorn, Dempsey and Hazel all understated their debt when applying for their respective real estate loans—that is, the financial statements contained false information.  Law enforcement estimates that federally insured banks lost in excess of $10 million in scheme and artifice to defraud.

United States Attorney Bill Nettles stated the maximum penalty the Defendants can receive is a fine of $1,000,000 and/or imprisonment for 30 years, plus a special assessment of $100.

The case was announced by United States Attorney Bill Nettles and investigated by agents of the Federal Bureau of Investigation.  Assistant United States Attorney Bill Watkins of the Greenville office handled the case.

Michael Yant, 40, Lexington, South Carolina, was sentenced to five months of incarceration, to be followed by five months home confinement,  in connection with a mortgage fraud scheme.   Yant also was ordered to pay almost $270,000 in restitution to the U.S. Department of Housing and Urban Development.

Evidence presented at the change of plea hearing established that between November 2011 and December 2013, Yant and others committed mortgage fraud on approximately fifteen Federal Housing Administration (FHA) loans. Specifically, Yant engaged in a prohibited rent-to-own scheme.  Yant collected rent from future buyers and used those funds for the buyer’s down payment at closing. Further, Yant added buyers to other people’s credit accounts as authorized users to enhance the buyer’s credit scores

Yant admitted to falsifying and submitting bank statements of buyers, paying off buyers’ debt and collection accounts, as well as falsifying buyers’ vehicle bills of sale in an effort to forge the origination of the buyer’s down payments. Also, Yant provided forged W-2’s and paystubs for buyers, as well as prepared false employment verifications to conceal the buyer not being an employee of certain businesses.  Further, Yant secured FHA loans for buyers who would not otherwise qualify by paying off the buyers’ debt and collection accounts to increase the buyers’ credit scores.

The case was investigated by the United States Department of Housing and Urban Development, Office of the Inspector General, and the United States Postal Inspection Service.  Assistant United States Attorney Winston Holliday of the Columbia office prosecuted the case.   The sentenced was announced by United States Attorney Bill Nettles.

Shayne Harrison Smith, 47, Myrtle Beach, South Carolina entered a guilty plea in federal court in Florence, South Carolina, to Wire Fraud, a violation of 18 U.S.C. § 1343 in connection with a loan modification fraud scheme. Continue Reading…

Jerry Elmo Hartsoe, 57, West Columbia, South Carolina; James Chappel Dew, 59, North Myrtle Beach, South Carolina; and Mark Shannon Manuel, 49, Franklin, Tennessee, were found guilty after a jury trial on eight counts of mail fraud.

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Scott C. Allmon, 38, Easley, South Carolina, pled guilty in federal court in Anderson to making false statements in connection with a real estate investment scheme, a violation of Title 18, United States Code, Section 1001.

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