Timothy Scott Brooks, 38, Lynchburg, Virginia and Adam Nash Spruill, 32, Forest, Virginia, pleaded guilty to charges they committed various frauds in relation to a scheme to obtain phony mortgages on properties located near Smith Mountain Lake, Virginia. The defendants waived their right to indictment. Each defendant pleaded guilty to one count of conspiracy to commit bank fraud, mail fraud, wire fraud, fraud by false statements on loan and credit applications and conspiracy to commit laundering of monetary instruments.
Brooks and Spruill admitted to participating in a scheme to find straw buyers for homes in a Moneta, Virginia area to enrich themselves, and others, through fraudulent means. The defendants admitted to causing loses of between $7 million and $20 million to various financial institutions. Brooks owned and operated SB Mortgage Consultants LCC and Spruill was a mortgage broker working for SB Mortgage Consultants, the firm used for a large number of the straw purchases.
The defendants, and others, found straw buyers with acceptable credit scores to apply for property loans. Loans applications were falsified in order to obtain loans to purchase lots and secure construction loans. The defendants admitted lying on loan applications by overstating the income of straw buyers by as much as $10,000 and falsely claiming the property being purchased would be a primary residence.
The straw buyers were promised and received “good faith” payments of $5,000 and were promised 10 percent of the proceeds from any subsequent proceeds when the home was sold. These straw buyers were not required to make down payments or pay the monthly loan payments, which were paid by the defendants, and others. The monies exchanged between parties operating this scheme traveled either by mail or wire transaction.
Brooks and Spruill each face a maximum penalty of five years in prison and/or a fine of up to $250,000, as well as a yet-to-be determined amount of financial restitution. In determining an actual sentence, the Court will consult the advisory United States Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant’s criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining the sentence. Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time. A sentencing hearing has been scheduled for September 10, 2010 at 10:00 a.m.
“The United States Attorney’s Office will continue to use every tool at its disposal to investigate and prosecute individuals who commit crimes that threaten our economy and the financial well-being of others,” United States Attorney Timothy J. Heaphy said. “The Department of Justice has made fighting back against financial fraud a national priority and here in the Western District of Virginia we are following that lead by doing everything we can to put an end to these devastating crimes.”
The investigation of the case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service. Assistant United States Attorneys Charlene R. Day and C. Patrick Hogeboom III prosecuted the case for the United States.