Woman Pleads Guilty to Defrauding Lenders

Allison Tussey —  August 25, 2011 — Leave a comment

Kathleen Harps, 51, Chesapeake, Virginia, pleaded guilty in Norfolk, Virginia, federal court to conspiring to commit mail and wire fraud in connection with a scheme to fraudulently obtain mortgage loans.           

Harps entered a guilty plea before United States Magistrate Judge Tommy E. Miller.  Harps faces a maximum penalty of 20 years in prison and a fine of $250,000 when she is sentenced on November 30, 2011 by United States District Judge Rebecca Beach Smith.

According to court documents, during 2006 Harps operated the New Beginnings Group and engaged in the business of “foreclosure rescue.” 

Harps and another conspirator solicited homeowners in financial distress and facing foreclosure, to sell their homes to Harps or other buyers that she located.  To induce participation in the program, Harps promised homeowners that:  (a) they could remain in their homes and live “mortgage free” for one year; (b) during the one year period, they would receive credit repair assistance to put their financial house in order; and (c) at the end of the year they could buy back their homes. 

In furtherance of the conspiracy, then Harps and other straw buyers made assorted false statements to fraudulently obtain mortgage loans.  At the real estate closings on these loans, all or most of the homeowners’ equity in their homes was paid out to Harps‘ business, the New Beginnings Groups.  Harps used these sales proceeds to, among other things, pay kickbacks to straw buyers and a loan officer, to make payments to and for the benefit of her and her companies, and to make mortgage payments for a period of time upon the fraudulently obtained mortgage loans. 

After one year, when homeowners could not afford to buy back their homes or to pay the rents charged by Harps‘ businesses, Harps and the straw buyers defaulted on the loans and they fell into foreclosure, causing the lenders to suffer losses and the homeowners to lose their homes.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement.

This case was investigated by the Federal Bureau of Investigation.  Assistant United States Attorney Robert J. Krask is prosecuting the case on behalf of the United States.

Allison Tussey

Posts Google+

No Comments

Be the first to start the conversation.

Leave a Reply

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>