Kimberly K. White, 38, Elizabeth, Colorado, pled guilty before U.S. District Court Judge Robert E. Blackburn on July 15, 2011, to one count of wire fraud related to a mortgage fraud scheme. White was named in a superseding indictment issued by a federal grand jury in Denver on May 20, 2010. White is scheduled to be sentenced by Judge Blackburn on September 30, 2011.
According to the stipulated facts contained in the plea agreement and indictment, between March 26, 2005 and June 30, 2005, Kimberly White worked with her co-defendants, Shawn Tieskotter and Craig Patterson, to execute a scheme to defraud various financial institutions as well as commercial mortgage lenders in connection with residential mortgage loan applications related to 13 properties in the Denver, Colorado metropolitan area.
As part of the scheme, Kimberly White, then a licensed real estate agent, helped Tieskotter find various residential properties available for purchase and drafted contracts for the purchase of the properties. Tieskotter and Patterson prepared and submitted applications for two loans, a first mortgage and a second mortgage, in connection with Tieskotter’s purchase of each property described in the Indictment. Each of these applications contained materially false and fraudulent representations that Tieskotter intended to use the property as his primary residence. Most of the applications also contained materially false and fraudulent representations about the extent of Tieskotter’s liabilities related to other residential mortgage loans, in that they failed to include a complete list of the properties Tieskotter owned or was in the process of purchasing and falsely indicated that one of Tieskotter’s other properties was leased. Some of the applications were supported by fictitious leases.
They also hid from lenders the extent of Tieskotter’s liabilities for other mortgages by preparing and submitting applications for multiple loans, secured by multiple properties, before such liabilities would appear on Tieskotter’s credit reports. This practice further affected the lenders’ ability to assess Tieskotter’s ability to re-pay the loans for which he was applying. White was aware that these multiple applications were being prepared and that they did not reflect all of Tieskotter’s liabilities.
Tieskotter and Patterson received money from the transactions at the time of closing by causing the disbursement at closing of additional monies to PK Design Group, LLC, an entity controlled by Patterson, or Dream Design, a trade name for an entity controlled by Tieskotter. Tieskotter and Patterson concealed from the lenders and other parties associated with the transactions their control of these entities. Tieskotter and Patterson also misrepresented that these monies would be used entirely for repairs or improvements to the properties, which led the lenders to falsely believe that the value of their collateral would increase as a result of these payments. White assisted with this process by providing versions of the real estate purchase contracts which omitted the provisions indicating that monies would be disbursed at closing to PK Design Group, LLC or Dream Design to the real estate appraiser and to Patterson, who in turn provided them to the lenders. This practice improperly helped generate appraisals with sufficient value to allow Tieskotter and Patterson to receive money back at the closing.
White also generated a contract for Tieskotter to purchase a property located at 19044 E. Prentice, Centennial, Colorado. Although the actual contract provided that Dream Design would receive $32,500 at closing, White provided a version of the contract to the appraiser which omitted this provision. Then, on or about May 20, 2005, there was an interstate wire transfer of $294,828.82 from the Bank of New York to a Land Title account in Lakewood, Colorado, in order to fund the fraudulently obtained loan Tieskotter used to purchase this property.
Tieskotter was sentenced by Judge Blackburn to serve nine months in prison followed by nine months of home detention, and then three years of supervised release. He was also ordered to pay restitution totaling $1,181,528.28. Patterson was sentenced to serve 10 months in prison, followed by 10 months of home detention, and then three years of supervised release. He was also ordered to pay $1,181,528.28 in restitution joint and severally with Tieskotter.
“The investigation and prosecution of mortgage fraud is a top priority of the Justice Department and this office,” said U.S. Attorney John Walsh. “Prosecuting these cases helps protect the integrity of the housing market.”
“Mortgage fraud directly threatens the financial health of the communities in which we live. IRS Criminal Investigation will continue to pursue individuals who commit mortgage fraud,” said Sean Sowards, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
“Mortgage fraud continues to be a serious crime problem affecting all citizens,” said FBI Denver Division Special Agent in Charge James Yacone. “The FBI, along with its state and federal law enforcement partners, will continue to pursue these investigations.”
Denver Division Inspector in Charge, Oscar S. Villanueva, stated the following: “U.S. Postal Inspectors worked diligently with the FBI and IRS in this investigation. The U.S. Postal Inspection Service continues to give top priority in its investigation to those who use the U.S. mail to perpetrate crimes against the American people. Our primary focus has been to identify any financial institutions and mortgage lenders who are harmed by these schemes; and preserve assets obtained through criminal proceedings. We work to bring to justice those who were involved in this criminal activity and prevent further victimization.”
Wire fraud carries a penalty of not more than 20 years’ imprisonment, and up to a $250,000 fine, per count.
This case was investigated by the Internal Revenue Service Criminal Investigation (IRS CI), the Federal Bureau of Investigation (FBI), and the United States Postal Inspection Service (USPIS).
The case is being prosecuted by Assistant U.S. Attorney Matthew Kirsch.
Mortgage fraud is a major part of President Barack Obama’s Financial Fraud Enforcement Task Force, which was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.