HOUSTON—Vincent Wallace Aldridge and Tori Aldridge, both of Fresno, Texas, surrendered themselves to federal authorities as a result of the return of a 19-count indictment arising from an alleged scheme to defraud residential mortgage lenders of more than $3.7 million in connection with home purchases in the Houston area, United States Attorney José Angel Moreno, FBI Special Agent in Charge Richard C. Powers, and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Rodney E. Clarke announced today. Vincent Aldridge, 45, is a former fee attorney of First Southwestern Title Company and attorney with Aldridge and Associates, while Tori Aldridge, 32, is a former employee of the same title company.

Vincent and Tori Aldridge surrendered to special agents of the FBI and IRS-CI at the FBI this morning and both are expected to make their initial appearances before U.S. Magistrate Judge John R. Froeschner in Houston later today. A third defendant, Gilbert Barry Isgar, 50, of Katy, Texas, the co-owner of Waterford Homes, appeared before U.S. Magistrate Judge John R. Froeschner earlier this week pursuant to a summons. Isgar was arraigned and his case was set for jury selection and trial before U.S. District Court Judge Sim Lake on May 24, 2010.

The 19-count indictment returned by a Houston grand jury on Thursday, March 25, 2010, accuses Vincent Aldridge, Tori Aldridge, and Isgar of conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, and money laundering.

According to the allegations in the indictment, Vincent and Tori Aldridge and Isgar conspired to devise and execute a scheme during 2004 and 2005 to receive proceeds from real estate transactions based upon materially fraudulent information that was intentionally supplied to at least three lending institutions as the basis for an agreement between the lending institutions and borrowers.

Vincent Aldridge allegedly lured borrowers by representing the scheme as an investment opportunity. For the use of the borrowers’ credit to obtain mortgage loans, they were promised $10,000 after the closing of their respective property. They were also allegedly told that the property would be sold after a year for a profit. Once a borrower agreed to the deal, Vincent Aldridge and Tori Aldridge acting as both an escrow officer and a loan processor and met with the borrower to obtain the necessary personal identifying information to complete the borrower’s lending package.

Prior to the submission of the lending packages to the lending institutions, it is alleged that Vincent and Tori Aldridge modified the lending package to enhance the borrower’s ability to qualify for the requested loan. These enhancements, according to the indictment, included fraudulently overstating the borrower’s income, misrepresenting the borrower’s principal residence as rental property and misrepresenting the purchase property as the principal residence. The mortgage loans totaled approximately $3,700,000. Each property sold in amounts between $344,000 and $365,000 and were funded to First Southwestern Title Company by wire.

As a part of the scheme, the indictment alleges that Isgar, co-owner of Waterford Custom Homes, inflated the sales price of the properties to be purchased by the aforementioned recruited borrowers. As a part of the alleged illicit agreement between the Aldridges and Isgar, the Aldridges were to receive the proceeds of their scheme by including disbursement authorizations for attorney’s fees signed by Isgar to the title company prior to closing. These amounts were listed on the loan closing documents as seller disbursements for attorney fees and were in addition to the attorney’s fees stated on the attorney fee line in the closing documents.

Once the loans were funded to the title company, the Aldridges are accused of causing several checks to be drawn on the account of the title company, each totaling more than $10,000, payable to a bank account controlled by Aldridge & Associates. The checks totaled approximately $442,089 and represented a portion of the illicit proceeds obtained through the mortgage fraud scheme.

The maximum penalty, upon conviction, for the conspiracy to commit wire fraud and each of the 11 wire fraud counts is 20 years in prison as well as substantial fines. The maximum penalty for the conspiracy to launder money and for each of the six money laundering counts is 10 years in prison. A conviction for money laundering carries the most significant fine of $250,000 or twice the amount of the criminally derived property, whichever is greater.

Assistant United States Attorney Jennifer Lowery is prosecuting the case.

The investigation leading to the charges was conducted by the FBI and IRS-CI, members of President Obama’s Financial Fraud Task Force. The President established the interagency Financial Fraud Task Force 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.

MINNEAPOLIS—Thomas Joseph Petters, age 52, of Wayzata, Minn., has been sentenced to 50 years in federal prison for orchestrating a $3.7 billion Ponzi scheme. The sentence, imposed by U.S. District Court Judge Richard H. Kyle earlier this morning in St. Paul, Minn., represents the longest term of imprisonment ever ordered in a financial fraud case in Minnesota history. In ordering the prison term, Judge Kyle said, “I’m not satisfied that if he were released early, he wouldn’t re-offend.”

Following a month-long trial, Petters was convicted on Dec. 2, 2009, of 10 counts of wire fraud, three counts of mail fraud, one count of conspiracy to commit mail and wire fraud, one count of conspiracy to commit money laundering, and five counts of money laundering. Today, while referring to the lack of believability in Petters’ trial testimony, Judge Kyle said, “It just didn’t pass the smell test.”

After the sentencing, U.S. Attorney B. Todd Jones said, “For years Tom Petters built his life on the shattered dreams of others. Minnesotans need to be reminded there are thousands of entrepreneurs in our state who are grounded in community values, give generously to charity, act as true mentors to other business people, are ethical stewards of investors and grow good jobs. They are not Tom Petters. Tom Petters is a fraud, and now he will pay a huge price for his self-enrichment and his deceit. The sentence imposed today by the court and the tremendous efforts made by an outstanding prosecution team in presenting this case to a jury should send a strong message to others that we in the Department of Justice are committed to investigating and vigorously prosecuting those who commit financial crimes, particularly during these tough economic times.”

Ralph S. Boelter, Special Agent in Charge of the Minneapolis field office of the Federal Bureau of Investigation, added, “It is my hope that this day will mark the start of a recovery process of sorts for all those victimized by Tom Petters, and that his sentence, appropriate for the crimes committed, will serve an effective deterrent to those similarly inclined.”

According to the evidence presented at trial, Petters, assisted by others, defrauded and obtained billions of dollars in money and property by inducing investors to provide Petters Company, Inc., (PCI) funds to purchase merchandise that was to be resold to retailers at a profit. However, no such purchases were made. Instead, the defendants and co-conspirators diverted the funds for other purposes, such as making lulling payments to investors, paying off those who assisted in the fraud scheme, funding businesses owned or controlled by the defendants and financing Tom Petters’ extravagant lifestyle.

“In simplest terms, promoters of Ponzi schemes prey upon trusting investors and then steal their hared-earned money,” said Julio LaRosa, Special Agent in Charge of the Internal Revenue Service (IRS) – Criminal Investigation Division. “This case was a blatant example of this type of fraud, and the IRS – Criminal Investigation Division, along with its law enforcement partners, worked diligently to get to the facts behind the facade and ensure that those responsible face the punishment they brought on themselves for the devastation they caused in the lives of so many.”

The investigation of this case began on Sept. 8, 2008, when co-conspirator Deanna Coleman and her attorney reported to authorities that she had been assisting Petters in executing a multi-billion-dollar Ponzi scheme over the previous 10 years. Coleman claimed she, Petters and co-conspirator Robert White had fabricated business documents to entice investors into lending Petters money purportedly to buy electronic goods to be sold to big-box retailers, such as Costco and Sam’s Club.

Coleman subsequently agreed to work with law enforcement. She wore a recording device to tape conversations with Petters and others to substantiate her claims as well as White and Petters’ involvement in the fraud. Within the first few hours of Coleman’s recorded conversations, Petters was heard admitting that purchase orders were “fake” and claiming “divine intervention” was the only explanation for how he and his co-conspirators “could of got away with this for so long.” Those recorded conversations chronicled the history of the scheme as well as the conspirators’ efforts to maintain it by obtaining new investor funds and lulling long-term investors. The recordings also detailed how the conspirators planned to avoid responsibility if the fraud was discovered.

On September 24, 2008, agents from the Federal Bureau of Investigation; the Internal Revenue Service, Criminal Investigation Division; and the U.S. Postal Inspection Service executed search warrants at Petters’ headquarters, Petters’ home, and other locations. They recovered numerous documents and evidence. Within days, PCI filed for bankruptcy. On October 3, Petters was arrested and detained after authorities learned he had been discussing fleeing the jurisdiction. He has been in custody since that time. His indictment on these charges occurred in December of 2008.

Shawn S. Tiller, Postal Inspector in Charge of the Denver Division, which includes the Twin Cities, said, “The sentencing today of Tom Petters in this $3.7 billion Ponzi scheme is reassurance that the U.S. Attorney’s Office and the U.S. Postal Inspection Service will remain at the forefront of investigating cases like these, where the trust and confidence of the American public has been violated through the criminal misuse of the U.S. mail. As long as there are individuals such as Petters and those associated with his company, PCI, who continue to misuse the U.S. mail to steal the hard-earned money of investors and ruin their hopes and dreams of a secure financial future, postal inspectors will be there to ensure that justice is served.”

Through Petters’ scam, potential investors were provided fabricated documents that listed goods purportedly purchased by PCI from various vendors and then sold to retailers. In some instances, investors also were provided false records indicating that PCI had wired its own funds to vendors, thus giving the appearance that PCI had money invested in the deals too. In addition, investors frequently received false PCI financial statements showing the company was owed billions of dollars from retailers. To induce investors further, Petters often signed promissory notes and provided his personal guarantee for the funds received. Those who invested, however, were not paid through profits from actual transactions. Rather, they were paid with money obtained from subsequent investors and, sometimes, even their own money.

PCI, which was formed in 1994, was solely owned by Petters and was used for fraudulent purposes from the start. Petters inflated and falsified purchase orders in an effort to obtain more money from investors, which, in turn, he used to pay other investors as well as his increasingly lavish personal lifestyle. When Petters could not pay an investor on time, he employed delay and evasion tactics, such as promising payment in the near future, making up excuses about slow payments from retailers, or providing checks that bounced. As the scheme progressed, Coleman, who was hired by Petters as an office manager in 1993, began fabricating PCI purchase orders and transferring funds between investors.

In 1999, Petters wanted to give investors false bank statements to “verify” PCI’s purported bank transactions with retailers. Therefore, Petters turned to White, his friend, who agreed to prepare the fraudulent documents. Afterward, Petters hired White and gave him the title of chief financial officer of PCI. Among other things, White was responsible for fabricating retailer purchase orders and PCI financial records.

To further his scheme, Petters recruited purported vendors to assist him. In 2001, he asked business associates Larry Reynolds and Michael Catain to launder billions of dollars of investor funds through their business accounts and back to Petters and PCI. Reynolds operated Nationwide International Resources, Inc. (NIR) and previously had conducted deals involving shoes and clothing with retailers, including Petters. In 2001, Petters asked Reynolds to allow him to wire money through Reynolds’s bank accounts in exchange for a percentage of the funds in “commission.”

Petters made a similar agreement with Catain. As a result, in early 2002, Catain created a sham company, Enchanted Family Buying Co. (EFBC), and opened a business bank account. He then directed funds from Petters through that business account and back to Petters and PCI, less a commission. EFBC did no real business. In fact, its headquarters was above Catain’s car wash, just a few miles from Petters’ headquarters.

Between January 2003 and September 2008, approximately $12 billion flowed through the NIR account into the PCI account. During that same time period, roughly the same amount flowed through the EFBC account into PCI. Although each company was purportedly a vendor, selling hundreds of millions of dollars in merchandise, bank records revealed no vendor income from those transactions. Instead, money only flowed one way—from the companies to PCI.

In April of 2001, PCI opened a new bank account that only Petters and Coleman were authorized to use. From January 2003 to September 2008, approximately $35 billion was wired into that account from investors, NIR, and EFBC. Although PCI supposedly was selling merchandise to retailers, none of the deposits into the account came from retailers. Moreover, while some funds in the account went to pay investors, other money from the account was used for bonuses for Petters’ employees, most of whom did not even work for PCI. In addition, hundreds of millions of dollars went to fund Petters’ companies, including Petters Warehouse Direct and RedTag. Petters also used PCI funds to employ family members, purchase real estate for family members, and fund businesses for them. Finally, millions went to Coleman and White, while Petters himself received tens of millions in account dollars.

Petters continued to purchase and operate companies in an effort to maintain the facade of a successful businessman and create a false air of legitimacy that would lure new investors. The companies he bought were purchased with proceeds of the PCI fraud, and they included Fingerhut, Polaroid, and Sun Country Airlines, which, collectively, became known as Petters Group Worldwide, or PGW. Each year PCI wrote off millions of dollars in losses based on the losses it incurred from funding these other companies. However, the companies provided Petters the appearance he needed to keep the scam going.

By the end of 2007, the conspirators were struggling to find new investors, and PCI was slow to pay hundreds of millions of dollars in promissory notes held by Lancelot Investment Management, which was operated by Greg Bell. Petters told Bell the slow payments were due to his retailers, who were late in paying him. As a result, Bell agreed to an extension on the payments so the notes would not go into default. In February 2008, Bell and Petters agreed Bell would receive replacement purchase orders from other retailers for the purported purchase orders held by Lancelot. Bell suggested they also exchange money so it would appear that PCI was paying its notes. Between late February 2008 and the date of the search warrants, Bell and Petters engaged in more than 80 “round trip” financial transactions intended to give the false impression that PCI was paying its obligations when due.

Petters continued to lull investors even after law enforcement executed search warrants on September 24, 2008. Furthermore, on October 1, 2008, Petters suggested to White and Reynolds that they flee prior to prosecution. Coleman, White, Reynolds, Catain, and Bell already have pleaded guilty for their roles in the scheme. Sentencing dates for them, however, have not been scheduled. James Wemhoff, Petters’ personal and business accountant, has pled guilty to criminal charges not related to the PCI Ponzi scheme. He has not been sentenced either.

This case was the result of an investigation by the Federal Bureau of Investigation, the IRS-Criminal Investigation Division, and the U.S. Postal Inspection Service. It was prosecuted by Assistant U.S. Attorneys Joseph T. Dixon, John R. Marti, Timothy C. Rank, and John F. Docherty.

DENVER—Vicki Dillard Crowe, aka Vicki R. Dillard, age 31, of Denver, was indicted by a federal grand jury on April 5, 2010 on charges of mortgage fraud, United States Attorney David Gaouette, FBI Special Agent in Charge in Denver James Davis, and U.S. Postal Inspector in Charge in Denver Shawn Tiller announced. Crowe was arrested earlier today without incident by FBI agents and U.S. Postal Inspectors. She will appear in U.S. District Court in Denver for her initial appearance, where she will be advised of the charges pending against her.

According to the indictment, beginning in June 2004, and continuing through December 2006, Crowe knowingly devised and intended to devise a scheme to defraud various financial institutions and commercial lenders and to obtain money and property from various financial institutions and commercial lenders by means of materially false and fraudulent pretenses, representations, and promises. The scheme was executed in connection with the residential mortgage loans related to 19 properties in Colorado—seven in Denver, six in Aurora, two in Centennial, and one each in Thornton, Castle Rock, Franktown and Parker. In addition, the defendant executed the scheme related to the refinancing of residential mortgage loans related to two properties—one in Denver and one in Aurora.

As part of the scheme, Crowe worked with at least one mortgage broker to obtain mortgage loans in order to purchase at least 19 residential properties, at least two of which were purchased in the name of Crowe’s husband because Crowe was concerned that she would not qualify for the required mortgage loans. In order to qualify, Crowe made and caused to be made at least one materially false representation, including: 1) inflating or fabricating employment or rental income and/or assets of the defendant or her husband; 2) falsely representing defendant Crowe’s job title; 3) failing to disclose all the properties she had recently purchased; 4) failing to disclose all of her financial liabilities; and 5) falsely stating that the property would be a primary residence for the borrower.

As part of the transactions, Crowe persuaded, and caused someone else to persuade, the property seller to falsely inflate the sale price of the property so that Crowe could receive the inflated portion of the sale price as “up front” money, or shortly after, the closing purchase transaction. Sometimes the “up front” money was falsely characterized on a HUD settlement statement as a payment to the broker, although the broker would then pay Crowe the money. At other times, the “up front” money was falsely characterized as a payment to a remodeling company that was supposed to perform specified remodeling work, although the work was never performed, and Crowe actually received the money that was issued to these remodeling companies.

The indictment further alleges that Crowe used much of the “up front” money to make the mortgage payments on the numerous properties that she had purchased. She also refinanced mortgages on a couple of the properties so that she could obtain additional money as a result of the refinance transaction.

In order to qualify for the refinancing of the mortgages, Crowe made at least one materially false statement, namely that she used some of the money that she obtained during the refinance transactions to make the mortgage payments.

Crowe faces eight counts of mail fraud, which carries a penalty of not more than 20 years’ imprisonment, and up to a $250,000 fine, per count. She also faces eight counts of wire fraud, which also carries a penalty of not more than 20 years’ imprisonment, and up to a $250,000 fine, per count. The indictment also includes an asset forfeiture allegation.

“The prosecution of those who commit mortgage fraud is a top priority of the Department of Justice and this U.S. Attorney’s Office,” said U.S. Attorney David Gaouette. “Those who commit such crimes seriously erode the confidence of financial institutions to lend money which is a key element of the future strength of our economy.”

“Combating mortgage fraud continues to be a priority for the Denver Division of the FBI because of its impact on the well being of our housing markets and national economy,” said FBI Special Agent in Charge James H. Davis. “Law enforcement and the community at large must maintain their vigilance in identifying those who commit these types of fraud.”

“When the mails are used to misrepresent or to send fraudulent information, it is a violation of Federal Law,” said U.S. Postal Inspector in Charge in Denver Shawn Tiller. “United States Postal Inspectors take this offense seriously and investigation of this crime reveals another successful effort to remove criminals involved in this type of activity from society. The Denver office was pleased to partner with our associates in the FBI to bring this investigation to a successful outcome.”

This case was investigated jointly by the Federal Bureau of Investigation (FBI) and the U.S. Postal Inspection Service (USPIS).

Crowe is being prosecuted by Assistant U.S. Attorney Pegeen D. Rhyne. The asset forfeiture is being handled by Assistant U.S. Attorney Tonya Andrews.

The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.

Mortgage fraud is a major part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force 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.

Press

Lead Defendant Eric Rulack Farrington, Jr. Convicted on All 32 Counts

DALLAS—A mortgage fraud trial that began in mid-February before U.S. District Judge Sam A. Lindsay, concluded late this afternoon when the jury found all eight defendants guilty of various offenses related to their role in a mortgage fraud scheme they operated in the Dallas area from March 2002 to January 2006, announced U.S. Attorney James T. Jacks of the Northern District of Texas.

The lead defendant in the case, Eric Rulack Farrington, Jr., 57, of Irving, Texas, was the president of Eric Farrington Seminars, Inc. and Prestige Capital Corporation, which did business as Farrington Mortgage Group. He was a manager of EFC Investments, LLC, which did business as EFC Management Company. All were located in Dallas.The jury convicted Farrington on all 32 counts of the superseding indictment, including:

* one count of conspiracy to commit wire fraud
* one count of bank fraud and aiding and abetting
* 15 counts of wire fraud and aiding and abetting
* 10 counts of money laundering and aiding and abetting
* five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting

Other defendants, their roles, and counts on which they were convicted are:

Janice Little Shepherd, 51, of Irving, Texas, Farrington’s former fiancé, was a mortgage broker who did business as EFC Capital Mortgage Company, in Dallas. She was convicted on:

* one count of conspiracy to commit wire fraud
* 11 counts of wire fraud and aiding and abetting
* four counts of engaging in a monetary transaction with criminally derived property and aiding and abetting

Regis Lamont Williams 44, of Dallas, was a Texas certified real estate appraiser who did business as Executive Certified Appraisal. He was convicted on:

* one count of conspiracy to commit wire fraud
* one count of bank fraud and aiding and abetting
* nine counts of wire fraud and aiding and abetting
* five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting

Kevin Ray Sanderson, 35, of Irving, Texas, was a business associate of Farrington and the vice president of Farco Construction, Inc., Dallas, which also did business as Farrington Mortgage Group. He was convicted on:

* one count of conspiracy to commit wire fraud
* one count of bank fraud
* four counts of wire fraud and aiding and abetting
* one count of money laundering

James Edward Jones, 44, of Dallas, was a real estate agent. He was convicted on:

* one count of conspiracy to commit wire fraud
* two counts of wire fraud and aiding and abetting

Edwin Terrence Bell, 43, of Fort Worth, Texas, was in the real estate management business and was the president of Togetherness, Inc. Bell also did business as The Togetherness Group and TTG, Inc. He was convicted on:

* one count of conspiracy to commit wire fraud
* five counts of wire fraud and aiding and abetting
* two counts of engaging in a monetary transaction with criminally derived property and aiding and abetting

Micheal (sic) Lewis Andrews, 50, of Plano, Texas, was chief executive officer of Second Chance Mortgage, Inc. and did business as 2nd Chance Mortgage. He was convicted on:

* two counts of wire fraud and aiding and abetting

Robert John Mason, 55, of Oak Leaf, Texas, was an employee of Prestige Capital Corporation. He was convicted of:

* two counts of wire fraud and aiding and abetting

Prior to trial, Marcus Allen Parker, 35, of Rowlett, Texas, who was an associate of defendant Kevin Ray Sanderson, pleaded guilty to one count of conspiracy to commit wire fraud. In addition, prior to trial, charges were dismissed against Tony Earl Anderson, 52, of Dallas and Christopher N. Williams, 43, of Flower Mound, Texas. All three testified as government witnesses.

The statutory maximum penalties for conspiracy to commit wire fraud and wire fraud is 20 years in prison and a $250,000 fine, per count. The maximum statutory penalty for bank fraud is 30 years in prison and a $1 million fine, per count. The statutory maximum penalty for money laundering is 20 years in prison and a $500,000 fine, per count. The maximum statutory penalty for engaging in a monetary transaction with criminally derived property is 10 years in prison and a $250,000 fine, per count.

The government presented evidence at trial that Farrington, a motivational speaker who had authored a real estate book and had an infomercial on making money in real estate that ran on late night television, largely orchestrated the scheme. The defendants located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence, many times using inflated appraisals. In some cases, they would create a bogus outstanding mortgage lien to be discharged. They recruited individuals with high credit scores to act as borrowers and falsely represented to them that the property would be managed by the defendants and rented by a suitable tenant; that the mortgage, interest, taxes, insurance and property maintenance would be paid from the rental income; and the purchasers/borrowers would have no expenses. The borrowers had no intention to live in the property and did not have sufficient income to repay the loans. They said they relied on Farrington.

Further evidence presented by the government showed that the defendants prepared and submitted fraudulent loan documents showing inflated incomes in the names of the borrowers and obtained loans in inflated amounts based on these fraudulent loan documents. Then they used the fraudulently obtained surplus loan proceeds to pay the sellers kickbacks, to conceal the fraud, and distributed the bulk of the proceeds among themselves. They would then allow the loan to go into foreclosure after a few payments were made on the loan.

Some of the residences used in the scheme are:

* 1420 Travis Circle South, Irving, Texas
* 6231 Azalea Lane, Dallas
* 7730 Cliffbrook Drive, Dallas
* 10907 Cinderella Lane, Dallas
* 7617 Arborgate Drive, Dallas
* 13735 Ashridge Drive, Dallas
* 6824 Winterwood Lane, Dallas
* 6840 Winterwood Lane, Dallas
* 6915 Winterwood Lane, Dallas
* 7012 Creek Bend Road, Dallas
* 1509 Appalachian Drive, Allen, Texas

Following a conviction on Count One, the conspiracy, the criminal forfeiture allegation requires the defendants to forfeit $4,500,070 to the U.S. The forfeiture allegation also requires the defendants, upon conviction of any of Counts Two through 17, to forfeit various sums of money, totaling nearly $4 million, as listed in the superseding indictment.

Mortgage fraud is a major focus of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force 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.

U.S. Attorney Jacks praised the investigative efforts of the FBI and Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorneys Joseph Revesz and Walt Junker are prosecuting the case.

BALTIMORE—A federal grand jury has indicted Douglas Skibicki, age 41, of Bethesda, Maryland, on charges of mail fraud, aggravated identity theft, and bankruptcy fraud, in connection with a mortgage fraud scheme in which he allegedly defrauded lenders, family, and others. The indictment was returned on March 31, 2010 and unsealed today upon Skibicki’s arrest.

The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Chief William J. McMahon of the Howard County Police Department; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation – Baltimore Field Office; Special Agent in Charge Barbara Golden of the United States Secret Service – Baltimore Field Office; and Special Agent in Charge Ken Taylor, Jr. of the Housing and Urban Development Office of Inspector General – Office of Investigations.

According to the nine-count indictment, Skibicki was a mortgage originator and/or broker for a company which operated in Laurel, Maryland. The indictment alleges that from April 2006 through August 2009, Skibicki, with the assistance of an appraiser and others, participated in a scheme to defraud lenders, family members, and others through a series of real estate transactions.

For example, Skibicki and Family Member 1 owned property at 5870 Deer Ridge Lane in Elkridge. On June 2, 2006, Skibicki allegedly submitted a loan application for $350,000 to refinance 5870 Deer Ridge Lane, in the name of Family Member 2. The loan application indicated that title to the property would be held by Skibicki, Family Member 1 and Family Member 2.

According to the indictment, Skibicki allegedly added Family Member 2 to the title of the property without consulting or obtaining the approval of either Family Member 1 or 2. To facilitate the loan application, the appraiser working with Skibicki allegedly prepared an appraisal indicating that there was a 2,040 square foot home on the property and included a description of the home and photographs purporting to be of the front and back of the home. In fact, there was no home on the property, which was a vacant lot. The indictment alleges that the loan application submitted by Skibicki on behalf of Family Member 2 also contained several false statements as to Family Member 2′s employment, income, and current address.

Further, the indictment alleges that in an attempt to conceal the fact that 5870 Deer Ridge Lane was a vacant lot and instead make it appear that there was a home on that property, and also to make it appear that Family Member 2 was earning rental income from leasing that home, Skibicki caused a fraudulent Single Family Dwelling Lease to be provided to the lender, falsely indicating that 5870 Deer Ridge Lane had been rented for a one-year term beginning on January 1, 2006, for a monthly rent payment of $2,875.

A former co-worker and longtime friend of Skibicki was listed on the lease as the real estate agent who had negotiated it, and Family Member 2 was identified on the lease as one of the landlords/owners of 5870 Deer Ridge Lane. According to the indictment, the signatures of the real estate agent and Family Member 2 were forged on this lease and neither individual had any knowledge of, or involvement with, this purported lease. Based on the fraudulent information provided by Skibicki, the lender provided a loan of $350,000 in the name of Family Member 2. The indictment alleges that the signatures of Family Members 1 and 2 were forged on the settlement statement.

The indictment alleges that Skibicki obtained mortgages on five additional properties in the names of family members and others. According to the indictment, in each instance the loan application contained false statements as to the family members and others whose names Skibicki used on the application. In some instances, the family members and others allegedly had agreed to allow Skibicki to use their names, with Skibicki promising that he would make the payments and/or remove their names from the property after some specific amount of time. However, the indictment alleges that the family members and others often had no idea that Skibicki had used their name and personal information to facilitate the transactions. The indictment further alleges that five of the properties went into foreclosure after Skibicki failed to make the promised loan payments. According to the indictment, Skibicki received loans worth $2,829,971 as a result of the scheme.

According to the indictment, after Skibicki had failed to make payments on a mortgage he had obtained in the name of a Family Member 3, the lender instituted foreclosure proceedings and the property was scheduled to be put to auction on August 11, 2009. The indictment alleges that in order to conceal his scheme, Skibicki caused a Chapter 13 bankruptcy petition to be filed on August 11, 2009, in the name of his friend, who was a co-owner of the property, in order to stop the auction of the property.

Skibicki faces a maximum sentence of 20 years in prison and a fine of $250,000 or twice the gross loss or gain of the offense, if greater than $250,000, on each of six counts of mail fraud; a mandatory two years in prison, consecutive to any other sentence, on each of two counts of aggravated identity theft; and a maximum of five years in prison for bankruptcy fraud. Skibicki had his initial appearance today at 2:30 p.m. in U.S. District Court in Baltimore and was released under the supervision of U.S. Pre-trial Services. As a condition of his release Skibicki is prohibited from working in the financial services industry. He is scheduled to be arraigned on April 16, 2010 at 2:00 p.m.

U.S. Attorney Rod J. Rosenstein recognized Howard County State’s Attorney Dario Broccolino and Chief J. Thomas Mangers of the Montgomery County Police Department, and their offices, for their assistance in this investigation and prosecution.

In a related action, Mark Kaufman, Deputy Commissioner of the Maryland Department of Labor, Licensing and Regulation’s Division of Financial Regulation issued a Summary Order to Cease and Desist against Skibicki today, prohibiting him from engaging in any further credit services business activities and/or foreclosure consultant activities with Maryland residents.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention, and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available at http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.President Obama established the interagency Financial Fraud Enforcement Task Force 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.

A lot of blame for the housing crisis that helped drive our nation into a financial crisis has been heaped on “greedy” bankers and home buyers trying to live beyond their means.

But there was another element that should not be forgotten – and that was outright criminal activity.

A recent Arizona case demonstrates the lengths that were taken by some to cheat bankers and others in order to fill the pockets of criminals with money.

The case involves five Arizona men who were convicted and sentenced for mortgage fraud involving millions of dollars. One of the ringleaders was sentenced to 62 months in prison. Others received lesser sentences based on their degree of involvement and cooperation in the case.

The scheme was rather involved. First, the rights to land was obtained which was then sold to accomplices at highly inflated prices. Fraudulent bank loan applications were then prepared and then cash kickbacks would be given to the buyers after the loans were approved. At each critical stage leading up to the loan, a “player” in the fraud was involved to disguise what was happening.

Eventually, the properties went into foreclosure and the banks lost over $1 million.

This is but one incident among the many shady dealings that went on during the “go-go” years of the housing boom. Only now is some accountability starting to be seen as part of a federal initiative called “Operation Cash Back.”

So far 49 people have been convicted after guilty pleas or trials in federal courts. Unfortunately, that only represents a small part of the fraudulent dealings that went on in the mortgage industry in past years. Unfortunately, these are complicated cases which are difficult to investigate and try.

But whatever the number convicted, there is some satisfaction that justice is finally being done.

Perhaps a more appropriate name for the fraud program might be “Operation Pay Back,” reflecting the prison sentences that are being handed out in repayment for what these individuals did to contribute to the economic collapse that has hurt so many people.

Bothell’s Robert Ernest Brandt, 42, a former Kirkland attorney and escrow officer, was convicted in U.S. District Court in Seattle April 1 of conspiracy and four counts of wire fraud.

The jury deliberated approximately one day following an eight-day trial. When sentenced by U.S. District Judge Richard A. Jones on June 25, Brandt faces up to 20 years in prison and a $250,000 fine.

The Washington State Bar Association disbarred Brandt in 2006 after concluding he had allowed the improper use of his client trust account in the mortgage fraud scheme, and had improperly engaged in transactions in which he had a conflict of interest.

The federal case was indicted in June of 2008, as part of “Operation Malicious Mortgage,” and the overall investigation was conducted jointly with the Washington State Department of Financial Institutions, the King County Prosecuting Attorney’s Office and the Kirkland Police Department.

According to records in the case and testimony at trial, more than a dozen people, including Brandt, were linked to an extensive mortgage fraud scheme operating in 2004 and 2005. Those who have already pleaded guilty in the scheme include a former bank employee, mortgage brokers, as well as the owner of shell companies involved in “flipping” dozens of properties as part of the fraud.

Ten members of the scheme were charged, six in federal and four in state court. All of the charged defendants pleaded guilty, except for Brandt. A number of the charged co-conspirators testified at trial.

The conspirators would identify houses and would use shell companies or third parties to purchase the homes, again according to records and testimony. At the same time, they recruited “straw buyers” who would enter into a purchase agreement to buy the same home from the conspirators at an inflated price (a “flip”). The conspirators assisted the straw buyers with phony paperwork for the home loans, making it appear that they were qualified for the mortgage loans and planned to occupy the houses.

Members of the conspiracy allegedly falsified numerous documents including appraisals, verifications of deposits, employment verification and closing documents. The conspirators split the proceeds from the fraudulent mortgages, and the straw buyers defaulted on the loans after pocketing as much as $20,000 for their fee. The homes were foreclosed and financial institutions and mortgage lenders suffered substantial losses, estimated to exceed $7 million dollars.

For his part, according to records and testimony, Brandt ran a company called “Escrow Authority,” which closed all of the sales of the flipped properties. He permitted other members of the scheme to use money out of his lawyer’s trust account to acquire properties. The same properties were then quickly resold to straw buyers for significantly higher prices, and fraudulent loans were obtained to finance the fictitious resales.

Brandt also helped create shell companies used as part of the scheme, and signed off on fraudulent settlement statements (HUD forms) provided to lenders that failed to disclose the fraudulent nature of the transactions.

Real Estate Investor Ordered to Pay Over $4.1 Million in Restitution

Sherman, Texas – U.S. Attorney John M. Bales announced today that a 38-year-old Grapevine, Texas man has been sentenced to federal prison for his role in a mortgage fraud scheme in the Eastern District of Texas.

Esshan Samuel “Sam” Agha pleaded guilty on Oct. 19, 2009, to conspiracy to commit mail fraud and was sentenced to 51 months in federal prison today by U.S. District Judge Marcia Crone. Agha was also ordered to pay restitution in the amount of $4,127,131.50.

According to information presented in court, from Oct. 2005 to Feb. 2008, Agha, a real estate investor, devised a scheme in which he solicited others to buy homes that in most cases were in fact owned by himself or an unnamed co-conspirator. A smaller number of homes were also owned by a third party for whom Agha brokered the sales. Agha facilitated the scheme by making false statements that included misrepresentations such as overstating the buyers’ income and stating that the buyers intended to occupy the homes as their primary residence. All of the loans involved in the scheme went into default when the buyers failed to make the mortgage payments on the homes, which included 24 properties in Collin County and one in Tarrant County.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.

President Obama established the interagency Financial Fraud Enforcement Task Force 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.

A Jackson County judge sent a man involved with a mortgage fraud scheme to jail Thursday for at least 90 days.

Circuit Judge Thomas Wilson also placed Freddie Young Jr. on probation for three years. As a condition of the probation, Young cannot apply for a mortgage or engage in any real estate transactions without the court’s written approval.

Young, 45, of Jackson pleaded guilty in February to two counts of using false pretenses to acquire more than $20,000. In exchange for his plea, the prosecutor’s office dropped a third false pretense count and a racketeering charge.

Young said he paid a woman to forge tax forms so a man who was not qualified for a house loan could get mortgages.

Assistant Prosecutor Nick Mehalco Jr. alleged Young worked with several others to cheat companies into giving homes loans for over-valued Jackson properties using doctored documents. The mortgages would then go unpaid.

He was linked to Angelo Williams, 46, of Jackson, who is now in prison for scamming mortgage companies.

Such scams negatively impact the economy, Mehalco said. “It is a cancer on our community.”

Young said he takes full responsibility for his actions. “I shouldn’t have let other people force me to do something I kind of knew was wrong,” he said.

Wilson said he got many letters about Young and his community activities, which include work with youth sports leagues. His lawyer said he works two jobs.

“You’ve done a lot of positive things out there,” Wilson said.

The judge also said Young had to do 150 hours of community service.

If he fails to comply with all court orders and conditions, he could spend more time in jail.

Young and others were arrested and charged as part of a county effort to nab those involved in mortgage fraud.

Almost $74,000 seized earlier from Young as part of an investigation is to be held in an escrow account until victims, if any, can be identified, Mehalco said.

Jeffrey H. Sloman, United States Attorney for the Southern District of Florida; John V. Gillies, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office; Daniel W. Auer, Special Agent in Charge, Internal Revenue Service, Criminal Investigation; Miguel A. Exposito, Chief, City of Miami Police Department; and James K. Loftus, Director, Miami-Dade Police Department, announced the sentencing of defendants Garry Souffrant, 33, a licensed real estate broker in the State of Florida, and Yvonne Souffrant, 33, husband and wife, both of Davie, FL. Today, U.S. District Court Judge Paul C. Huck sentenced the defendants to 240 months and 54 months in prison, respectively.

In November 2009, Garry Souffrant was convicted after a five-week jury trial of 46 counts, including conspiracy to commit mortgage fraud, conspiracy to commit drug money laundering, mail fraud, making false statements to mortgage lenders, bank fraud, bank theft, and receipt of stolen bank funds. At the same trial, Yvonne Souffrant was convicted of count of fraud conspiracy and one count of making a false statement to mortgage lenders.

According to the Indictment and evidence presented during the trial, from 2002 to 2008, defendants Garry and Yvonne Souffrant used their family business, called Progressive Real Estate of Broward, Inc., to launder millions of dollars in drug proceeds through an extensive mortgage fraud scheme. The defendants assisted drug traffickers in purchasing homes and luxury automobiles, including a 2004 Rolls Royce Phantom. To execute the scheme, the defendants arranged for and/or acted as straw buyers on behalf of the drug traffickers. This allowed the traffickers to use their drug proceeds to purchase homes and lease automobiles, while concealing the source of the income. The defendants also diverted several million dollars of mortgage loan proceeds to continue to fund the scheme and for their personal use.

This investigation and prosecution was the culmination of a five-year Organized Crime Drug Enforcement Task Force (OCDETF) Operation, named Operation KOMPA, which focused on drug trafficking and violent crimes in north Miami-Dade County. As part of this Operation, numerous individuals were prosecuted, convicted, and sentenced to lengthy prison terms (Case No. 07-20577-CR-Huck). Among those prosecuted and sentenced were Ali Adam and Graylin Kelly. In March 2008, Adam and Kelly were both sentenced to 360 months’ imprisonment, after having pled guilty to drug conspiracy and money laundering conspiracy charges for their participation in a scheme to launder millions of dollars of drug proceeds through the purchase of real estate and luxury automobiles. The Souffrants were involved in this aspect of the conspiracy.

U.S. Attorney Jeffrey H. Sloman stated, “These defendants engaged in mortgage fraud as a means to launder drug proceeds. We will continue to use our expertise in financial cases to deprive drug dealers of their ill-gotten gains.”

“As we’ve seen in this case, drug trafficking organizations routinely commit so called white collar crimes such as mortgage fraud and bank fraud to launder their proceeds, said FBI Special Agent in Charge John V. Gillies.“These types of crimes should not be taken lightly given that they fuel violent, criminal activity. We will continue to work with our partners to disrupt and dismantle drug trafficking organizations.”

IRS Special Agent in Charge Daniel W. Auer stated, “These defendants used what appeared to be a legitimate real estate company as a method to launder the proceeds of illegal narcotics activities and to defraud financial institutions and mortgage lenders. In this case, IRS Special Agents were able to follow the money, track and document the flow of funds, and prove that the defendants laundered millions of dollars through an extensive mortgage fraud scheme.”