The owners of a well established Minnesota home builder were sentenced last Friday in federal court for conspiring to commit mortgage fraud and money laundering in connection with a scheme involving approximately 200 residences and approximately $100 million in loans. In determining the following sentences, U.S. District Court Judge Ann Montgomery found the scheme resulted in a loss of between $20 million and $50 million and harmed more than 50 victims:

• Michael Parish, 63, of Eagan, MN: 13 years in prison along with three years of supervised release
• Ardith Parish, 62, Eagan: 5 years in prison followed by three years of supervised release
• Christopher Troup, 40, Eagan: 10 years in prison and three years of supervised release

Michael and Ardith Parish were the owners and officers of Parish Marketing Development Corp. (PMDC), a long-time Minnesota home builder, and Christopher Troup, their son-in-law, was an agent for the company. Along with the company, all three pleaded guilty in November 2007 to participating in the real estate fraud conspiracy. According to their pleas, the Parish’s and Troup acknowledged participating in the mortgage fraud scheme, by which PMDC utilized straw buyers to purchase approximately 200 Minnesota properties built by PMDC.

All three also acknowledged completing loan applications for the straw purchases (which–go figure–included false information), executing loan documents in the names of the straw buyers, and manufacturing and providing false documentation (i.e., false representations of employment and false verifications of deposit) for the straw buyers for purposes of obtaining loan proceeds to purchase the properties from PMDC.

The three also admitted:

1. Providing false information that resulted in appraisals that overstated the amount for which the residences could have been sold at the time of the transaction in a normal, arms-length transaction. The appraisals supported a higher sales price to the straw buyers, allowing PMDC to obtain additional funds from the loan proceeds.
2. That the straw buyers did not view the residences they were purchasing, did not negotiate the purchase price of the residences, and, often times, did not execute the sales documents and loan documentation, which were instead signed by the three pretending to be the straw buyers.
3. That the straw buyers made no payments on the mortgages that were taken out in their names. Instead, PMDC made all payments or allowed mortgages to go into foreclosure. Often times, PMDC utilized proceeds from the sale of one residence to a straw buyer to make monthly payments for the mortgages held on other residences in the names of other straw buyers.

Several other people connected to the conspiracy previously pleaded guilty to federal charges and are awaiting sentencing, including:

• Ramiz Yousef Saadeh, 30, of Apple Valley, MN, pleaded guilty in September 2007 to conspiracy to commit mortgage fraud. The former US Bank officer admitted providing false verifications of deposit to PMDC on behalf of straw buyers.
• Kristopher Robbins, 28, Brandon, South Dakota, pleaded guilty in September 2007 to conspiracy to commit mortgage fraud. The former closing agent admitted to permitting conspirators to forge signatures on mortgage documentation.
• Melissa Smith, 45, Gerard, Ohio, pleaded in September 2007 to conspiracy to commit mortgage fraud. Smith, a stay-at-home mother and the sister of Christopher Troup, admitted to acting as a straw buyer for the scheme, purchasing 46 residences for approximately $20 million from October 2004 through January 2007.
• Donald Yeager, 41, Ardamore, Oklahoma., pleaded guilty in October 2007 to one count of honest services fraud. The former appraiser admitted providing misleading and inflated appraisals of the homes to lenders.
• In June of this year, John Rubischko, 36, Eagan, a former mortgage broker implicated in the scheme, also pleaded guilty to mortgage fraud and identity theft charges.

Acting U.S. Attorney Frank J. Magill had this to say about the case:

The crime of mortgage fraud poses a significant threat to the national economy, as well as Minnesota’s economy. For many, the dream of home ownership has been shattered by those engaging in fraud, deception and illegal lending practices. These illegal practices have also resulted in communities blighted by foreclosed and boarded up homes, increased crime, property depreciation and other livability issues. Our office is working to ensure that those who devise and implement fraud schemes to bilk homeowners and lenders out of money will be prosecuted to the fullest extent of the law. Mortgage fraud will continue to be a top priority, and we thank our law enforcement partners on the federal, state and local level, for their efforts in investigating these schemes.