Westhill Consulting Property Consultants Examples of Mortgage and Real Estate Fraud Investigations - Fiscal Year 2014

Topics: Mortgage, Fraud, Loan Pages: 13 (6613 words) Published: July 17, 2014
Westhill Consulting Property Consultants Examples of Mortgage and Real Estate Fraud Investigations - Fiscal Year 2014

The following examples of mortgage and real estate fraud investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.

Wisconsin Man Sentenced in Mortgage Fraud Scheme
On June 25, 2014, in Milwaukee, Wisconsin, Billy Cannon, Sr. was sentenced to 48 months in prison for wire fraud and money laundering. His incarceration will be concurrent to a 16 year sentence he received earlier this year in state court for drug and firearm offenses. According to court documents, from at least June 2006 through July 2007, Cannon worked as a mortgage broker and used straw buyers to fraudulently obtain mortgages for numerous properties. Loan applications submitted to lenders by Cannon contained material misrepresentations which made the straw buyers more appealing candidates for a mortgage. The straw buyers almost uniformly defaulted on the loans. In all, nearly a million dollars was lost by lenders as a result of the scheme. Cannon has been ordered to pay restitution to the lenders for the losses incurred.

Washington State Man Sentenced for Participation in a Mortgage Fraud Scheme On June 6, 2014, in Seattle, Washington, William Beard was sentenced to 16 months in prison, three years of supervised release and ordered to pay $1,343,618 in restitution to the IRS and victim banks. Beard pleaded guilty in February 2014 to evading taxes on his 2005 tax return by failing to report as income the proceeds of a mortgage-elimination scheme. According to court documents, after falling behind on his mortgage payments for his Los Angeles home in 2005, Beard enrolled in a mortgage-elimination program. That scheme, run by Jeff McGrue, Ronald Morgan, and another defendant, involved a series of false documents, including a fraudulent Full Reconveyance purportedly authorized by the lender that was instead signed by Beard’s two roommates. The purpose of the Reconveyance was to make it appear as if Beard had paid off his mortgage. In June 2005, the co-schemer obtained an $800,000 loan and purchased Beard’s Los Angeles home. Beard caused a payoff demand to be sent from McGrue’s company, North West Capital, for the false loan. Based on that payoff demand, the escrow company sent $800,000 to North West Capital’s bank account in Washington. No proceeds were paid to the true holder of the mortgage lien because the title company did recognize the Reconveyance and treated the true mortgage lien as having been satisfied. The $800,000 was divided among the co-schemers with Beard receiving $400,000. Beard filed his 2005 tax return failing to report the $400,000 of scheme proceeds, causing a tax loss to the government of at least $117,905. In addition, Beard participated in a second mortgage-elimination scheme and received just over $40,000, again failing to report the proceeds of the scheme as income on his individual income tax return. In 2011, Jeff McGrue, the mastermind of the scheme that involved duping 300 homeowners to pay thousands of dollars for mortgage elimination, was sentenced to 300 months in prison. Gerald Guidry and Ronald Morgan were sentenced to 36 months and 33 months in prison, respectively.

Real Estate Broker Sentenced for Role in Mortgage Fraud Scheme On May 21, 2014, in Raleigh, North Carolina, Mark Henry Tkac was sentenced to 42 months in prison, five years of supervised release and ordered to pay $1,612,612 in restitution. On May 24, 2012, Tkac pleaded guilty to conspiracy to commit mail, wire, and bank fraud. Between August 2006 and May 2008, Tkac was a licensed real estate broker who worked in the Wake County area. Tkac participated with others, including developer David Lewis Johnson, developer Arthur Lee Barnes, mortgage broker Mark Thomas Bowe, and attorney Jeffrey Scott Taggart, in a real estate flipping scheme which defrauded various...
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