Man sentenced to 23 years in prison in foreclosure scam

Alexander Coolidge reports for the Cinncinati Enquirer that convicted swindler Troy Lee Keith was sentenced Friday to more than 23 years in prison for scamming more than $100,000 from homeowners trying to avoid foreclosure.Keith, 38, was convicted in October by a Butler County jury of 41 criminal charges, including 26 counts of theft by deception, 14 counts of tampering with government records and one count of engaging in a pattern of criminal activity.

Butler County Common Pleas Judge Keith M. Spaeth sentenced Keith to 23 years and two months and ordered him to pay $99,875 in restitution.
Prosecutors said Keith stole from 26 victims in Cincinnati and Dayton facing foreclosure by promising to save their homes and assume their mortgages in exchange for a processing fee and monthly rent.

He told customers he’d sell them their houses back once they got back on their feet financially.Keith collected money but didn’t take over the mortgage payments or purchase any houses – leaving his victims in foreclosure. Several of his victims – many of them elderly – learned their mortgages were never paid until after they’d been evicted from the homes.

Keith did business in Hamilton County as KT Property Management, which authorities say is also the name of a legitimate Warren County company that manages apartment buildings but has no connection to the case.


FBI ask mortgage brokers to help in fight against fraud

Andrew Zajac and David Jackson report for The Chigao Tribune that a crackdown on mortgage fraud by federal law-enforcement agencies will have limited impact without better self-policing in the home sales industry, including more information from mortgage brokers about suspicious activity, a top FBI official said Wednesday.

Unlike lenders, mortgage brokers are not required to report questionable transactions to the government, and "I would question whether they’re exercising as much due diligence as we would like to see," said Chris Swecker, FBI assistant director in charge of the criminal division. Underscoring the seriousness of the crime, federal prosecutors in Chicago separately announced the indictments of a Loop attorney and three real estate professionals who allegedly used 12 Chicago homes in mortgage fraud schemes that netted $774,000. Two of the real estate professionals previously had been convicted of cocaine dealing.

In Washington, Swecker and representatives of the IRS, the Postal Service and the Departments of Justice and Housing and Urban Development held a news briefing to discuss recent efforts to curb mortgage fraud.

At that Press Conference (click to read more) the FBI released various materials which are attached below:

Photographs of properties involved in different schemes 

Slide show showing statistcus, graphs and flow charts (you will need Adobe Acrobat reader)

Fraud definitions and descriptions

List of fraud prevention tips


Fraud case scams more than 70, officials say

Erin Rickert reports for The Daily Reflector that four people caught in violation of the Mortgage Lending Act will face charges in Pitt County for scamming some 71 people in counties across eastern North Carolina, authorities said. Tom Woolard, a detective with the Greenville Police Department, said during a news conference at the Greene Street department Monday that Micaela Martin, aka Ivy Carter; Carrie Tyson (click here for the Final Order revoking her loan officer license); Renee Wheaton and Creig McBride face allegations of credit repair fraud and illegal mortgage work.

Woolard said during a six-month investigation by the police department and officers with North Carolina Office of Commissioner of Banks discovered the suspects worked together to collect fees for mortgage applications and credit reports without providing the loans applicants were seeking. Martin, 41, of Greenville, turned herself over to police at the department Wednesday night. Woolard said Martin was charged with 72 counts obtaining property by false pretenses and 59 counts felony conspiracy. She remains under a $5 million secured bond at the Pitt County Detention Center.

Arrests are pending for Wheaton, who lives in Greenville, and McBride and Tyson, both of Charlotte. All are expected to be served on similar charges within the next two weeks, Woolard said. He said each of the 71 victims lost a couple hundred dollars each for an overall loss of $27,000.

The victims of the scam were all people with moderate to good credit, and all had put up money for mortgage application fees and fees for credit report checks, he said. Of these victims, about five received the loans they were promised, Woolard said. “A lot of people were promised things that were not produced,” Woolard said.

He said 56 of the scams were carried out at 1530 S. Evans St., the office Martin and Wheaton were operating together. Martin was interviewing clients and collecting $140 or more for loan applications and credit report fees, officials said, even though her mortgage loan officer’s license was revoked effective Dec. 19, 2003, for failing to report a felony conviction to the Office of Commissioner of Banks. The revocation was reaffirmed on appeal on May 19, 2004.

Wheaton , who was employed as a loan officer and worked with Carteret Mortgage, allegedly was using the information to obtain credit reports through Carteret for Martin, Woolard said. The two were using brochures and other forms from companies such as Soloman Investments, Workingman Mortgage and Lighthouse Mortgage to solicit clients.

Sandra Lee, an investigator with the Office of Commissioner of Banks, said the victims told authorities they looked up the companies Martin was using as fronts, saw information they were legitimate and believed it. Woolard said Martin and Wheaton hired six sales representatives, who believed her to be a licensed broker, to help solicit relatives, church members and others in their social circles.

More than half were customers of Wheaton and Martin’s who had sought mortgages, he said. Woolard said search warrants show clients were being solicited primarily from Bertie, Martin, Pitt and Edgecombe counties. Undercover officers witnessed Martin representing herself as a licensed mortgage broker and loan officer holding meetings at Sheppard Memorial Library to teach people how to repair their credit and fill out mortgage applications.

Woolard said the investigation began in June when the Office of the Commissioner of Banks notified Greenville police about Martin violating the Mortgage Lending Act. To test the allegation, two officers went undercover as a married couple and met Martin at her South Evans Street office to apply for a mortgage, officials said. The two were told an application would be mailed, but they never received it.

Authorities said during the investigation they learned Martin was charging two to three times what is an acceptable fee for a credit report check and all money was being collected up front which violates the Mortgage Lending Act. Woolard said officers later discovered Tyson, whose mortgage loan license was revoked Feb. 21, 2005, for failing to report a felony conviction and McBride were conspiring with Martin. Later, a fifth person, an account executive from Waynesville, began working with Tyson, Woolard said. He said that person is not expected to receive charges at this time. “Fortunately no one lost a huge amount of money in this,” Woolard said.

Woolard said Wheaton is facing 40 counts violation of the Mortgage Lending Act and 59 counts felony conspiracy while Carrie Tyson faces two counts violation of the Mortgage Lending Act for co-brokering mortgage loans and two counts felony conspiracy. McBride faces a felony conspiracy charge.

Have a question about a broker?. Sandra Lee, an investigator with the North Carolina Office of Commissioner of Banks, said be sure the broker or loan officer’s license is posted. Effective July 2002, the Mortgage Lending Act required licensure be posted. Questions about licensure should be directed to to the North Carolina Office of the Commissioner of Banks at (919) 733-3016.
Erin Rickert can be contacted at erickert@coxnc.com and 329-9566.


Title company charged with embezzlement

John Tunison reports for The Grand Rapids Press that four months after a fellow employee was fired over embezzlement allegations, the broken trust still haunts Deanna Binder.  She wonders how to repair the psychological damage.  "She had access to the accounts and she misused her access," said Binder, local escrow manager for Land America Transnation Title Co.

Tonia Laquese Mitchell, 34, of Muskegon, was arraigned Wednesday in Grand Haven District Court on an embezzlement charge that title company officials say involves $90,000 in stolen funds.  Mitchell was an escrow specialist hired in March 2003 through a temporary agency, first working in the company’s Holland office and later in Grand Haven.

"She did the closings with the buyers and sellers of real estate and disbursed the funds to them," Binder said.

Court records in a civil lawsut filed to stop Mitchell from spending any allegedly illgotten money not already spent charge she made several wire transfers of money from Transnation’s "client trust fund" to her personal account at Muskegon Co-op Credit Union.  The transfers reportedly involved $1,681.55 Dec. 20, 2004, another for $36,869 May 19 and another for $8,774 Aug. 4. The lawsuit alleged she also was responsible for the illegal transfer of $43,000 in additional funds to "other accounts at other banking institutions for her direct or indirect benefit."

"Because of Mitchell’s fraudulent activities and breach of obligation to Transnation, Transnation has lost funds, has had its security breached and has had its reputation challenged and its ability to safeguard client funds impaired," the lawsuit said.

Grand Rapids attorney John Beason, representing Mitchell, said Wednesday he did not know many details about the case.  "All I know is there is a lot of money involved," he said.

Binder, who was Mitchell’s immediate supervisor, said no clients lost money.  An internal audit identified discrepencies with Mitchell’s procedures. She was fired in August.

Binder said several factors — the title company switched banks, a medical leave taken by Mitchell and Mitchell’s ability to skirt a policy that requires two workers to sign for a wire transfer — allowed the alleged fraud to go on for months.  Officials at Transnation recently discovered Mitchell was convicted of a felony in 1991 on check-writing charge in Muskegon County. As such, she is charged as a habitual offender.  Mitchell was released on a $3,000 personal recognizance bond.


Woman sentenced over false details in loan applications

SHELLEY M. DAY, 45, formerly of Mercer Island, Washington was sentenced today to 30 months in prison and five years of supervised release for Bank Fraud. Over the course of a year, DAY defrauded Asia Europe Americas Bank of Seattle of more than $1.5 million. DAY claimed that she was selling a portion of her company, Hulabee Entertainment, Inc. to Disney Interactive and later to Vivendi Universal Publishing in order to secure large loans from the bank. DAY used the money to attempt to purchase a $3 million "dream home" on Mercer Island. The purchase was never completed. In sentencing DAY, U.S. District Judge Thomas S. Zilly called DAY "a sophisticated, educated person setting out to defraud anyone to reach her goals."

According to court records DAY repeatedly misled the bank providing forged documents to bolster her applications for large loans. In March 2002, DAY told the bank loan officer that Hulabee Entertainment was going to be sold to Disney Interactive. DAY even presented a phoney "Letter of Intent" from Disney and other supporting documents that indicated she would receive $2.5 million from the sale. After the bank agreed to that loan, and later loaned her additional funds, DAY fell behind and ultimately stopped making payments. She told the bank that the sale of her company was being "renegotiated" and again provided forged documents. She falsely claimed Disney Interactive had been acquired by Vivendi Universal Publishing, which therefore "delayed" the sale of her company. Again she produced forged documents from Vivendi Universal Publishing to bolster her fraud. DAY asked bank officials not to contact Disney or Vivendi saying that would "jeopardize the deals." After a year of DAY’s misleading the bank, a lawyer for the bank contacted Disney and discovered it was all a sham.

Describing this conduct in her memo to the court, Assistant United States Attorney Janet Freemen noted that the bank was a relatively small, homegrown financial institution. "One can only imagine how the loan officers’ hearts sank upon learning that everything the defendant had represented to them regarding Disney Interactive, Vivendi Universal, the "letters of intent," and the "contract negotiations," were all one big fabrication; a story for which they would later be accountable to federal banking regulators."

DAY was a founder of Humongous Entertainment which went on to be the third-largest publisher of children’s software creating such popular characters as Freddi Fish and Pajama Sam.

Defense attorneys asked that DAY be allowed to delay reporting to prison until April 2006 saying she had new children’s games in the works that could be quite profitable. Judge Zilly rejected that request saying that sounded too much like what she told the bank. As he imposed sentence Judge Zilly stated "others need to be told you cannot create fraudulent documents and go to the bank and basically steal money." The case was investigated by the FBI and prosecuted by Assistant United States Attorney Janet Freeman. For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, Western District of Washington, at (206) 553-4110.


Pair Plead Not Guilty in Home Loan Scam

In a Press Release the US DOJ in Los Angeles announced that as the result of an investigation by the FBI two individuals operating real estate and escrow agencies in Downey and Seal Beach were arrested this morning for allegedly victimizing dozens of homeowners through misrepresentations and fraudulent transactions, and eventually robbing them of the equity in their homes.

Click here to see the District Court Docket (Indictment not yet available)

In an indictment filed yesterday in United States District Court in Los Angeles, Martha Rodriguez and Edward Seung Ok were charged with 10 counts of mail fraud by operating a foreclosure scheme that targeted commercial lenders and homeowners in the cities of Lakewood, Wilmington, Carson, West Covina, La Puente, El Monte, Wilmington, Downey, Los Angeles and Asuza. The scheme allegedly caused losses of at least $8 million.

According to the indictment, the defendants would locate homeowners whose loans were in default by scouring databases that list pending foreclosure sales. The defendants would then pay others to visit the identified homeowners and convince them they could avoid forfeiture of their homes. When homeowners expressed interest, Rodriguez and Ok would meet with them and tell the homeowners that they could stop the foreclosure of their homes. Rodriguez and Ok explained that they would provide short-term loans to cover their debts. The victims were told that their homes would eventually be refinanced by "co-signers" with good credit, and that would help the homeowner qualify for a new loan. The defendants promised the homeowners that their credit would be improved within a period of 6 to 12 months.

The indictment further alleges that homeowners were asked by the defendants to sign various documents including loan applications, trust and grant deeds, while being assured they would not lose title to their homes. The defendants promised the deed would either be held in escrow or that the title would be returned to them once their credit was fixed.

The defendants continued the scheme by applying for loans, in some cases using straw buyers, who never intended to reside in the home. The straw buyers were paid a fee of up to $5,000. The loan applications included information relating to their income, bank account and employment. In other cases, the defendants would submit applications using the information and forged signatures of past clients, without their knowledge. The defendants would instruct the banks to wire the loan proceeds directly to their escrow accounts, and only a small portion of the loan proceeds would go to the homeowner. The majority of the loan proceeds would go to Rodriguez and her family members, Ok, and other unindicted co-schemers, according to the indictment.

Rodriguez, 33, was taken into custody at her Downey residence this morning. Ok, 39, of Torrance, was arrested simultaneously at a probation office in Arcadia. Both are scheduled to make their initial appearances this afternoon in federal court in Los Angeles. If convicted on all counts of the indictment, Rodriguez and Ok each face a maximum possible penalty of 200 years in prison.


Lenders face 14 felony charges

In a Press Release (reproduced below) Stanislaus County (Modesto, California) Assistant District Attorney Carol Shipley announced today that charges were filed in the matter of People v. Lonnie Lamont Ashlock, Ronald B. Buhler and Wilma Sue Walls. The complaint alleges fourteen counts of Fraud perpetrated against seven separate victims.

Additionally, there is a separate count of possession of methamphetamine against Ashlock only.

The charges arise from several real estate transactions that occurred between January 2002 and June of 2005 in which the defendants would obtain the trust of an individual who was seeking a loan to avoid foreclosure–and who would end up signing over title to their home.

The defendants surrendered themselves to the jail on December 1st. They were released upon posting bail and will be arraigned on December 22, 2005.

More about this story can be read in the Modesto Bee article which is contained in the references below.



United States Attorney Chuck Rosenberg announces the return of a jury’s verdict today convicting Cynthia Eneanya, 33 of Missouri City, of all 26 counts arising from a multi-million dollar mortgage fraud scheme. Eneanya faces a maximum of five years imprisonment for the wire fraud conspiracy conviction and twenty years for each count of conviction for wire fraud and conspiracy to launder funds and substantial fines, as well as an order to pay restitution to the victims of the fraud scheme. United States District Judge Nancy F. Atlas, who presided over trial that began on Monday, November 28, 2005, has set sentencing for February 24, 2006.

During the week-long trial, the United States presented evidence that showed the workings of a multi-million dollar mortgage fraud scheme executed in the Houston area between September 2003 and August 2004. The evidence proved the mortgage fraud scheme involved the securing of mortgages by the defendants in amounts greater than the amount the seller received in payment for the house. The buyers gave the difference between the sales price and the mortgage amount to the defendant brokers. Kolo allegedly brokered these real estate transactions through his company. Thereafter, the defendant buyers allegedly defaulted on the loans.

Michael McKelvey, Gerald Scott and Johnny Hill were the buyers of the houses allegedly brokered by Peter Gibson Kolo through AMH Enterprises, operated by Cynthia Eneanya, a licensed loan officer with the Texas Department of Savings and Mortgage Lending. Each buyer received $5,000 for each house they purchased during the scheme. Eneanya and Kolo through AMH Enterprises paid the monies to James Turner, a licensed realtor, who acted as a middleman in this scheme. The defendants obtained a mortgage to purchase a total of twelve houses, each with an estimated value of approximately $500,000 or more, by making false statements and concealing facts in their sworn mortgage applications, such as: falsely inflating their incomes; listing false employers; providing false references; falsely stating that their current residences were leased; falsely stating that they intended to live in the house of purchase after the sale was completed; and failing to disclose on their mortgage application their obligations to pay for other homes previously purchased in the scheme. Eneanya, as a licensed loan officer, completed the mortgage applications and submitted them to the mortgage companies for their consideration. She also worked as a mortgage broker and arranged the loans for the buyers in the scheme.

The evidence showed that during the course of the scheme, the defendants caused more than $6.9 million in wires to be sent to title companies to effect the closing on the homes. Losses to the lenders are over $2 million.

Eneanya is the fifth of six defendants indicted for their respective roles in the scheme to be convicted. Three of the defendants, Michael McKelvey, Gerald Scott, and Johnny Hill, have previously pleaded guilty to conspiracy to commit wire fraud. James Turner pleaded guilty to count two, which charges conspiracy to launder funds. They are also scheduled to be sentenced on various dates in February of 2006. The sixth and last defendant named in the indictment, Peter Gibson Kolo, remains a fugitive. A warrant remains outstanding for his arrest.

This case was investigated by special agents of the United States Secret Service and the Internal Revenue Service Criminal Investigations Division. It was prosecuted by Assistant United States Attorneys Jay Hileman and Hays Jenkins.