Truck driver David Barnes sweats to support his wife and son in a modest brick home on the outskirts of Lancaster. The little house and the money to buy it came the hard, honest way, mile by mile, in the cab of an 18-wheeler. Yet for the past eight months, Barnes has been listed as the unlikely owner of a half-million dollar luxury “investment” home in McKinney three times the size of the one he actually lives in.
He is on the hook for a half million dollars he can’t even begin to pay for the property - a gleaming brick and stone new construction house he had never even seen until CBS-11 News took him there recently. For months, debt collectors have been banging down Barnes’ door for payments on the house, utilities, and even homeowners association dues.
“I don’t even have $100 to my name,” he said. Barne’s once-perfect credit is in ruins. His wife and family are furious with him. How did this state of affairs come to be?
According to Barnes, who has a high school education and grew up chopping cotton in rural Mississippi, former Dallas Cowboys player Eugene Lockhart used celebrity to bedazzle him with promises of quick wealth from a special investment program, free game tickets and dalliances with current team stars. And $10,000 cash upfront on future profits, a payment that law enforcement experts say may be against the law.
“He’s like, ‘Are you a Cowboys fan? And I say, yup. And he says okay we can get you some tickets and everything. You let me know what game you want to attend and you and your buddies have at it,’” Barnes said. “He played for the Cowboys, and I thought he was financially able to do what he said he was going to do,” Barnes said. “He presented himself well.”
In the end, CBS-11 has learned, Lockhart’s company ended up pocketing more than $100,000 on the Barnes deal and left him, the mortgage company - and ultimately the insurance industry - holding the bag. The FBI, as well as the California-based mortgage company People’s Choice, are investigating as many as 18 similar real estate deals that Lockhart’s companies and associates set up.
In an interview, Lockhart said he has never once met Barnes and that he had no knowledge about any of his company’s daily dealings with the houses. He blamed former associates and employees for any problems and insisted he began working hard to fix all real estate deals as soon as he learned they have gone awry.
Lockhart and his attorney, Jay Ethington, also presented CBS-11 with signed statements from seven customers who state he was never personally involved in the deals.
“I understand that there were problems done in those particular files,” Lockhart told CBS-11. “I’m doing everything to be sure and get it all corrected and to go forward in helping all of our investors and be sure it doesn’t happen again.”
Barnes and several other financially marginal “investors” said Eugene Lockhart’s Cowboys Mortgage company, or subsequent variations of it, had promised to let them in on a sure-thing real estate investment program. The company, now being reconfigured as Ace Mortgage, would take care of all the details - all Barnes had to do was sign a few papers and lend his good name and credit.
Barnes said Lockhart’s representatives promised that the company would arrange financing for a first and second mortgage on a new construction home that had been located for far below market value. Tenants would be placed in the home to pay the mortgage and utilities. He said Lockhart’s company promised to buy him out after a year and split the huge profits.
A major obstacle stood in the way: Barnes didn’t make nearly enough money to qualify for such loans. CBS-11 News has learned that Barnes’ loan application was falsified to reflect that he earned $180,000 a year as owner of his own trucking company. CBS-11 has found other Cowboys Team Mortgage loan applications in which incomes were vastly inflated.
CBS-11 also has learned that an appraisal used by Lockhart’s company for the Barnes deal and several others were vastly inflated - in Barnes’ case by $115,000 more than other houses in the immediate vicinity. The difference was pocketed by Lockhart’s company at closing, records show.
No legitimate tenant was ever placed in Barnes’ new luxury investment property, and soon collection notices and foreclosure warnings were cramming his mailbox.
“Everybody’s pocket got fat except mine,” Barnes said. “Some of (Barnes’ friends back in Mississippi) would say, ‘man you just got tricked…Gangster style.”
Lockhart defended the extraordinarily high fees his company collected from some of the deals that CBS-11 has investigated. “There’s a lot of work that’s involved in just buying and selling, and we get the money,” he said. “There’s closing costs involved. There’s rent that has to be paid. There’s advertising.
“There’s marketing and maintencance of the properties. Of course we make our money, but the investors all share in the profits as well.”
Real estate fraud experts say the deals described to them by CBS-11 resemble classic mortgage fraud scheme known as property flipping. In property flipping, a house is bought and then fraudulently appraised at a value much higher than it’s worth and then quickly sold to an unsuspecing buyer.
In the case of David Barne’ house, the appraiser used the sales prices of houses in a posh neighborhood located a mile and a half away from Barnes’ neighborhood to set the value of his house at more than a half million dollars.
Bryan Moorman , the appraiser used by Lockhart on a number of questionable house deals, said he properly followed standard practices in appraising Barnes’ house. But when questioned further, he hung up on CBS-11 Investigative Producer Todd Bensman. A check of his appraisal showed that Moorman compared Barnes’ house with one that backed up onto a lake and another set next to a meandering, manicured greenbelt on a remote cul-de-sac.
A larger house just across the street from the one Barnes owns was on sale for $387,000, much less than the half million his was appraised for. Lockhart brought three of his investors to the interview with CBS-11 News. all three said their loan applications were accurate and that Lockhart did not directly participate in their preparation.
One of them Steven McGee, obtained a $335,000 loan through Cowboys Mortgage for a house in Frisco. McGee said he works as an hourly employee in a Walmart vision center. CBS-11 has learned that McGee’s loan application states he was a self-employed optical engineer making $6,500 a month. And, a signed statement promised the banks, as a condition of the loan, that McGee would live in the house. Asked if he had ever lived in the house, McGee said he had not.
“I went by and I was…and I thought about it, but actually living? No,” McGee said.
Law enforcement authorities ay the allegations against Lockhart are a drop in the bucket when it comes to mortgage fraud. The FBI and other investigative agencies say mortgage fraud is occurring at historic highs across America
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