Another builder indicted in alleged fraud scheme
In the following press release from Topeka, KS U.S. Attorney Eric Melgren announced that a grand jury in Topeka has returned an indictment charging a Kansas City home builder with violating a court order and trying to interfere with a federal investigation. Already under indictment on charges including conspiracy to commit bank fraud and money laundering, F. Jeffrey Miller, 45, Stanley, Kan., was allowed to continue doing business after agreeing that an outside consultant could monitor his activities on behalf of the court.
“The new indictment charges that Mr. Miller continued to operate illegally while being monitored, and conspired with others to interfere with the federal investigation into his business practices,” said U.S. Attorney Eric Melgren. Miller was arrested Thursday morning and is in Federal custody pending a court hearing on December 5, 2006.
Charged along with Miller in the new indictment are Stephen W. Vanatta, 43, Lenexa, Kan., Hallie Irvin, 26, Lenexa, and James Sparks, 35, Lawson, Mo.
Miller, a building contractor in Kansas, Missouri and other states, sold homes under the name of Miller Enterprises, Star Land Development, Somerset Homes, Dutch Custom Homes and other companies. He was indicted May 17, 2006, along with eight other people on charges of conspiracy to commit bank fraud and money laundering. The government sought the forfeiture of more than $25 million in proceeds from the alleged fraud. In the May indictment, Miller and the conspirators were accused of targeting home-buyers with poor credit, obtaining inflated appraisals, submitting false information to lenders, and manipulating home buyers to move into homes before closing and then increasing the purchase price at closing when buyers were under pressure to accept the terms for fear of losing their homes.
After he was indicted, Miller was released on his own recognizance pending trial. He was allowed to continue doing business under an arrangement in which he agreed to abide by all federal, state and local laws and to permit his business transactions to be monitored by Meara King & Company of Kansas City.
The new indictment (click here to read it) charges that:
Miller knew when he signed the monitoring agreement that he was in fact continuing to engage in criminal conduct through a new conspiracy with Stephen Vanetta, Hallie Irvin, James Sparks and others.
To induce Vanatta and Irvin to continue to cooperate in the conspiracy, Miller agreed to cosign a note to allow Vanetta and Irvin to buy a property at 415 Regency Cove, Lake Ozark, Mo. Miller agreed with Vanatta and Irvin that they would use part of the money to purchase from him a 1998, 45-foot Sea Ray boat known as “Bling Bling.” The conspirators knew that Vanatta and Irvin could not provide a legitimate history of assets and income to qualify for the loan and would have to create and present false documents to obtain the loan from First National Bank, Lake Ozark, Mo.
Miller, Vanatta and Irvin ran an office at 10777 Barkley, Overland Park, Kan., where they marketed homes under the names Miller Enterprises, Dutch Custom Homes, Star Land Development and Somerset Homes. They created advertisements soliciting home buyers with credit problems, promising no money down and financing by the builder.
At 10777 Barkley, the conspirators kept business records including credit information, loan application information, sales contracts and falsified rent verification documents that they referred to as “friend letters.” Among the records was evidence that the conspirators unilaterally increased the sales price on homes before closing, forged buyers’ signatures and caused buyers to submit “friend letters” that contained falsified rent history in order to obtain loans that they would not otherwise qualify to receive.
In August 2006, federal investigators obtained a subpoena for the conspirators’ business records based on information that “friend letters” containing falsified rent histories were being kept at 10777 Barkley. An employee who worked for the conspirators received the federal subpoena and notified Vanatta that she would retrieve the records to comply with the court order. When the employee got to the office, the files had been sanitized to remove the incriminating evidence.
James Sparks was a loan broker in the greater Kansas City area who referred home buyers to Miller, Vanatta and Irvin. He collaborated with Miller, Vanatta and Irvin by knowingly preparing and submitting false financial information for home buyers who were applying for loans from federally insured lenders. Sparks paid kickbacks to Irvin on behalf of Vanatta of 40 percent of loan closings to maintain business with Miller Enterprises. He provided down payments to home buyers and referred falsified and inflated sales contracts to appraisers selected by Vanatta knowing that they would inflate appraisals to cover altered sales prices. At Vanatta’s direction, he shredded and deleted incriminating documents.
In the 12-count indictment returned Wednesday, Miller, Vanatta, Irvin and Sparks each are charged with one count of conspiracy to commit bank fraud; Two counts of bank fraud; Two counts of engaging in unlawful monetary transactions; One count of destroying records in a federal investigation; Four counts of criminal contempt of a court order. In addition, Miller, Vanatta and Irvin are charged with one count of attempting to intimidate a federal witness by inducing Sparks to withhold records and testimony in a grand jury investigation.
In the 12th count, the government seeks the forfeiture of more than $5 million in proceeds from the crimes, including the assets of Miller Enterprises, Star Land Development, Somerset Homes, Dutch Custom Homes, HCI, Innovative Designs and any other entities organized by Miller, Vanatta, Irvin and Sparks. Property listed in the forfeiture count includes a residence at 425 Regency Cove, Lake Ozark, Mo.; a 1998, 45-foot Sea Ray boat known as “Bling Bling;” a 2006, 50-foot Sea Ray boat known as “Pipe Dream;” and a 1998 Piper Seneca V Aircraft.
Housing and Urban Development’s Office of Inspector General investigated the case. Assistant U.S. Attorney Richard Hathaway and Assistant U.S. Attorney Christine Kenney are prosecuting.
The Editor - Ian Shuter - DMS
James Sparks , 35, Lawson, Mo., pleaded guilty on Friday February 23, 2007 to one count of conspiracy to commit mortgage fraud. He will be sentenced on June 11, 2007.
The Editor - Ian Shuter - DMS
In the following press release Marietta Parker Acting U.S. Attorney for the District of Kansas announced that a Kansas City builder and two business associates have been convicted on federal charges of conspiracy, bank fraud, and money laundering in a $5 million mortgage fraud scheme, Acting U.S. Attorney Marietta Parker announced today.
The trial, which is the first of two trials developer F. Jeffrey Miller faces in federal court in Topeka, began Nov. 17. Jury deliberations started Dec. 16. On Thursday afternoon, the jury returned the following verdicts:
F. Jeffrey Miller, 47, Stanley, Kan.: Guilty on count 1 (conspiracy), count 5 (unlawful monetary transactions), count 9 (criminal contempt), and count 10 (criminal contempt).
He was acquitted on count 2 (bank fraud), count 3 (bank fraud), count 4 (unlawful monetary transactions), count 6 (destruction of records), count 8 (interfering with a witness), count 11 (criminal contempt), and count 12 (criminal contempt).
Stephen W. Vanatta, 45, Lenexa, Kan.: Guilty on count 1 (conspiracy), count 2 (bank fraud), count 4 (unlawful monetary transactions), count 5 (unlawful monetary transactions), count 9 (criminal contempt), and count 10 (criminal contempt).
He was acquitted on count 3 (bank fraud), count 6 (destruction of records), count 8 (interfering with a witness), count 11 (criminal contempt), and count 12 (criminal contempt).
Hallie Irvin, 29, Lenexa, Kan.: Guilty on count 1 (conspiracy), count 2 (bank fraud), count 4 (unlawful monetary transactions), count 5 (unlawful monetary transactions), count 9 (criminal contempt), and count 10 (criminal contempt).
Irvin was acquitted on count 3 (bank fraud), count 6 (destruction of records), count 8 (interfering with a witness), count 11 (criminal contempt), and count 12 (criminal contempt).
Sandra Joy Harris, 42, Overland Park, Kan., was acquitted on all counts.
A fifth defendant in the case, James Sparks, 37, Lawson, Mo., already pleaded guilty in September 2008. He is scheduled for sentencing Jan. 12, 2009.
The government is seeking the forfeiture of $5 million it alleges the conspirators obtained as a result of the fraud. That phase of the trial is set for Jan. 20 and Jan. 21, 2009.
Miller still faces federal charges of conspiracy, bank fraud and money laundering in a related case. Co-defendants in that case are Todd Earnshaw, Brian Rouse, Angela Parenza, Elizabeth Hessel, James Moser, Steve Middleton, Lanny Ross and Judy Brumble. Five of those defendants – Ross, Brumble, Middleton, Parenza and Hessel – have entered guilty pleas and are awaiting sentencing. As in any criminal case, a person is presumed innocent until and unless proven guilty. The outstanding indictment merely contain allegations of criminal conduct.
ILLEGAL ACTIVITIES CONTINUED
AFTER INITIAL INDICTMENT
Miller, a building contractor in Kansas, Missouri and other states, sold homes under the name of Miller Enterprises, Star Land and Development, Dutch Custom Homes and other companies. He first was indicted May 17, 2006, along with eight other people on charges of conspiracy to commit bank fraud and money laundering. The government sought the forfeiture of more than $25 million in proceeds from the alleged fraud. In the May 2006 indictment, Miller and the conspirators were accused of targeting home-buyers with poor credit, obtaining inflated appraisals, submitting false information to lenders, and manipulating home buyers to move into homes before closing and then increasing the purchase price at closing when buyers were under pressure to accept the terms for fear of losing their homes.
After he was indicted, Miller was released on his own recognizance pending trial. He was allowed to continue doing business under an arrangement in which he agreed to abide by all federal, state and local laws and to permit his business transactions to be monitored by Meara King & Company of Kansas City.
EVIDENCE PRESENTED AT TRIAL ON SECOND INDICTMENT
During the trial leading to Thursday’s verdict, prosecutors presented evidence that Miller’s illegal activities did not stop with his indictment in May 2006. Evidence showed Miller, Vanatta, Irvin and Harris participated in a conspiracy to obtain mortgages from federally insured lenders by submitting fraudulent information. The conspirators were responsible for 29 fraudulent loans totaling more than $5 million.
Evidence presented at trial showed that:
– Miller knew when he signed a monitoring agreement that he was in fact continuing to engage in criminal conduct through a new conspiracy with Stephen Vanetta, Hallie Irvin, James Sparks and others.
– Miller induced Vanatta and Irvin to cooperate in the conspiracy, Miller agreed to cosign a note to allow Vanetta and Irvin to buy a property at 415 Regency Cove, Lake Ozark, Mo. Miller agreed with Vanatta and Irvin that they would use part of the money to purchase from him a 1998, 45-foot Sea Ray boat known as “Bling Bling.” The conspirators knew that Vanatta and Irvin could not provide a legitimate history of assets and income to qualify for the loan. They created and presented false documents to obtain the loan from First National Bank, Lake Ozark, Mo.
– Miller, Vanatta and Irvin ran an office at 10777 Barkley, Overland Park, Kan., where they marketed homes under the names Miller Enterprises, Dutch Custom Homes, Star Land and Development and Somerset Homes. They created advertisements soliciting home buyers with credit problems, promising no money down and financing by the builder.
– James Sparks was a loan broker in the greater Kansas City area who referred home buyers by Miller, Vanatta and Irvin. He collaborated with Miller, Vanatta and Irvin by knowingly preparing and submitting false financial information for home buyers who were applying for loans from federally insured lenders. Sparks paid kickbacks to Irvin on behalf of Vanatta of 40 percent of loan closings to maintain business with Miller Enterprises. He provided down payments to home buyers and referred falsified and inflated sales contracts to appraisers selected by Vanatta knowing that they would inflate appraisals to cover altered sales prices.
Sentencing is set for May 4, 2009. The defendants face the following penalties:
– Conspiracy: A maximum penalty of 30 years in federal prison and a fine up to $250,000.
– Bank fraud: A maximum penalty of 30 years and a fine up to $1 million on each count.
– Unlawful monetary transactions: A maximum penalty of 10 years and a fine up to $250,000.
– Criminal contempt: A maximum penalty of 5 years and a fine at the court’s discretion.
Parker commended IRS-Criminal Investigation, Housing and Urban Development’s Office of Inspector General, Assistant U.S. Attorney Richard Hathaway, and Assistant U.S. Attorney Christine Kenney for their work on the case.
The Editor - Ian Shuter - DMS
Kansas City Builder F. Jeffrey Miller and two associates must forfeit more than $2.6 million in proceeds derived from conspiracy, bank fraud and money laundering, Acting U.S. Attorney Marietta Parker announced today (1/22/2009).