Former Mortgage Broker Sentenced to 25 Years in Prison in Multiple Mortgage Fraud Schemes Worth $23 Million

EDWARD WILLIAM FARLEY, 47, of Hoschton, Georgia, was sentenced today by United States District Judge Timothy C. Batten, Sr. to serve 25 years in federal prison on charges of bank fraud and conspiracy involving mortgage fraud, a real estate investment “Ponzi” scheme with over 100 victims, a check-kiting scheme, and bankruptcy fraud. WALTER JULIUS HERMANN, 41, of Dunwoody, Georgia, was also sentenced by Judge Batten to serve over two years in federal prison on charge of bank fraud involving real estate appraisals he submitted in the FARLEY mortgage fraud scheme.

United States Attorney Sally Quillian Yates said, “Not only did these different mortgage fraud schemes cause the lenders to suffer cash losses of $23 million, they contributed to the losses that many homeowners and communities have experienced because of the blight of empty houses. Homeowners think someone new is moving in, their houses will keep their value, and their community is growing. But just the opposite happens. Flipped houses turn into eyesores and the neighborhood quickly suffers. This creative mortgage fraudster is now going to federal prison.”

Brian Lamkin, Special Agent in Charge, FBI Atlanta, said, “While justice is served in the sentencing of Mr. Farley and his associates to federal prison, over a hundred victims suffering large monetary losses remain. Mr. Farley’s greed was far reaching in that he crossed over into several schemes to defraud. The mortgage fraud scheme run by Mr. Farley relied on others to pull off the scam, but he relied on the complete and ill-placed trust of the victims in an aggressive real estate Ponzi scheme offering investors high rates of returns. The FBI is pleased in the role that it played in removing from society these few individuals that preyed on so many.”

FARLEY was sentenced to 25 years in prison to be followed by five years of supervised release, and ordered to pay restitution of $24,131,857. FARLEY pleaded guilty to these charges on November 5, 2009.

HERMANN was sentenced to two years and nine months in prison to be followed by five years of supervised release, and ordered to pay restitution of $2,023,077. HERMANN was also prohibited from requesting reinstatement of his appraiser’s license during his prison sentence or during his supervised release. HERMANN pleaded guilty to this charge on December 16, 2009. There is no parole in the federal system.

According to United States Attorney Yates, the charges and other information presented in court: FARLEY, a former mortgage broker, operated through “Creative Home Search,” “Southern Land Partners,” “Georgia Land Group,” and “Global Mortgage” in Dunwoody and Norcross, Georgia, to defraud mortgage lenders through same-day “flips” of properties located in Buford, College Park, Conyers, Cumming, Dacula, Grayson, Lawrenceville, Lithonia, Norcross, Marietta, Roswell, Snellville, and Suwanee.

FARLEY paid appraiser HERMANN to fraudulently inflate the value of each property by $50,000 to $100,000, and recruited often unqualified investor/borrowers to purchase them from one of his companies. The loan applications of these investor/borrowers were often supported by false income, employment, bank deposits, bank statements, W2’s and/or leases. However, as is common with “flips,” FARLEY did not purchase the properties he was selling to the investors/borrowers until after the fraudulently obtained loan proceeds on the “second” “subsequent” purchase had been disbursed. During the “first” purchase, he purchased the properties for up to $100,000 less than the amount of the inflated mortgage loans he had arranged for the investor/borrowers in the “second” purchase. As a result of the defendant’s lies and manipulations, the lenders lost millions of dollars in this flip scheme.

In a separate real estate investment/Ponzi scheme, FARLEY operated under the name “Alliance Resource Management” (“ARM”) in Lawrenceville, Georgia, to conceal his new source of income from prior victims. He falsely represented that ARM was in the business of purchasing primarily residential properties which were being renovated and sold at a profit, when in reality ARM had insufficient equity and income to do so. Real estate investors and lenders, including private investors, corporate lenders, and banks were induced to participate through FARLEY’s false promises that their investments and loans were fully secured by a first security position in property, plus a personal guarantee, and sometimes title insurance. FARLEY also provided promissory notes falsely promising those ARM lenders an interest rate between 14 percent to 60 percent. The same property was used to “fully secure” multiple investors and lenders, causing losses in excess of $20 million. As is common in such Ponzi schemes, FARLEY made repayments to early victims from scheme proceeds generated from newer investors and lenders.

FARLEY also fraudulently obtained $1.2 million from Washington Mutual Bank in a check kiting scheme by transferring funds he did not have among several ARM bank accounts, and withdrawing scheme proceeds before the “insufficient funds” checks were returned. He then used $400,000 in investor funds solicited for property refinance loans to address his check-kiting problem. The evidence also showed that FARLEY diverted assets of ARM to himself after a bankruptcy petition was filed, and concealed that diversion from the United States Bankruptcy Court and ARM creditors.

A co-defendant related to FARLEY’s Ponzi scheme, TRENT EDWARD WRIGHT, 38, of Cumming, Georgia, was a real estate closing attorney used by FARLEY in his scheme to issue title policies without paying off prior security holders. WRIGHT pleaded guilty to mail fraud on December 17, 2009, and was sentenced on March 12, 2010, by Judge Batten to serve one year and nine months in prison, to followed by three years supervised release, and ordered to pay restitution of $2,409,760.

These cases were investigated by special agents of the Federal Bureau of Investigation with the assistance of the Office of the United States Trustee.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Atlanta Man Pleads Guilty to Making False Statements to the FDIC and Aggravated Identity Theft

BRENT MERRIELL, 37, of Atlanta, Georgia, pleaded guilty today in federal district court to charges of making false statements to the Federal Deposit Insurance Corporation (FDIC) and aggravated identity theft.

United States Attorney Sally Quillian Yates said, “This case demonstrates our resolve to prosecute those who attempt to cheat the FDIC as that agency works to secure the assets of hard-working Americans deposited in this country’s banks.The FDIC has limited resources to guarantee deposits across this country, and we will not ignore attempts by criminals like Merriell to steal money intended to protect honest citizens.”

According to United States Attorney Yates, the charges and other information presented in court: MERRIELL obtained millions of dollars in loans from Omni National Bank before Omni’s failure and takeover by the FDIC on March 27, 2009.Beginning in October 2009, when he was facing foreclosure on 14 different properties, MERRIELL asked the FDIC to forgive $2.2 million in Omni loan payoffs and allow him to “short sale” two properties each to seven new purchasers at greatly reduced amounts.

A “short sale” occurs when a lender agrees to the sale of property—on which the current owner has defaulted—to a third party for less than the full amount due on the loan.Lenders are willing to accept “short sales” as a means of reducing their losses on bad loans and assisting the distressed property owner. In this case, MERRIELL attempted to arrange short sales in the names of people whose identities had been stolen, and he submitted forged and counterfeited sales contracts and loan commitment letters to the FDIC in support of the sales.MERRIELL was arrested before he could complete these sales and ruin the credit of the persons whose identities he stole.

MERRIELL was indicted on the charges in December 2009. He could receive a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000 for the false statements crime, as well as a mandatory consecutive sentence of two years in prison and a fine up to $250,000 for the aggravated identity theft.In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Sentencing is scheduled for May 25, 2010, at 2 p.m. before United States District Judge Jack T. Camp.

Additional Omni-related prosecutions to date include:

MARK ANTHONY MCBRIDE, 43, of East Point, Georgia, who pleaded guilty on April 4, 2009, to fraudulently obtaining millions of dollars in mortgage loans from Omni and other lenders, is scheduled to be sentenced on April 1, 2010, at 2:00 p.m., before United States District Judge Jack T. Camp. MCBRIDE remains in jail while awaiting sentencing.

JEFFREY L. LEVINE, 68, of Atlanta, Georgia, who pleaded guilty on January 14, 2010, to causing materially false entries that overvalued bank assets to be made in the books, reports and statements of Omni, is scheduled to be sentenced on May 25, 2010, at 10:00 a.m., before United States District Judge Jack T. Camp.

DELROY OLIVER DAVY, 37, of Lithonia, Georgia, was charged in a Criminal Information on December 18, 2009, with bank fraud and conspiracy to commit bank, mail, and wire fraud in connection with a scheme to fraudulently obtain millions of dollars of mortgage loans from Omni and other lenders. At his initial appearance, DAVY waived indictment and is now scheduled to plead guilty on May 11, 2010, at 2 p.m.before United States District Judge Jack T. Camp.

These cases are being investigated by Special Agents of a Mortgage Fraud Task Force formed for Omni-related cases, made up of the Housing and Urban Development (HUD) - Office of Inspector General, the United States Postal Inspection Service, the FDIC -Office of Inspector General, the Office of the Special Inspector General for the Troubled Asset Relief Program, and the Federal Bureau of Investigation. The Task Force is continuing to investigate a number of Omni-related matters.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Former Georgia Closing Attorney Sentenced to Prison in Multimillion Dollar Mortgage Fraud

/PRNewswire/ -- Trent Edward Wright, 38, of Cumming, Ga., was sentenced today by U.S. District Judge Timothy C. Batten, Sr. to serve one year, nine months in federal prison on a mail fraud charge involving a mortgage fraud scheme which victimized lenders and title insurance companies.

Acting U.S. Attorney Sally Quillian Yates said of today's sentencing, "Lenders and title companies relied on this defendant as their closing attorney and agent and he was in a position of trust. He was supposed to pay off all prior encumbrances on properties to secure loans, and pass clear title as warranted by the title insurance. He didn't. Now he is going to federal prison."

Wright was sentenced to one year, nine months in prison to be followed by 3 years of supervised release, and ordered to pay $2,409,760 in restitution to the victims of the scheme. There is no parole in the federal system. Wright pleaded guilty to the mail fraud charge in a criminal information on Dec. 17, 2009.

According to Acting U.S. Attorney Yates and the information presented in court: In September, October and November 2006, Wright, then a real estate closing attorney operating from an office in Sugar Hill, Ga., closed approximately 17 loans in which lenders were falsely assured that all prior loans encumbering the properties securing their loans had been paid off. Those lenders then believed that they would be in first position to recoup their loan amounts from the sale of the properties should they go into foreclosure. Wright also wrote title insurance for these loans although he failed to pay off numerous prior recorded liens which encumbered the properties. Rather than ordering title searches and requesting pay off amounts from all prior lenders as required before the new loan closings, Wright either failed to order title searches or disregarded recorded prior encumbrances, causing over $2.4 million in losses. Wright closed his law practice in January 2007, and surrendered his license to practice law in December 2009.

A co-conspirator in a related case, Edward William Farley, 47, of Hoschton, Ga., operated through a company called Alliance Resource Management (ARM) located in Lawrenceville, Ga., as the borrower who received the proceeds from the 17 mortgage loans closed by Wright. In seeking funds for other loans, Farley told real estate investors, lenders, and banks, that they would get returns of 14% to 60%. Farley also promised them that they, too, would be first position to recoup their loan amounts from the sale of the properties should they go into foreclosure. Farley in fact used the same property to falsely "fully secure" multiple lenders on that same property. This fraud caused losses in excess of $25 million.

Farley pleaded guilty to bank fraud and conspiracy on Nov. 5, 2009, and is scheduled for sentencing before Judge Batten on April 14, 2010. Farley could receive a maximum sentence of 30 years in prison and a fine of up to $1,000,000 on each of the two counts, plus full restitution to all victims who have not been repaid. In determining the actual sentence, the court will consider the U.S. Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

These cases are part of President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

These cases were investigated by Special Agents of the FBI, assisted by the Office of the U.S. Bankruptcy Trustee.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter:  @GAFrontPage

Three Members of a “Reverse” Mortgage Fraud Ring Charged

JONATHAN ALFRED KIMPSON, 27, of Lithonia, Georgia, and GIA HARRIS, 26, of Atlanta, Georgia, have been indicted by a federal grand jury on charges of conspiracy to commit financial institution fraud involving so-called "reverse" mortgages. KIMPSON was also charged with aggravated identity theft and wire fraud. KELSEY TORREY HULL, 38, of Lithonia, Georgia, was charged on February 25, 2010, in a Criminal Information related to the same scheme, on a charge of financial institution fraud and conspiracy.

Acting United States Attorney Sally Quillian Yates said, “These defendants are charged with profiting from the corruption of an FHA-insured program designed to assist seniors with either cash for equity in their home or with funds toward the purchase of a home. These defendants allegedly altered real estate records, used fake documents, and posed as realtors. This abuse of the system took money away from qualified senior citizens who need these funds. With these charges, we have taken the first steps to stop this crime and to reverse the damage these crimes have caused.”

Inspector General Kenneth Donahue, U.S. Department of Housing and Urban Development (HUD) said, “HUD's Home Equity Conversion Mortgages Program was created to help senior citizens find greater financial security through FHA-insured reverse mortgages loans. The HUD Office of Inspector General will aggressively investigate those who would prey on America's senior citizens through reverse mortgage fraud, and encourages anyone having knowledge of such schemes to contact our HUD hotline at 1-800-347-3735.”

KIMPSON and HARRIS were indicted separately on February 24, 2010, and HULL was charged in a Criminal Information the next day. The indictments and information were unsealed upon the arrest of KIMPSON and HARRIS when they appeared before United States Magistrate Judge Linda T. Walker today and entered not guilty pleas to the charges.

According to Acting United States Attorney Yates, the charges and other information presented in court: Reverse mortgages were designed to assist with the financial security of seniors, ages 62 or older. There are two types of reverse mortgages. In a “refi-reverse,” the senior homeowner receives money from the lender for a portion of their equity in the home they own. In a “purchase money reverse,” the senior homeowner receives money from the lender toward the purchase of a new home. Under both types of reverse mortgages, the senior does not have to repay the lender for as long as the senior lives in the home. However, refi-reverse mortgages fund only a percentage of the property value, requiring significant equity to remain in the property, and purchase money reverse mortgages require a significant down payment from senior borrowers, to establish equity in the property.

The indictment charges that KIMPSON, HARRIS, and HULL, in an attempt to take advantage of the system, allegedly faked the required down payments by the senior citizen to establish the equity needed in the home to qualify for the FHA-insured reverse mortgages. The defendants did this through bogus “gift” letters in amounts between $50,000 and $105,000. They used fake “HUD-1" Settlement Statements reflecting the sale of non-existent assets closed by fictitious law firms to show the source of the required down payments. All down payments were actually supplied by the defendants, not the senior citizens, to be returned to the defendants upon the reverse loan closings, along with profits far in excess of the true sales prices of the properties. The return of such payments to the defendants was disguised as seller proceeds or lien payoffs. All such reverse mortgages included fraudulently inflated appraisals.

KIMPSON’s charge of aggravated identity theft and wire fraud relates to a scheme to use stolen identities of realtors. KIMPSON allegedly used realtor passwords obtained in his and relatives' names, and in the stolen identities of other realtors. With that information, he allegedly falsified Georgia MLS records to create fake property sales at inflated amounts to support many of the properties' fraudulent appraisals.

The KIMPSON indictment charges a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000, a wire fraud count with a maximum sentence of up to 30 years in prison and a fine of up to $250,000, and three aggravated identity theft counts which each carry a maximum sentence of up to two years in prison and a fine of $250,000 with at leas two years required to be imposed consecutive to the sentence on the other counts. The HARRIS indictment charges a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000. The HULL Criminal Information charges a bank fraud count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000, and a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000. In determining the actual sentence upon any convictions in these cases, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictments and information contain only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.

These cases are being investigated by Special Agents of the HUD-Office of Inspector General and the Federal Bureau of Investigation (FBI). Assistance in this case is also being provided by the U.S. Department of Treasury Financial Crimes Enforcement Network (FINCEN) and the Georgia Multiple Listing Service.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page
Follow us on Twitter: @GAFrontPage

Former Mortgage Broker Pleads Guilty to a $20 Million Mortgage Fraud, Real Estate Investment Scam, and Check-Kiting Scheme

EDWARD WILLIAM FARLEY, 47, of Hoschton, Georgia, today (November 5) pleaded guilty in federal district court to committing a mortgage fraud, a real estate investment “Ponzi” scam involving over 150 victims, a check-kiting scheme and a bankruptcy fraud.

According to Acting United States Attorney Sally Quillian Yates and the information presented in court: FARLEY, a former mortgage broker, operated through “Creative Home Search,” “Southern Land Partners,” “Georgia Land Group,” and “Global Mortgage” in Dunwoody and Norcross, Georgia, to defraud mortgage lenders through same-day “flips” of properties located in Buford, College Park, Conyers, Cumming, Dacula, Grayson, Lawrenceville, Lithonia, Norcross, Marietta, Roswell, Snellville, and Suwanee.

FARLEY paid an appraiser to fraudulently inflate the value of each property by $50,000 to $100,000, and recruited often unqualified investor/borrowers to purchase them from one of his companies. The loan applications of these investor/borrowers who were purchasing the properties were often supported by false income, employment, bank deposits, bank statements, W-2s, and/or leases. However, as is common with “flips,” FARLEY did not purchase the properties he was selling to the investor/borrowers until after the fraudulently obtained loan proceeds on the “second” purchase had been disbursed. At that time he purchased the properties for up to $100,000 less than the amount of the inflated mortgage loans he had arranged for the investor/borrowers in the “second” purchase, thereby causing lenders to lose millions of dollars.

In the real estate investment-Ponzi part of the scheme, FARLEY then began to operate under the name of “Alliance Resource Management” (“ARM”) in Lawrenceville, Georgia, to conceal his new source of income from prior victims. He falsely represented that ARM was in the business of purchasing primarily residential properties which were being renovated and sold at a profit, when ARM had insufficient equity and income to do so. Real estate investors and lenders, including private investors, corporate lenders, and banks, were induced through false promises that their investments and loans were fully secured by a first security position in property, plus a personal guarantee, and sometimes title insurance. FARLEY also provided promissory notes falsely promising ARM investors an interest rate between 14% and 60%. The same property was used to “fully secure” multiple investors and lenders, causing losses in excess of $20 million, with any victim repayments made from scheme proceeds generated from new investors and lenders in what is commonly known as a “Ponzi” scheme.

FARLEY also received $1.2 million from Washington Mutual Bank in a check-kiting scheme by transferring funds he did not have among several ARM bank accounts, and withdrawing scheme proceeds before the “insufficient funds” checks were returned. He then used $400,000 in investor funds solicited for property refinance loans to address the check-kiting problem.

Near the end of the scheme, FARLEY diverted assets of ARM to himself after a bankruptcy petition was filed, and concealed that diversion from the United States Bankruptcy Court and ARM creditors.

FARLEY was charged in a Criminal Information on October 15, 2009 with bank fraud and conspiracy, which included the bankruptcy fraud. He pleaded guilty to those charges today. He could receive a maximum sentence of up to 60 years in prison and a fine of up to $2,000,000, plus full restitution to all victims. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders. There is no parole in the federal system.

Sentencing is scheduled for February 3, 2010, at 10:30 a.m., before United States District Judge Timothy C. Batten, Sr.

This case is being investigated by Special Agents of the Federal Bureau of Investigation, assisted by the Office of the United States Trustee.

-----
www.fayettefrontpage.com
Fayette Front Page
www.georgiafrontpage.com
Georgia Front Page

Major Mortgage Fraud Scam Busted

DOSSEY RICHARDS, 36, of Atlanta, Georgia; LOVIE HOBBS, a/k/a “Lovie Hobbs Hagwood,” 47, of Lithonia, Georgia; MONTRA McKENZIE, 29, of Atlanta, Georgia; CYRUS DAVIS, 42, of Atlanta, Georgia; MARCUS VICKERS, 35, of Ellenwood, Georgia; RAYSHUAN HARMON, 27, of East Point, Georgia; and MICHELLE DAVILA, 35, of Atlanta, Georgia, have been arrested on a federal criminal complaint related to a mortgage fraud scheme.

United States Attorney David E. Nahmias said, “This is unfortunately another in a long series of major mortgage fraud cases in metro Atlanta. In this case, an entire condominium complex was gutted by fraud and greed. And as we have seen too many times before, one of the defendants charged is a closing attorney, someone the victim lenders retained and trusted to protect them against such fraud, but who instead became a participant in it. Mortgage fraud will remain a high priority for federal law enforcement in North Georgia.”

FBI Atlanta Special Agent in Charge Greg Jones said, “Today's (June 18, 2008) arrests illustrate clearly that the crime of mortgage fraud involves people from all walks of life who unwisely choose to collectively use their various positions and skills to rip off banks or other lending institutions. Mortgage fraud is a complex and prevalent crime problem that the FBI is well suited to address and intends to do just that.”

According to Nahmias and the information presented in court: The complaint alleges one count of conspiracy to commit wire fraud based on a mortgage fraud scheme.

Participants in the alleged fraud included DOSSEY RICHARDS, the owner of “Red Hair Investment Group, LLC;” MARCUS VICKERS, d/b/a “Title Depot of America,” a closing attorney in the Atlanta area; MONTRA McKENZIE and CYRUS DAVIS, both mortgage
brokers in the Atlanta area; MICHELLE DAVILA, an employee of Wachovia Bank; and
RASHUAN HARMON, who provided fraudulent appraisals as a part of the scheme. In
addition, LOVIE HOBBS, accused of being a “straw buyer,” is an employee with the Internal
Revenue Service (IRS)in Atlanta.

The properties that are the subject of the charges are units in the “Blue Sky” condominium complex located at 3106 Memorial Drive in Atlanta. It is alleged that the persons named in the criminal complaint conspired to defraud certain lenders by inflating the value of units at Blue Sky.

The fraudulent transactions outlined in the complaint occurred between March and May of 2008. The complaint alleges that the current (as of today) listings of 25 units in the complex range in price of between $2,000 and $28,750; however, the inflated sales prices used to fraudulently obtain inflated loans were between $135, 000 and $155,000. The participants charged include the property owner/seller DOSSEY RICHARDS as well as the straw buyer/borrower LOVIE HOBBS. As in most mortgage fraud cases, prior inflated loans obtained for units in Blue Sky have gone into foreclosure, causing losses to the victim lenders.

The defendants each face a possible maximum term of 30 years in federal prison. In determining the actual sentence, the Court will consider the United States Sentencing
Guidelines, which are not binding but provide appropriate sentencing ranges for most
offenders.

Members of the public are reminded that the indictment contains only allegations. A
defendant is presumed innocent of the charges and it will be the government's burden to
prove a defendant's guilt beyond a reasonable doubt at trial.

This case is being investigated by Special Agents of the FBI. Assistant United States Attorney Barbara Nelan is prosecuting the case.