Emanuel County Couple Sentenced in Mortgage Fraud Scheme

BRIAN STEPTOE, 41, and NATASHA STEPTOE, 38, both from Emanuel County, Georgia, were sentenced September 27 in federal district court for their roles in a mortgage fraud scheme that occurred in Swainsboro, Georgia.

“The U.S. Attorney’s Office will continue to work with law enforcement partners to investigate and prosecute those who engage in financial crimes, especially crimes such as mortgage fraud, that affect the heartland of our country,” stated United States Attorney Edward J. Tarver.

Evidence presented during their guilty pleas revealed that the Steptoes, with the assistance of others, knowingly submitted a false loan application and other documentation to Bank of America with regard to a $400,000 home loan. The investigation revealed that the Steptoes’ scheme was to defraud Bank of America in order to pocket sizeable sums of money for themselves and others. The property went into foreclosure soon after it was sold and remains on the market to this day.

BRIAN STEPTOE was sentenced to fifty-four (54) months, $410,236.59 in restitution to be paid jointly and severally with his co-defendants, and five (5) years of supervised release. NATASHA STEPTOE was sentenced to twenty (20) months, $340,297.54 in restitution to be paid jointly and severally with her co-defendants, and three (3) years of supervised release.

This case was brought in coordination with 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.

U.S. Attorney Tarver recognized the extensive efforts of the FBI in bringing this criminal activity to light, and particularly praised the efforts of Statesboro FBI Special Agent Cornelius Harris, who investigated this case.

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Former UGA Football Star and NFL Player Arthur Marshall Sentenced to 69 Months in Prison for Mortgage Fraud

ARTHUR JAMES MARSHALL, JR., 41, from Augusta, Georgia, was sentenced late June 14 by United States District Judge J. Randal Hall to 69 months in prison and five years of supervised release for his mortgage fraud convictions. MARSHALL was also ordered to pay more than $3.6 million restitution to his victims.

Before imposing sentence, Judge Hall remarked that mortgage fraud was a major factor in pushing the country’s economy to “the brink of depression.”

United States Attorney Edward J. Tarver stated, “Mortgage fraud poses a significant threat to our nation’s financial system. This prosecution demonstrates the ongoing response of the United States Attorney's Office to protecting the integrity of the financial system of this nation. Relying on the joint efforts of federal, state and local law enforcement, this office will aggressively prosecute those who defraud financial institutions and other victims of mortgage fraud.”

Evidence presented at sentencing revealed that MARSHALL falsified sales contracts, personal finance records and other documents as part of his mortgage fraud scheme. The victims of MARSHALL’s scheme included banks, a family who never got a property title from MARSHALL after paying him $100,000 for a home, and members of the American Legion.

This case was brought in coordination with 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.

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First Guilty Plea Related to Fraudulent Loans Funded by Failed Bank

MARK ANTHONY MCBRIDE, 43, a/k/a “Charles Conley,” “Charles Conley, Jr.,” and “Manuel Evans,” of East Point, Georgia, pleaded guilty April 24 in federal district court to a conspiracy to obtain millions of dollars in fraudulent mortgages and other loans and to a bankruptcy fraud designed to stay foreclosures on dozens of fraudulently obtained properties.

United States Attorney David E. Nahmias said, “We are moving with dispatch to review bank failures and to investigate and prosecute any frauds we find that were related to failed banks. This case is disturbing because dozens of banks, including the now-failed Omni National Bank, were damaged by this defendant's long-running conspiracy. Moreover, the U.S. Bankruptcy Courts in three states were abused by the defendant's eight fraudulent bankruptcy filings designed to delay property foreclosures and collection of scheme proceeds by his debtors.”

FDIC Office of Inspector General Special Agent in Charge, Southeast Region, C. Ed Slagle said, “It is a priority of the FDIC Office of Inspector General to investigate and assist the United States Attorneys' Offices in prosecuting offenses which relate or contribute to the failure of so many financial institutions.”

Martin D. Phanco, Inspector in Charge, U. S. Postal Inspection Service in Atlanta, said, “The U.S. Postal Inspection Service found this case to be especially disturbing due in part to the illegal use of the U. S. mails in furtherance of their fraudulent scheme; which, has ultimately led to the failure of so many banks. This overt criminal act is a prime example of the type of rampant financial fraud that currently exists within our society, and has subsequently contributed to the failure of the nation's economy. Make no mistake, this will not be tolerated or accepted by the American public nor the U.S. Postal Inspection Service.”

According to United States Attorney Nahmias and the information presented in court: In 2001, immediately after being released from prison, MCBRIDE began a mortgage fraud scheme that continued through 2002, when he had to report for service of another federal prison sentence. As soon as he was released again from prison in November 2006, MCBRIDE continued his fraud by completing fraudulent mortgage loans, vehicle loans, lines of credit, credit cards and other extensions of credit in his name, in his aliases, in a number of stolen identities, including those of his children, and in the identities of other unqualified borrowers. These fraudulent loans continued until MCBRIDE was arrested in September 2008 for violating his supervised release. Dozens of banks and other lenders, including the recently failed Omni National Bank, funded fraudulent loans for MCBRIDE.

MCBRIDE generated mortgage loan proceeds for himself using inflated valuations for properties, securing the loans and sharing those proceeds with his straw borrowers and other conspirators. He was able to retain proceeds from the frauds by filing eight bankruptcy cases in Georgia, Alabama and South Carolina. The last such fraudulent filing was a May 2008 petition in Atlanta, filed in a bogus name and stolen Social Security Number. The petition falsely stated he had never filed bankruptcy in the past.

MCBRIDE was charged in a two-count Criminal Information filed today. The Information charged MCBRIDE with a conspiracy which encompasses the 10-year long fraud scheme and with one count of bankruptcy fraud. He pleaded guilty to those charges today. He could receive a maximum sentence of 35 years in prison and a fine of up to $1,250,000. 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 July 9, 2009, at 10 a.m., before United States District Judge Jack T. Camp.

This case is being investigated by the recently formed Northern District of Georgia Mortgage Fraud Task Force, comprised in this case of the U. S. Postal Inspection Service, HUD OIG, FDIC OIG and FBI, and assisted by the Office of the U.S. Bankruptcy Trustee.

Assistant United States Attorneys Gale McKenzie and Chris Bly are prosecuting the case.

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Georgia Loan Officer Sentenced for Mortgage Fraud

ANDREW JOHN SMITH, 29, of Cleveland, Georgia, was sentenced April 9, 2009, by United States District Judge William C. O’Kelley to serve over 3 years in prison on a federal charge of conspiracy to commit bank, wire and mail fraud arising from a mortgage fraud scheme.

United States Attorney David E. Nahmias said of the case, “We will continue to use undercover ‘sting’ operations to stop the closing of fraudulent loans before the proceeds are disbursed, especially when a loss of over a million dollars to such frauds could seriously impact the lending banks during these difficult times. We remain committed to the prosecution of mortgage frauds, which has so devastated our local and national economy, and anyone involved in such fraud should fear that everyone else involved in the deal may be cooperating with the FBI.”

FBI Atlanta Special Agent in Charge Gregory Jones said, “This investigation should send a clear message to those criminals involved in mortgage fraud that the FBI may also be at the closing with cameras rolling and a set of handcuffs.”

FDIC-OIG Special Agent in Charge, Southeast Region, C. Ed Slagle said, “This investigation should serve as a warning to those who continue to attempt mortgage frauds in ever increasing amounts at a time when the community has already been so negatively impacted by such frauds.”

SMITH was sentenced to 3 years, 6 months in prison to be followed by 5 years of supervised release. The court has ordered SMITH to pay restitution but has not yet set a final amount. SMITH pleaded guilty to the charge on January 9, 2009.

According to United States Attorney Nahmias and information presented in court: In early 2007, SMITH was employed as a part-time Loan Officer by United International Mortgage (UIM) in Buford, Georgia, when he originated a fraudulent loan for his own residence. SMITH was later recruited by an UIM co-conspirator not named in the indictment to refinance UIM loans with other lenders, as well as to sell UIM foreclosed properties on which construction was not complete to unqualified straw borrowers funded by other lenders. SMITH’s own loan for his residence had been included in the UIM portfolio of non-performing loans facing imminent foreclosure.

On June 9, 2008, SMITH and his UIM co-conspirator were caught in an FBI/FDIC-OIG (Federal Deposit Insurance Corporation-Office of Inspector General) “sting” after SMITH had arranged for the sales price of a Pendergrass, Georgia, property to be inflated from $2 million to $4 million. Prior to his arrest, SMITH submitted fraudulent documents to federally insured banks to arrange a $3.2 million purchase money mortgage loan to finance the purchase of the property. SMITH then negotiated a side agreement with the sellers (who were, unbeknownst to SMITH, cooperating with the FBI) for the secret kickback of $2 million to his shell company. SMITH was arrested by federal agents at the property during a subsequent meeting to negotiate his multi-million dollar kickback for the “deal.”

Notably, the property at issue was sold for its true market value of $1.8 million immediately upon conclusion of the FBI’s sting operation.

The FBI investigation is ongoing.

This case was investigated by Special Agents of the Federal Bureau of Investigation and the Office of Inspector General, Federal Deposit Insurance Corporation.

Assistant United States Attorney Gale McKenzie prosecuted the case.

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Attorney Sentenced to almost Five years in Federal Prison for Role in Mortgage Fraud Scheme

Mary Reagan, 41, of Alpharetta, Georgia, was sentenced today to serve almost five years in federal prison for her role in a multi-million dollar mortgage fraud scheme. Reagan pleaded guilty in July 2008 shortly before she was to go to trial, and agreed to assist the government in the prosecution of the scheme.

"As is unfortunately true of many mortgage fraud schemes that we have seen, this case involves an attorney who should have known and done better," said United States Attorney David E. Nahmias. "This prosecution serves as another warning to closing attorneys and others in positions of trust in the real estate industry. If you become involved in mortgage fraud, you will not just lose your license, you may end up in a federal prison."

Reagan was sentenced to four years, nine months in federal prison, to be followed by five years of supervised release. Reagan was also ordered to pay full restitution of over $4,000,000 and an exact amount will be determined by the court at a later date.

According to United States Attorney Nahmias and information presented in court: From mid-2004 through June 2006, Reagan was an attorney, doing business as The Reagan Law Group, closing millions of dollars of fraudulently inflated mortgage loans being provided to unqualified straw buyers. Reagan was the attorney responsible for representing the mortgage lenders at the closing table. When the loans closed, Reagan instead transferred millions of dollars of the inflated loan proceeds to her co-conspirators by falsifying closing documents, such as the HUD-1 settlement statements, and concealing from the lenders the true recipients and purposes of payments made in connection with the closing.

Reagan also concealed from the lenders that the unqualified straw buyers did not make sizeable down payments required by lenders as a condition of closing. On one property, Reagan falsified title work and other documents to conceal from a lender that the property was already encumbered by two mortgages at an inflated price, ensuring that the lender's security interest in the property was worthless.

This case was investigated by Special Agents of the Federal Bureau of Investigation. Assistant United States Attorneys Doug Gilfillan and Barbara E. Nelan prosecuted the case.

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Allen Sentenced to More Than 11 Years in Federal Prison in Mortgage Fraud Scheme

ADRIENE NEWBY-ALLEN, 40, of Alpharetta, Georgia, was sentenced November 10, 2008, to serve more than 11 years in federal prison for her role in a multi-million dollar mortgage fraud scheme. NEWBY-ALLEN pleaded guilty in July 2008 shortly before trial.

United States Attorney David E. Nahmias said, “This case is the result of a FBI sting operation that uncovered a mortgage fraud scheme with far reaching effects. This defendant, along with others, were on all sides of a complex paper trail that circled a number of criminal acitivies.”

NEWBY-ALLEN was sentenced to 135 months in federal prison to be followed by 5 years of supervised release, and ordered to pay $5,278,703 in restitution.

According to United States Attorney Nahmias and information presented in court: From mid-2004 through March of 2006, NEWBY-ALLEN conducted a mortgage fraud scheme that siphoned off millions of dollars in fraudulently inflated mortgage loans being provided to unqualified straw buyers, one of whom was her husband and co-defendant, BRINSON ALLEN. ALLEN was found guilty of multiple charges relating to the fraudulent scheme on July 30, 2008, by a federal jury after a ten-day trial and will be sentenced at a later date.

NEWBY-ALLEN inflated the sale prices of residential real estate and arranged for the submission of false loan applications, documents and other information to mortgage lenders to obtain loans for the unqualified straw buyers. When the loans closed, NEWBY-ALLEN and her co-conspirators received millions of dollars of the mortgage loan proceeds through NEWBY-ALLEN’S shell company, “Swiss Acquisitions,” by using misrepresentations about disbursements of the loan proceeds. NEWBY-ALLEN personally received more than $1 million of the loan proceeds obtained in the fraudulent scheme.

Assistant United States Attorneys Doug Gilfillan and Barbara E. Nelan are prosecuting the case.

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Former Georgia Real Estate Agent Sentenced to 14 Years in Federal Prison for Mortgage Fraud

Joseph Sterling Jetton, 61, of Woodstock, Ga., was sentenced October 10, 2008, to 14 years in federal prison to be followed by five years of supervised release and ordered to pay $11,194,300 in restitution on charges of conspiracy, bank fraud, wire fraud and money laundering related to a multi-million dollar mortgage fraud scheme. Jetton was convicted by a jury on Nov. 26, 2007, after a three week trial, and was sentenced today by U.S. District Judge Beverly B. Martin.

According to U.S. Attorney David E. Nahmias and the information presented in court, Jetton orchestrated a mortgage fraud scheme that involved millions of dollars in fraudulently inflated mortgage loans being provided to unqualified straw borrowers from late 2004 through early 2006. The straw borrowers were paid through shell companies as much as $600,000 per property from the fraudulently obtained loan proceeds. Jetton wrote sales contracts that failed to disclose that the sales prices of the residences had been inflated and that hundreds of thousands of dollars out of the loan proceeds were going to the buyers and others. Jetton personally derived more than a $1 million in commissions from the mortgage fraud scheme.

"This defendant was a licensed real estate agent. Using his specialized knowledge of real estate and residential mortgage financing, he orchestrated a mortgage fraud scheme that has caused millions of dollars in losses to lenders and untold damage to neighborhoods," said U.S. Attorney Nahmias. "Nearly a dozen people have been sentenced to federal prison for their involvement in this defendant's scheme. The long prison sentence handed down today accounts for his leadership role in the scheme and the misuse of his position as a real estate agent to commit the fraud. We will continue to work with federal, state and local law enforcement agencies to vigorously investigate and prosecute mortgage fraud schemes, especially those perpetrated by professionals in the real estate industry."

Eleven other defendants have already been sentenced to prison terms in related cases, with sentences ranging from eight months to more than ten years in federal prison. Raymond Joseph Costanzo Jr., 63, of Clayton, Ga. -- a closing attorney in the scheme -- was sentenced to three years and five months in federal prison. A loan broker in the scheme, Olympia D. Ammons, 31, of St. Louis, Mo., was sentenced to five years and three months in prison to be followed by four years of supervised release, and was ordered to pay $7,549,044 in restitution.

Assistant U.S. Attorneys Gale McKenzie, William L. McKinnon Jr. and Douglas Gilfillan prosecuted the case. This case was investigated by Special Agents of the FBI.

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