12 Indicted for Fraud Scam Involving 27 Properties

Allison Tussey —  February 10, 2011 — 2 Comments

A 29-count federal grand jury indictment was returned against 12 people accused of taking part in a mortgage fraud scheme involving 27 properties throughout the Cleveland, Ohio area:

Stephen S. Holman, 40, Cleveland, Ohio; Timothy Holman, 44, Reminderville, Ohio; Deborah Jordan, 45, Euclid, Ohio; Reda Maxie, 50, Vermilion, Ohio; Paula Nezat, 55, Parma, Ohio; Robert McCoy, 50, Willoughby, Ohio; Brian R. Chenoweth, 45, Cleveland; David Davis, 42, Richmond Heights, Ohio; Phillip O. Taylor, 41, Long Beach, California; David Richards, 49, Cleveland Heights, Ohio; Carl Pannell, Jr., 38, Cleveland, and Darryl Williams, 52, South Euclid, Ohio.

From March 2004 through June 2006, the defendants conspired to fraudulently purchase 27 properties in the Cleveland area, securing more than $6.2 million in mortgage loans, according to the indictment.

The indictment charges one count of conspiracy to commit mail fraud, 27 counts of mail fraud, and one count of money laundering.

Lenders lost a total of approximately $3,328,107 as a result of the scheme, according to the indictment.

The indictment further alleges that as part of the conspiracy, Stephen S. Holman, a loan officer for Buckeye Lending, Inc. and United Mortgage Group, completed and submitted fraudulent loan applications in the names of straw buyers/investors (individuals who applied for a mortgage loan on a property, but never intend to live in the house or to keep it as an investment property).

Deborah Jordan also worked for Buckeye Lending and assisted Stephen Holman submit fraudulent loan applications, according to the indictment. Stephen S. Holman and his brother, Timothy Holman, induced the straw buyers/investors to allow the properties to be put in their names by promising they could purchase the properties with no money down and would receive cash back at closing, according to the indictment.

The straw buyers/investors included David Richards, Carl Pannell, Jr., and Darryl Williams. Timothy Holman also purchased several properties at a reduced price because of the poor condition of the properties, did little to no work to rehabilitate the properties and, then, sold the properties to straw buyers/investors at an inflated price so that he could retain the excess loan proceeds at closing without a legitimate reason to do so, according to the indictment.

The straw buyers/investors signed their loan applications knowing that the loan applications contained false information about their employment, income and assets, as well as concealed the true source of their down-payment funds. Although the loan applications and settlement statements stated to the lenders that the straw buyers/investors provided the down-payment money from their personal bank accounts, the down payment funds were actually provided by either Brian R. Chenoweth, Robert McCoy or David Davis, according to the indictment.

The indictment alleges that Phillip O. Taylor assisted in the scheme by falsely verifying employment for the straw buyers/investors through his company, Lakeside Builders, Ltd., in order for them to qualify for mortgage loans.

The indictment further alleges that Paula Nezat and Reda Maxie served as the title agents for 18 of the properties through their company, ATA Title. Nexat and Mazie, as title agents, submitted false settlement statements to the lenders concealing the true source of the down payment funds and the true distribution of the mortgage loan proceeds at closing.

The defendants’ fraudulent conduct induced Meritage Mortgage Corporation, Finance America, LLC, Master Financial, Security Connections, FMF Capital, LLC, Long Beach Mortgage Company, Novastar Mortgage, Inc., New Century Mortgage Corporation and Argent Mortgage Company, LLC to fund the mortgage loans.

If convicted, defendants’ sentences will be determined by the Court after review of factors unique to this case, including defendants’ prior criminal records, if any, each defendant’s role in the offense, and the characteristics of the violation. In all cases the sentences will not exceed the statutory maximum and in most cases they will be less than the maximum.

Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced the charges.

This case is being prosecuted by Assistant United States Attorney Mark S. Bennett, following an investigation by the Cleveland Divisions of the U.S. Postal Inspection Service and Internal Revenue Service Criminal Investigation.

An indictment is only a charge and is not evidence of guilt. Defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

 

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2 responses to 12 Indicted for Fraud Scam Involving 27 Properties

  1. Adirondack Waterfront Property February 12, 2011 at 5:19 am

    The idea of owning rental real estate seems to be gaining popularity as investors tire of the swoops and swoons of the stock market. As I pointed out in a separate column, not everyone has what it takes to be a landlord. But those who do may find rentals to be a good way to build wealth.Once you’ve made the decision to buy rental property, your real work begins. Finding a profitable rental property usually takes time, connections and plenty of research.

  2. Does anyone have any evidence of fraud involving Marilyn Morgan of MERS, Notary Joann Tutt of Texas or Security Connections Inc.?

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