4 Sentenced In Kentucky Mortgage Fraud Scheme

admin —  February 25, 2009 — 3 Comments

Edward “Ted” House, 38, Louisville, Kentucky; Nathan Frisbie, 39, Louisville, Kentucky; Khaliad Raheem, a/k/a Dwayne Cross, 42, Louisville, Kentucky; and Jerry Crenshaw, 36, Louisville, Kentucky, were sentenced on February 18, 2009, after previously pleading guilty to conspiracy to commit wire fraud and bank fraud in violation of 18 U.S.C.§ 371, bank fraud in violation of 18 U.S.C. § 1344, and wire fraud in violation of 18 U.S.C. § 1343. House and Frisbie were each sentenced to 18 months a piece and ordered to pay approximately $2.7 million in restitution to multiple mortgage lenders. Crenshaw was sentenced to 12 months and ordered to pay approximately $400,000 in restitution to multiple mortgage lenders. Raheem was sentenced to 25 months and ordered to pay approximately $1 million in restitution to multiple mortgage lenders.

The Indictment alleges that between January 1, 2000, and May 30, 2003, House, Frisbie, Raheem, and Crenshaw conspired with one another to defraud two residential mortgage lenders. The indictment identifies 24 separate fraudulent loan transactions, totaling approximately $1.5 million, in which the named defendants participated. The defendants defrauded the mortgage lenders through various means. Generally, they provided the lenders with false borrower background information in order to fraudulently induce the funding of individual loans. The defendants would provide lenders with false employment and financial information of an applicant in order to get a loan approved. In addition, they would often misrepresent the payment of earnest money or a deposit from a buyer to a seller. The lenders relied on all theses false representations in order to make its decision whether to fund a loan.

For example, House, Frisbie, and, Raheem were fraudulently involved in a $63,750 mortgage loan for the purchase of property located at 801 Dearborn Street, Louisville, Kentucky. In order to fraudulently induce the lender, ABN Mortgage Group, to fund the loan, they provided false and fraudulent information in support of the loan. The fraudulent information included the following: false and fraudulent employment information of the buyer and a closing statement that reflects a fraudulent sales price in that no earnest money or deposit was actually paid by the buyer. Count 1 of the Indictment alleges 21 separate instances in which the defendants conspired to defraud mortgage lenders through manners similar to the above example.

The indictment further charges the defendants with counts of wire fraud and bank fraud. For example, Count 2 charges House, Frisbie, and Crenshaw with obtaining a $59,850 loan for property located at 2712 Algonquin Parkway, Louisville, Kentucky, from National City Mortgage Company under false and fraudulent pretenses. They defrauded National City by providing false information regarding the buyer’s employment and financial information, as well as misrepresenting funds paid by the buyer to the seller. Counts 3 through 5 charge the defendants with similar schemes involving different properties and different lenders.

At the sentencing, the United States presented evidence that a the action of the defendants caused a $2.7 million total loss to multiple mortgage lenders. The defendants were ordered to pay full restitution for the amounts they were responsible.

The was prosecuted by Assistant United States Attorney Bryan Calhoun, and it was investigated by the Federal Bureau of Investigation.

 

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3 responses to 4 Sentenced In Kentucky Mortgage Fraud Scheme

  1. Elizabeth Henry January 22, 2016 at 5:31 pm

    I was Ted House’s wife. He forged my name on deeds with individuals, (Kevin Hickman, Diana Noble and Kamal Stoddard) I never met. According to the deeds I was buying and selling houses with the afore mentioned people. He thought nothing of involving me in his schemes and putting me at risk for prosecution. My job was caring for our daughter at the time the crimes were committed.
    I was never the target of the FBI investigation and was told I was only guilty of trusting my husband. In this particular case it was not only the banks and lenders that were defrauded it was myself as well. I was married or thirteen years and was left with $11.38 and forced into bankruptcy.

  2. Do I have a solid case to sue the Appraiser for damages for an inflated appraisal?
    Here is the gist.
    A Florida based promoter arranged a real estate investment deal for properties on outskirts of Nashville. It was a no-money down deal that used the credit of the investors to secure a construction loan, get the investment property built, then close with permanent financing once the homes were built. The sales price of the finished home was $208K. The appraised value was $250K. $42K of equity for the investor. The promoter is a real estate agent based in FL. The promoter arranged for the mortgage broker (licensed in FL) to qualify investors, obtain the construction loan financing and then the perm loan. The promoter also arranged for the builder in Nashville and also arranged for the appraiser. This project consists of 9 lots and all 9 investors are from out of state.
    The appraiser did a preconstruction appraisal that came in at $250K. There were 3 sales comps used in the appraisal. I paid $500 for the appraisal and signed the construction loan which allowed the builder to get started. The construction loan was for $170K. 4 months later, after the house was completed, the same appraiser did another appraisal for the permanent financing and it also came in again at $250K. This time, 2 additional sale comparables were used (for a total of 5 sales comps) in the 2nd appraisal. I was being pressured to close perm financing and things weren’t feeling right. I hired an independent appraiser to get a second opinion on the value. I was floored when the independent appraisal came in at $146,500. I told him that two previous appraisals came in at $250K with the latest appraisal just month earlier. He told me there were misrepresentations on the first 2 appraisals that inflated the value.
    I submitted a complaint to the Tennessee Real Estate Appraiser Commission (TREAC) against the original appraiser. The TREAC found the appraiser violated several provisions of the TN code including actions or omissions that involve dishonesty, fraud or misrepresentations. The appraiser signed a TREAC consent order agreeing to the findings, was fined $3,000 as a discipline measure.
    In later research that was made after the TREAC findings, I found out that there were many factual errors on the $250K appraisal for all 5 of the sales comparable properties involving size of the lots or property when compared l to the public records on the county assessor’s web site.
    I was the only investor who complained to the TREAC (the other 8 did not). The TREAC could not look at any other appraisals unless the other property owners submitted official complaints. I suspect that the same appraiser was used on the other 8 property lots (which are all in the same subdivision) and that the house size and style is the same as mine and that the appraisal value on the other 8 lots is exactly the same as mine. I also have suspicions the appraiser committed the same violations on the other 8 appraisals as were committed on mine. All the properties closed their construction loans on the same date with the same lender. Bottom-line, it seems like this was a deliberate conspiracy by the appraiser and others. Had I known the true value of the property, I would not have moved forwarded and executed the construction loan.
    There are more details, but the questions I have are as follows:
    1) Do I have a case against the appraiser? What are the maximum damages I can levy against the appraiser?
    2) If the promoter, mortgage broker, construction lender and builder all knew that the value of the property was much less than the $250K appraisal or the loan, are there potential violations of the law? Is this considered mortgage fraud?
    3) The construction lender is threatening to foreclose on me for the $170K mortgage loan. I have shared the details of my concern about the inflated appraisal before the TREAC report was finalized. Do I have a case against the construction lender to stop foreclosure?
    4) Assuming that several (or all) of the other 8 investors have similar misrepresentations on their appraisals, do we as a group have cause against the appraiser and other parties? Could this be a class action suit?
    Many thanks on your thoughts
    John

  3. Do I have a solid case to sue the Appraiser for damages for an inflated appraisal?
    Here is the gist.
    A Florida based promoter arranged a real estate investment deal for properties on outskirts of Nashville. It was a no-money down deal that used the credit of the investors to secure a construction loan, get the investment property built, then close with permanent financing once the homes were built. The sales price of the finished home was $208K. The appraised value was $250K. $42K of equity for the investor. The promoter is a real estate agent based in FL. The promoter arranged for the mortgage broker (licensed in FL) to qualify investors, obtain the construction loan financing and then the perm loan. The promoter also arranged for the builder in Nashville and also arranged for the appraiser. This project consists of 9 lots and all 9 investors are from out of state.
    The appraiser did a preconstruction appraisal that came in at $250K. There were 3 sales comps used in the appraisal. I paid $500 for the appraisal and signed the construction loan which allowed the builder to get started. The construction loan was for $170K. 4 months later, after the house was completed, the same appraiser did another appraisal for the permanent financing and it also came in again at $250K. This time, 2 additional sale comparables were used (for a total of 5 sales comps) in the 2nd appraisal. I was being pressured to close perm financing and things weren’t feeling right. I hired an independent appraiser to get a second opinion on the value. I was floored when the independent appraisal came in at $146,500. I told him that two previous appraisals came in at $250K with the latest appraisal just month earlier. He told me there were misrepresentations on the first 2 appraisals that inflated the value.
    I submitted a complaint to the Tennessee Real Estate Appraiser Commission (TREAC) against the original appraiser. The TREAC found the appraiser violated several provisions of the TN code including actions or omissions that involve dishonesty, fraud or misrepresentations. The appraiser signed a TREAC consent order agreeing to the findings, was fined $3,000 as a discipline measure.
    In later research that was made after the TREAC findings, I found out that there were many factual errors on the $250K appraisal for all 5 of the sales comparable properties involving size of the lots or property when compared l to the public records on the county assessor’s web site.
    I was the only investor who complained to the TREAC (the other 8 did not). The TREAC could not look at any other appraisals unless the other property owners submitted official complaints. I suspect that the same appraiser was used on the other 8 property lots (which are all in the same subdivision) and that the house size and style is the same as mine and that the appraisal value on the other 8 lots is exactly the same as mine. I also have suspicions the appraiser committed the same violations on the other 8 appraisals as were committed on mine. All the properties closed their construction loans on the same date with the same lender. Bottom-line, it seems like this was a deliberate conspiracy by the appraiser and others. Had I known the true value of the property, I would not have moved forwarded and executed the construction loan.
    There are more details, but the questions I have are as follows:
    1) Do I have a case against the appraiser? What are the maximum damages I can levy against the appraiser?
    2) If the promoter, mortgage broker, construction lender and builder all knew that the value of the property was much less than the $250K appraisal or the loan, are there potential violations of the law? Is this considered mortgage fraud?
    3) The construction lender is threatening to foreclose on me for the $170K mortgage loan. I have shared the details of my concern about the inflated appraisal before the TREAC report was finalized. Do I have a case against the construction lender to stop foreclosure?
    4) Assuming that several (or all) of the other 8 investors have similar misrepresentations on their appraisals, do we as a group have cause against the appraiser and other parties? Could this be a class action suit?
    Many thanks on your thoughts
    Displeased Investor

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