7 Indicted in Alleged $35 Million Mortgage Fraud Scheme

admin —  July 23, 2010 — 3 Comments

Kenneth Steward, 44, South Holland, Illinois, was arrested on federal charges alleging that he and six co-defendants participated in a $35 million mortgage fraud scheme involving more than 120 residential properties located primarily on the city’s south side. Steward who bought and sold homes and recruited others to act as residential purchasers, and his co-defendants allegedly caused various lenders and financial institutions to lose at least approximately $16 million on mortgage loans that were not repaid by the borrowers or fully recovered through subsequent foreclosure sales.

Steward who operated various businesses including a property renovation company called Jireh Development, South Holland, Illinois was charged with mail, wire and bank fraud in an 18-count indictment that was returned by a federal grand jury and unsealed following his arrest. Steward remains in federal custody pending a detention hearing before U.S. Magistrate Judge Michael Mason in U.S. District Court.

Six other defendants, including two licensed loan officers and an unlicensed loan officer and mortgage originator, were each charged with one or more counts of fraud in the same indictment. They are scheduled to be arraigned before Magistrate Mason.

The scheme allegedly ran between June 2004 and May 2008, said Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, who announced the charges with Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, and Thomas P. Brady, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago.

For generations, home ownership has been one of the measures of the American Dream,” Mr. Brady said. “Some individuals have turned to criminal activity to profit from these circumstances. The U.S. Postal Inspection Service, along with our law enforcement partners, is committed to aggressively pursuing those who seek to actively engage in mortgage fraud schemes at the expense of others.

Also indicted were James Wilson, 62, Chicago, Illinois, who allegedly created false documents and sold them to clients to enable them and others to fraudulently obtain mortgage and automobile loans; Vanessa Mayes, 41, Chicago, Illinois an unlicensed loan officer; William Bart Rusk, 52, Woodridge, Illinois, a licensed loan officer; Stephen Iwerebon, 45, Oak Park, Illinois, who owned an unnamed real estate company that purchased, renovated and re-sold residences; Emmit Suddoth, 38, Chicago, Illinois, who also bought and sold homes and operated purported property management companies; and Lennell Willis, 47, Frankfort,Illinois, another licensed loan officer.

According to the indictment, the defendants provided false residential real estate loan applications and supporting documents to banks and lenders on behalf of prospective purchasers, knowing that these individuals, whom they had recruited, could not, or did not intend to, fully repay the loans. Steward and Suddoth and others referred and recruited individuals to buy homes by promising potential purchasers that they would not have to use any of their own money for down payments or deposits; they would be paid to act as purchasers and attend closings; in some instances, they would not have to make any payments on the mortgages obtained; and the homes were ready for occupancy or would be renovated.

The charges are part of a continuing effort to investigate and prosecute mortgage fraud in northern Illinois and nationwide under the umbrella of the inter-agency Financial Fraud Enforcement Task Force, which was established to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.

The indictment seeks forfeiture of $35 million. The government is being represented by Assistant U.S. Attorneys Lisa Noller and Megan Church. Since 2008, more than 170 defendants have been charged in two dozen cases in Federal Court in Chicago and Rockford with engaging in various mortgage fraud schemes involving more than 1,000 properties and $275 million in potential losses, signifying the high priority that federal law enforcement officials give mortgage fraud in an effort to deter others from engaging in crimes relating to residential and commercial real estate. Just last month, local charges resulting from Operation Stolen Dreams involved a total of 17 defendants charged in seven separate mortgage fraud cases in Federal Court in Chicago.

The Financial Fraud Enforcement 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. For more information on the task force, visit: www.StopFraud.gov.

Each count of bank fraud, or mail or wire fraud affecting a financial institution, carries a maximum penalty of 30 years in prison and a $1 million fine and restitution is mandatory.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

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3 responses to 7 Indicted in Alleged $35 Million Mortgage Fraud Scheme

  1. Wm. A. McCann July 28, 2010 at 4:58 pm

    It seems like this type of fraud could not have happened without the complicity of one or more real estate appraisers; however none were named in this article??

  2. they since you are trying to stop mortgage fraud in illnois you better try indiana there are some serious kidnappers in the seymour indiana area who did come from the illnois area and go to the casionos beating up the poeple for there winnings in indiana money is not all this ku klux klan does of white men they do forge peoples name s to checks home loans get there car insurance in there names has it taqking out of ther bank accounts in centra bank scott county state bank madison bank louisville bank they rob brinks trucks from other states las vegas is one of them, running car thieving rings in clarksvill indiana is rick lintini and his gang and thats not all he runs faorging people name to asset checks many corporations in seymour are guilty of money laundering in `18 wheelers from state to state going into cnanada going into europe with bank robbery money robbing malls banks and its the same gang having it all done

  3. I know serious fraud is going in the banks in scottsburg indiana pamela name is being forged on many cds of 25 thousand 50 thousand and has because she wrote many movies and did many cartoons that were stolen by walt d to disney corporation with many people beating her up to keep making a living off her finding out that every time she leaves the state of indiana they stalk on a continuous basis forcing her back to this community and has to be embezzling money in her name forging her name in florida they were hid out living off of money they had attacked this child for and soon learned they set her up in minnasoto to have her murdered by others in that state after going there from indiana to minnosata state college to force her out of college now they have the gall to hold her prisoner in the same town aat the age of 47

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