Calvin Davis, 47, New Orleans, Louisiana, pled guilty to a three count Bill of Information in United States District Court in connection with an on-going federal investigation into a “house-flipping” scam.
As previously reported on Mortgage Fraud Blog, the factual basis filed in court documents describes a “housing flipping” scheme and the role Davis had in that scheme. Davis admitted in that document that he purchased the properties, obtained fraudulent appraisals and arranged for straw buyers to purchase them. Davis then sent the strawbuyers to Citywide Mortgage to obtain loans by using fraudulent employment and credit documents as well as false tax returns. These loans were approved by Michelle Cochrane, a former underwriter at Citywide Mortgage. Cochrane recently admitted at her guilty plea, that she participated in the house flipping scheme with Davis and others. Cochrane pled guilty to approving fraudulent FHA/HUD loan applications for the “straw buyers” while employed at Citywide Mortgage. Cochrane also admitted that after she approved the fraudulent loan applications, the loans were forwarded to the HUD offices in Denver Colorado. Based on the fraudulent applications, the Department of Housing and Urban Development insured the loans. Citywide then sold the loans to another mortgage company. Various properties eventually went into default and HUD became responsible for paying off those loans. According to a plea letter filed in Court, Davis is expected to provide cooperation. Davis will remain on bond while awaiting sentencing.
Davis is the sixth person to plead guilty to charges stemming from this investigation. Michelle Cochrane recently pled guilty to Conspiracy to Make False Statements in a HUD transaction. Robert Green pled guilty to an identical charge and admitted that he prepared the fraudulent tax returns. Three “straw buyers” Timothy Falls, Dennis Addison and Dennis LeBlanc have pled guilty to Making False Statements in HUD Transaction. All defendants will be sentenced at a later date. A seventh individual, Michael O’Keefe, Jr. is also charged with various offenses related to the scheme and is awaiting trial.
The Information charged Davis with Conspiracy to Commit Mail Fraud, Making a False Statement to Obtain HUD Insurance and False Statement on an Income Tax Return. The range of punishment for Conspiracy to Commit Mail Fraud is a term of imprisonment of not more than five (5) years, and a fine of $250,000.00; the range of punishment for Making a False Statement to Obtain HUD Insurance is a term of imprisonment of not more than two (2) years, and a fine of $250,000.00 and the range of punishment for False Statement on an Income Tax Return is a term of imprisonment of not more than three (3) years, and a fine of $100,000.00. Sentencing has been set for November 8, 2007.