Broker and Associate Admit $5M Mortgage Fraud Scheme

Allison Tussey —  April 4, 2012 — Leave a comment

Michele Mitchell, 45, Glendale, Arizona, and Jeremy Pratt, 33, Glendale, Arizona, a mortgage broker and her former associate, have each admitted to conspiring to commit a multiple-transaction mortgage fraud that federal law enforcement calculates resulted in a loss to defrauded financial institutions of approximately $5,300,000.

 

Mitchell entered a guilty plea to one count of conspiracy to commit wire fraud in federal court on April 2, 2012, and Pratt pled guilty to one count of conspiracy to commit wire fraud on January 13, 2012.

Mitchell held herself out to be a mortgage broker, loan officer, and real estate investor. She was president of Golden Opportunity Investments, which was located in Scottsdale, Arizona. Pratt operated a construction and remodeling company, Arizona Cooling Control Plus. Both admitted that between May 2005, and February 2007, they conspired to recruit straw buyers with good credit scores to purchase residential properties for purported investment purposes. In order to qualify for mortgage financing, they had the straw buyers submit loan applications and supporting documents that misrepresented their incomes, assets, liabilities, employment status, and intent to occupy the premises. At the close of escrow, Mitchell and Pratt obtained a portion of the loan proceeds as “cash back” to be used for mortgage payments and for their own personal enrichment.

Mitchell and Pratt each admitted that their fraudulent scheme resulted in the purchase of at least 17 residential properties by obtaining loans from financial institutions in the total amount of nearly $17 million. The residential properties were located in the Valley cities of Glendale, Scottsdale, Surprise, Goodyear, and Peoria, Arizona. All 17 properties went into foreclosure when neither Mitchell nor the straw buyers made the necessary mortgage payments. The total amount of “cash back” fraudulently obtained by Mitchell and Pratt from these transactions was $2.46 million and federal law enforcement calculates the loss to the financial institutions, that is, the difference between the total loan amounts and the total sales prices obtained at foreclosure sales, at approximately $5.3 million.

A conviction for conspiracy carries a maximum penalty of five years in prison, a $250,000 fine, or both. Pratt‘s plea agreement provides that his sentence will not exceed 24 months. Mitchell‘s plea agreement contains no such restriction. In determining an actual sentence, the court will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. United States District Judge James A. Teilborg, however, is bound by neither the plea agreement nor the guidelines in determining a sentence.

Pratt is scheduled to be sentenced by Judge Teilborg on May 29, 2012. Mitchell is scheduled to be sentenced by Judge Teilborg on June 18, 2012.

The investigation in this case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigations. The prosecution is being handled by Frank T. Galati, Assistant U.S. Attorney, District of Arizona, Phoenix.

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Allison Tussey

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