Builder, Banker and Broker Sentenced For Bank Fraud

Allison Tussey —  March 16, 2009 — 1 Comment

3 Defendants were sentenced for their involvement in a scheme to use “straw borrowers” to obtain residential construction loans. The scheme defrauded the bank of approximately $20 million:

Christopher A. Upchurch, 34, Meridian, Idaho, a Nampa, Idaho building contractor, did residential construction under the name of Inline Construction, LLCUpchurch was sentenced to 33 months in federal prison by visiting United States District Judge William F. Downes. Upchurch was also ordered to serve five years of supervised release after he completes his prison term and pay $633,634 in restitution to Zions Bank.

Barbara L. Cobos, 37, Mountain Home, Idaho, a loan officer at Zions Bank, received approximately $125,000 in kickbacks from Upchurch in order to assure funding of fraudulent loan applications. Cobos was sentenced to 18 months in federal prison by Judge Downes. Cobos was also ordered to serve five years of supervised release after she completes her prison term and to pay $125,000 in restitution to Zions Bank.

Nicholas R. Gossi, 27, Boise, Idaho, worked first for a bank and later as a mortgage broker, and is alleged to have received “finder fees” from Upchurch to locate people willing to have their identities used to obtain the fraudulent loans. He pled guilty to submitting a false loan application to a mortgage lender. Gossi was sentenced to six months in federal prison, followed by six months of home detention. Gossi was also ordered to serve five years of supervised release after he completes his prison term and to pay restitution to National City Bank in an amount to be determined later.

Nicholas Coats, 29, Meridian, Idaho, a real estate agent, is alleged to have received approximately $49,500 in finder fees for locating “straw buyers.” Max Reich, 32, Boise, Idaho, received approximately $67,900 in finder fees for similar work. Coats and Reich are scheduled to be sentenced on May 4, 2009.

As previously reported by Mortgage Fraud Blog, the scheme began in October 2004 and lasted until November 2005. Once straw buyers were located, their information was used as the borrowers’ on residential construction loan applications. In many cases, the loan applications overstated the “borrower’s” income and credit, and falsely said that they were planning to build “owner-occupied” homes. Upchurch and others also forged the “borrowers” names on loan documents.

The 49 fraudulent applications would have totaled approximately $20 million, had they all been drawn down in full. The applications were not reviewed or approved by supervisory officials at Zions Bank.

Once the fraudulent loans were approved, Upchurch had the straw borrowers sign blank draw requests, so that he could draw on the loans at any time. He then filled out the draw requests for specific construction purposes, but diverted a substantial amount of the loan proceeds for his own personal benefit.

Cobos and Gossi entered guilty pleas in September 2008. Upchurch entered a guilty plea in November 2008.

United States Attorney Tom Moss commended the investigative efforts of the Boise office of the Federal Bureau of Investigation, which resulted in the convictions in this case.

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Allison Tussey

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One response to Builder, Banker and Broker Sentenced For Bank Fraud

  1. How does $20 million in loans get funded without supervisory approval or anyone knowing?? Sounds like the bank did a good job of covering their tracks from the inside on this one.

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