Business Owner and Son Indicted in $1.3M Fraud Scheme

Allison Tussey —  September 21, 2010 — Leave a comment

Stilianos (Stan) Mavroulis, 66, and his son, Kyriakos (Kirk) Mavroulis, 29, both of Baltimore, Maryland, have been indicted for conspiracy to defraud the Government National Mortgage Association (GNMA) of $1.3 million.

According to the one count indictment, Stan Mavroulis was owner and president, and Kirk Mavroulis was vice president, of Fidelity Home Mortgage Corporation (FHMC), a mortgage lending company in Baltimore. From 2007 to October 2008, the defendants allegedly conspired to defraud the GNMA by diverting to their own benefit the proceeds of Federal Housing Administration (FHA) claims from mortgage loans that were due the GNMA.

Specifically, the indictment alleges that the defendants received $1.3 million in FHA claim funds for at least 11 defaulted mortgage loans which were deposited in a FHMC clearing account between June and August 2008. Claim funds are insurance proceeds paid by FHA to the lender when a FHA insured mortgage goes into default. The defendants failed to move the FHA claim funds within 48 hours, as required by GNMA regulations, from the FHMC clearing account to GNMA, which would have, in turn, used the funds to pay off the investors of mortgage backed securities. The defendants allegedly caused false reports to be made to GNMA which omitted the fact that FHA had paid out claims on defaulted loans and that FHMC had not paid over the proceeds as required. The defendants allegedly used the proceeds of the FHA claim funds for their own benefit, including the payment of legal fees.

The defendants face a maximum sentence of five years in prison followed by three years of supervised release and a fine of $250,000. Their initial appearances are not yet scheduled.

An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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.

The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Ken Taylor of the Housing and Urban Development Office of Inspector General – Office of Investigations.

United States Attorney Rod J. Rosenstein thanked Assistant U.S. Attorney Stephen M. Schenning, who is prosecuting the case.

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Allison Tussey

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