Former Broker Sentenced for Fraudulent Transactions

admin —  January 29, 2010 — Leave a comment

Donella Locke, 60, Indianapolis, Indiana, was sentenced to 71 months in prison following her conviction at trial September 18, 2009 for wire fraud.

As previously reported on Mortgage Fraud Blog, from 2004 through 2006, Locke engaged in a series of fraudulent real estate transactions either in her capacity as a real estate broker or an investor. The real estate transactions concerned high dollar homes priced between $300,000 and $1.4 million. For five properties, Locke used a false social security number to the lender, and generated false verifications of employment, false verifications of rent, used false business names, submitted false income amounts, and used names of people she knew without their permission on false residential leases submitted to lenders. For other properties, Locke represented that repair and rehabilitation work would be done to the properties which was never done. The false statements to the lenders resulted in them lending moneys they would not have otherwise loaned. Locke used several lenders and several mortgage brokers, most of whom did not know of the existence of the other fraudulent transactions. In sentencing Locke, U.S. District Judge Larry J. McKinney noted that the number of false statements she submitted was overwhelming and that she had engaged in a two-year period of dishonesty.

According to Assistant U.S. Attorneys Gayle L. Helart and Bradley Shepard, who prosecuted the case for the government, Judge McKinney also imposed two years supervised release following Locke’s release from prison. During the period of supervised release, Locke must provide her financial information to probation. Locke was ordered to make restitution in the amount of $2.3 million to 13 different lenders who were defrauded.

This case was the result of a several year investigation by the Hamilton County Sheriff’s Office, Hamilton County Prosecutor’s Office, Indiana Attorney General’s Office-Homeowner Protection Unit, United States Trustees Office, Region 10, Federal Bureau of Investigation and other members of the Southern Indiana Bankruptcy Fraud Working Group.

We appreciate U.S. Attorney Morrison’s commitment to addressing mortgage fraud schemes because often those schemes end up in bankruptcy,” stated Nancy J. Gargula, United States Trustee for Region 10, which includes the Southern District of Indiana.

This mortgage-fraud scheme involved an elaborate web of deceit, encompassing numerous high-end homes in counties throughout Indiana. The Homeowner Protection Unit of the Indiana Attorney General’s Office and our partners at the federal and county levels worked diligently to untangle this case and hold this individual accountable for the harm she caused,” said Abigail Kuzma, Director and Chief Counsel of the Indiana Attorney General’s Consumer Protection Division

This case was referred to the U.S. Attorney by the Indianapolis Office of U.S. Trustee and the investigation assisted by the collaborative efforts of members of the Southern Indiana Bankruptcy Fraud Working Group. Members of the Southern Indiana Bankruptcy Fraud Working Group include representatives of the United States Attorney’s Office for the Southern District of Indiana; Office of the United States Trustee for Indiana and Central and Southern Illinois (Region 10); Federal Bureau of Investigation; Internal Revenue Service; United States Postal Inspection Service; and Social Security Administration, among others. The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.

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