Kevin Lee Grady Sr., 47, Grand Rapids, Michigan, was found guilty on all counts for conspiracy to commit wire fraud and for commission of wire fraud and a single bank fraud count in conjunction with multiple mortgage loans.
Grady was also found guilty on two counts for making a material false statement to a special agent of the FBI in connection with the mortgage fraud investigation. He was acquitted of one bank fraud count. Co-defendant Edward Hessie Sumrell, 56, Grand Rapids, Michigan, was found guilty on one count for making a material false statement to a special agent of the FBI in connection with the mortgage fraud investigation and acquitted on two counts of perjury before a grand jury.
Also charged in the indictment and who entered pleas and are awaiting sentence are: Lisa Lynn Walters, 42, Wayland, Michigan, for wire fraud; Jimmy Ladell Collins, 40, Grand Rapids, Michigan, for bank fraud; and Carlus Demond Bridgeforth, 39, Grand Rapids, Michigan, for wire fraud. Alina Jamelle Belmont, 35, Alpharetta, Georgia, pled guilty to conspiracy to commit wire fraud and Kristen Sarnicola, 38, Kentwood, Michigan, to misprision of a felony in separate charges related to the investigation.
Kevin Lee Grady, formerly the manager of a local Grand Rapids mortgage brokerage office, and others named above, conspired to commit, and did commit, wire fraud in conjunction with numerous mortgage loans obtained from private mortgage lenders for home purchasers in 2005 and 2006. Grady fixed prices with prospective sellers and with the help of Walters obtained inflated appraisals and false appraisals. Grady then secured financially unqualified buyers to purchase the homes at the fraudulently inflated values.
In return for their agreement to buy, Grady and other coconspirators under his direction, promised the purchasers cash kickbacks, often as much as $10,000 per property. The cash payments were most often made to the purchasers after the sale of the property and were unknown to the lenders. This fraudulent conduct resulted in the creation of false equity in the properties because the loans sought and received by the buyers were in amounts substantially greater then what the sellers had previously agreed to accept for the properties and far in access of their true fair market value.
Grady compounded the fraud by submitting or causing to submit loan applications to lenders on behalf of the purchasers that contained materially false information relating to the purchasers’ true financial status. This false information included highly inflated salaries or simply fictitious employments, grossly exaggerated net worths, false sources of down payments for the loans and various other false financial representations. By submitting such flagrantly false loan applications Grady and other coconspirators were able to convince lenders to make loans they would otherwise have rejected and which eventually ended in default and resulted in substantial losses for the lenders.
Once a loan was approved and the sale was completed, Grady and other co-conspirators shared in the falsely created equity-surplus mortgage loan proceeds””with the largest portion going to Grady. Grady and the coconspirators also used a portion of the surplus loan proceeds to pay the promised kickbacks to the purchasers. All of this fraudulent conduct was done without the lenders’ knowledge or consent.
Bridgeforth and Collins were purchasers who bought several homes through Grady and received kickbacks for participating in his mortgage fraud scheme.
Grady faces a maximum penalty of 30 years’ imprisonment, and a maximum fine of $1,000,000, for the bank fraud conviction; a maximum penalty of 20 years’ imprisonment, and a maximum fine of $250,000, for each count of wire fraud; and a maximum penalty of five years’ imprisonment and/or $250,000 fine, for each count of making a false statement. In addition, Grady consented to a personal criminal forfeiture money judgment of $1,241,000.
Sumrell faces a maximum penalty of five years’ imprisonment and/or $250,000 fine, for making a false statement.
U.S. Attorney Donald A. Davis announced the conviction.
The investigation was conducted by the Grand Rapids Office of the Federal Bureau of Investigation. The prosecution was handled by Assistant U.S. Attorneys Ron Stella and Brian Delaney.