Jury Convicts 8 of Mortgage Fraud

Allison Tussey —  April 8, 2010 — 1 Comment

A mortgage fraud trial that began in mid-February 2010, concluded when the jury found all eight defendants guilty of various offenses related to their role in a mortgage fraud scheme they operated in the Dallas, Texas area, from March 2002 to January 2006.

Eric Rulack Farrington, Jr., 57, Irving, Texas, the lead defendant in the case, was the president of Eric Farrington Seminars, Inc. and Prestige Capital Corporation, which did business as Farrington Mortgage Group. He was a manager of EFC Investments, LLC, which did business as EFC Management Company. All were located in Dallas, Texas. The jury convicted Farrington on all 32 counts of the superseding indictment, including: one count of conspiracy to commit wire fraud; one count of bank fraud and aiding and abetting; 15 counts of wire fraud and aiding and abetting; 10 counts of money laundering and aiding and abetting; five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.

Other defendants, their roles, and counts on which they were convicted are:

Janice Little Shepherd, 51, Irving, Texas, Farrington‘s former fiancé, was a mortgage broker who did business as EFC Capital Mortgage Company, in Dallas, Texas. She was convicted on: One count of conspiracy to commit wire fraud; 11 counts of wire fraud and aiding and abetting; four counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.

Regis Lamont Williams, 44, Dallas, Texas, was a Texas certified real estate appraiser who did business as Executive Certified Appraisal. He was convicted on: one count of conspiracy to commit wire fraud; one count of bank fraud and aiding and abetting; nine counts of wire fraud and aiding and abetting; five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.

Kevin Ray Sanderson, 35, Irving, Texas, was a business associate of Farrington and the vice president of Farco Construction, Inc., Dallas, which also did business as Farrington Mortgage Group. He was convicted on: one count of conspiracy to commit wire fraud; one count of bank fraud; four counts of wire fraud and aiding and abetting; one count of money laundering.

James Edward Jones, 44, Dallas, Texas, was a real estate agent. He was convicted on: one count of conspiracy to commit wire fraud; two counts of wire fraud and aiding and abetting;

Edwin Terrence Bell, 43, Fort Worth, Texas, was in the real estate management business and was the president of Togetherness, Inc. Bell also did business as The Togetherness Group and TTG, Inc. He was convicted on: one count of conspiracy to commit wire fraud; five counts of wire fraud and aiding and abetting; two counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.

Micheal (sic) Lewis Andrews, 50, Plano, Texas, was chief executive officer of Second Chance Mortgage, Inc. and did business as 2nd Chance Mortgage. He was convicted on: two counts of wire fraud and aiding and abetting.

Robert John Mason, 55, Oak Leaf, Texas, was an employee of Prestige Capital Corporation. He was convicted of: two counts of wire fraud and aiding and abetting.

Prior to trial, Marcus Allen Parker, 35, Rowlett, Texas, who was an associate of defendant Kevin Ray Sanderson, pleaded guilty to one count of conspiracy to commit wire fraud. In addition, prior to trial, charges were dismissed against Tony Earl Anderson, 52, Dallas, Texas, and Christopher N. Williams, 43, Flower Mound, Texas. All three testified as government witnesses.

The statutory maximum penalties for conspiracy to commit wire fraud and wire fraud is 20 years in prison and a $250,000 fine, per count. The maximum statutory penalty for bank fraud is 30 years in prison and a $1 million fine, per count. The statutory maximum penalty for money laundering is 20 years in prison and a $500,000 fine, per count. The maximum statutory penalty for engaging in a monetary transaction with criminally derived property is 10 years in prison and a $250,000 fine, per count.

The government presented evidence at trial that Farrington, a motivational speaker who had authored a real estate book and had an infomercial on making money in real estate that ran on late night television, largely orchestrated the scheme. The defendants located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence, many times using inflated appraisals. In some cases, they would create a bogus outstanding mortgage lien to be discharged. They recruited individuals with high credit scores to act as borrowers and falsely represented to them that the property would be managed by the defendants and rented by a suitable tenant; that the mortgage, interest, taxes, insurance and property maintenance would be paid from the rental income; and the purchasers/borrowers would have no expenses. The borrowers had no intention to live in the property and did not have sufficient income to repay the loans. They said they relied on Farrington.

Further evidence presented by the government showed that the defendants prepared and submitted fraudulent loan documents showing inflated incomes in the names of the borrowers and obtained loans in inflated amounts based on these fraudulent loan documents. Then they used the fraudulently obtained surplus loan proceeds to pay the sellers kickbacks, to conceal the fraud, and distributed the bulk of the proceeds among themselves. They would then allow the loan to go into foreclosure after a few payments were made on the loan.

Some of the Texas residences used in the scheme are:

1420 Travis Circle South, Irving, Texas
6231 Azalea Lane, Dallas
7730 Cliffbrook Drive, Dallas
10907 Cinderella Lane, Dallas
7617 Arborgate Drive, Dallas
13735 Ashridge Drive, Dallas
6824 Winterwood Lane, Dallas
6840 Winterwood Lane, Dallas
6915 Winterwood Lane, Dallas
7012 Creek Bend Road, Dallas
1509 Appalachian Drive, Allen, Texas
.

Following a conviction on Count One, the conspiracy, the criminal forfeiture allegation requires the defendants to forfeit $4,500,070 to the U.S. The forfeiture allegation also requires the defendants, upon conviction of any of Counts Two through 17, to forfeit various sums of money, totaling nearly $4 million, as listed in the superseding indictment.

Mortgage fraud is a major focus 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.

U.S. Attorney James T. Jacks of the Northern District of Texas announced the convictions. U.S. Attorney Jacks praised the investigative efforts of the FBI and Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorneys Joseph Revesz and Walt Junker are prosecuting the case.

The trial took place before U.S. District Judge Sam A. Lindsay.

Be Sociable, Share!

One response to Jury Convicts 8 of Mortgage Fraud

  1. Gary Crabtree, SRA April 14, 2010 at 6:16 pm

    Sounds very familar to a case in Central California.

Leave a Reply

*

Text formatting is available via select HTML.

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>