Jury Convicts Homebuilder for Mortgage Fraud Scheme

Allison Tussey —  November 15, 2010 — 2 Comments

Bernard J. Kurlemann, 57, Mason, Ohio, was found guilty of conspiracy and fraud by a jury in US District Court.

Kurlemann participated in a mortgage fraud scheme to deceive lending institutions by agreeing to sell high-end luxury properties to “straw buyers” and submitting false information on purchase contracts and other loan documents regarding down payments that were never made to the defendant’s companies. The defendant benefitted from the fraud by walking away from approximately $3.5 million in mortgage debt and receiving approximately $500,000 in seller’s proceeds.

The trial that began with jury selection on October 20, 2010 before U.S. District Judge Timothy S. Black.

The jury convicted Kurlemann of all counts against him in an indictment returned in January 2010 including one count of conspiracy to commit loan fraud, punishable by up to five years’ imprisonment, and two counts of loan fraud, each punishable by up to 30 years’ imprisonment. The law also requires restitution to the lenders.

The scheme involved “straw buyers”-individuals who would purchase properties in name only. According to testimony presented at the trial, Kurlemann was a homebuilder who was part of the scheme. Kurlemann owned and operated a number of residential development construction businesses, two of which were known as Kurlemann Homes of Long Cove and Long Cove Management, LLC, Mason, Ohio.

The jury also convicted Kurlemann of one count each of bankruptcy fraud, concealment of assets, and making false oaths, for hiding an asset from the bankruptcy trustee and his creditors when his company, Kurlemann Builders, Inc., filed for bankruptcy in 2008. Those crimes are each punishable by five years’ imprisonment. Three others charged with Kurlemann in January 2010 have pleaded guilty.

Eric D. Duke, 36, Newport, Kentucky pleaded guilty on September 14, 2010 to three counts of conspiracy, and four counts of fraud. Duke is a self-employed tax preparer and interior designer. He also owned a property management company called Rivendale Property Management Group, L.P., Maineville, Ohio.

Terrence J. Monahan Jr., 36, Cincinnati, Ohio, formerly with Huntington National Bank, pleaded guilty on October 18, 2010 to one count of making a false statement to the U.S. Department of Housing and Urban Development.

Bryan Sanneman, 38, Mason, Ohio, owner of Sanneman Homes, Inc. pleaded guilty on September 3, 2010 to two counts of conspiracy to commit loan fraud. All three are awaiting sentencing.

The charges were the result of a two-year investigation by the Greater Cincinnati Mortgage Fraud Task Force. Judge Black has set sentencing for February 9, 2011.

Two of the straw buyers also pleaded guilty to charges connected with their roles in the scheme. Francisca Webster, 46, Cincinnati, Ohio, pleaded guilty to conspiracy to commit wire fraud. Christopher Gagnon, 37, Florence, Kentucky, pleaded guilty to loan fraud.

Carter M. Stewart, United States Attorney for the Southern District of Ohio; Ohio Attorney General Richard Cordray; Warren County Prosecuting Attorney Rachel Hutzel; Keith L. Bennett, Special Agent in Charge, Federal Bureau of Investigation (FBI); Daniel M. McDermott, U.S. Trustee, Region 9; and other task force participants announced the verdict.

Stewart commended the investigation by the Greater Cincinnati Mortgage Fraud Task Force. The Greater Cincinnati Mortgage Fraud Task Force is a multi-agency, multi-jurisdictional initiative dedicated to combating the mortgage fraud problem in the Southern District of Ohio.

The case was prosecuted by Assistant United States Attorney Jennifer C. Barry and Special Assistant United States Attorney Bruce A. McGary of the Warren County Prosecutor’s Office.

 

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Allison Tussey

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2 responses to Jury Convicts Homebuilder for Mortgage Fraud Scheme

  1. It doesn’t take a rocket scientist to figure out what happened to this home builder who for the most part of his entire life had been a model taxpaying hard working American citizen. He and others like him got caught up in the housing boom and over built. He had a surplus of homes when the market began to slow down or crash. Small time loan originators or loan brokers approach him with a plan to help get rid of some of his inventory. Out of desparation he agrees to participate in sham purchases. Right now it easily for someone to point the finger at this good man and say that he shouldn’t got involved, but when banks are demanding repayment of those construction loans and they began to freeze additional lines of credit……YOU DO THE MATH! Now comes the simple part for reasonable judges to see. Whatever or however and whenever these sham investment straw purchases were done, they can’t be fraudulant because the Wall Street lenders pushed illegal loan products on the market. Liar loan products like No-doc, NINA (no income, no assets),no down payment….THESE LOANS PRODUCTS WERE FRAUDULANT FROM INCEPTION! Unless the Federal Justice Department is going to charge these Wall Street backed lenders in a co-conspriracy, these convictions are wrong! When will our government stop allowing the banks to use them when they know that they (Banks) caused this economic disaster? I don’t know this builder and I have never met him, but there are hundreds of builders just like him scared to dealth of what might happpen to them and their families! Please , please stop this maddness!!!!

  2. Straw buyers are enablers and most of the time they know it. Using a straw buyer in a gun purchase is a major league “no-no” and it should be the same within the debt securitization world because of the same reason – it is frickin’ dangerous. BTW, you had it called on the dismissal for John Steffen in St. Louis about the “double dipping of the tax credit chip and putting his whole mouth in the bowl”. It got thrown out just like you said. As a rule, I don’t like ambulance chasers but in your case I make an exception :>)

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