Leader of Alabama Mortgage Fraud Ring Sentenced

Allison Tussey —  December 14, 2010 — Leave a comment

Timothy Wayne Johnson, 45, Bessemer, Alabama, the leader of a mortgage fraud ring, has been sentenced to six-and-a-half years in prison.

Johnson was sentenced on two counts of making false statements on a loan application, two counts of mail fraud against a financial institution, and one count of false statements to federal agents.  Johnson was also ordered the defendant to forfeit $2.5 million to the government as proceeds of illegal activity. Johnson pleaded guilty to the charges and consented to the forfeiture in July,2010.

The mortgage fraud scheme involved more than 40 real estate transactions that caused financial institutions to approve $2.5 million in loans that were fraudulently obtained through false statements and documents made by Johnson. The loans were on properties in Fairfield, East Lake, inner-city Birmingham and BessemerAlabama and about 75 percent of those mortgages have been foreclosed. Johnson created and controlled nearly every aspect of the mortgage fraud scheme and enlisted the participation of at least 10 other individuals who have been convicted for their conduct in the scheme, according to the government’s sentencing memorandum.

Government documents in the case outline Johnson’s illegal scheme as follows: As the center of the fraud, Johnson would approach people attempting to sell their homes and discover what price they wanted. He would do minimal work on the homes, have them appraised, and then attach a “mechanics lien” against the property for the difference between the appraised value and what the owner wanted for the house. Johnson would then proceed to find buyers, spreading the word that he could help individuals improve their credit or get approved for a mortgage loan.

His means of helping people secure loans often involved the creation of fraudulent letters purporting to show that the loan applicant received monthly disability payments from the Social Security Administration. Once loans were issued, based on false credit or disability income claims, Johnson would be paid the amount of the liens he placed on the properties.

The announcement was made by U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Patrick Maley and Department of Housing and Urban Development Acting Inspector General Michael Stephens.

Mortgage fraud and white collar crimes strike at the economic heart of the American system,” Stephens said. “The Inspector General’s Offices of HUD and the Social Security Administration work collaboratively with the FBI to investigate these crimes. We use a variety of investigative and analytical techniques to identify those who engage in mortgage fraud. To the extent that we can uncover and prosecute these activities, it is to everyone’s benefit,” he said. “This joint prosecutorial effort by the U.S. Attorney’s Office and law enforcement agencies has helped send a strong message that those who seek to unlawfully profit by committing acts of mortgage fraud will be vigorously prosecuted.”

Mortgage fraud has a direct negative impact on property values, potentially making all of us victims,” Maley said. “I encourage anyone with information on possible fraud to report it to the FBI, so it can be investigated and rooted out.”

This case was investigated by the FBI, and the Inspector General’s Offices of HUD and the Social Security Administration. Assistant U.S. Attorney Patrick Carney prosecuted the case.

 

Be Sociable, Share!

Allison Tussey

Posts Google+

No Comments

Be the first to start the conversation.

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=""> <s> <strike> <strong> 

*