Loan Officers Sentenced for Mortgage Fraud Ring

admin —  November 13, 2009

Damon Clark, 32, Grand Rapids, Michigan and Reginald Tardy, Jr., 31, Ferndale, Michigan, each pled guilty in late September 2009, of one count of Racketeering and were sentenced by Judge David Hoort in Montcalm County Circuit Court. Clark was sentenced to 15 months to 20 years in prison, Tardy was sentenced to 18 months to 20 years in prison and they were ordered to pay restitution totaling $131,113. A third man, Brian VanFarowe, Grand Rapids, Michigan fled the country before charges were formally issued.

As previously reported on Mortgage Fraud Blog, during 2005, mortgage loan officers Tardy and Clark and real estate investor VanFarowe conducted a mortgage foreclosure scam that targeted the Hispanic community in Grand Rapids. The targeted buyers often spoke or wrote little English and had a limited understanding of the mortgage process.

Promising them the dream of home ownership, Tardy and Clark prepared loan documents for the buyers using falsified financial information to ensure a mortgage could be obtained. The pair acquired generous appraisals for VanFarowe’s properties and used the falsified loan applications to secure mortgages for the buyers which exceeded the actual property value.  At the closings, VanFarowe presented invoices alleging that legitimate services had been rendered by T.Dot Financial, a company owned by Tardy and Clark. These invoices were fraudulent because they were kick-backs to the loan officers provided for finding a buyer and getting the fraudulent loan application approved. Because VanFarowe did not object to the invoice, the mortgage company permitted payment from loan proceeds. As loan officers, Tardy and Clark had a duty under law to remain at “arms length” in arranging mortgage applications. They used the fraudulent invoices to hide the fact that they personally benefited from the inflated sale and fraudulent mortgage applications. As a result of the scheme, the buyer ended up owning property with a mortgage greater than the actual value of the home, while Tardy, Clark and VanFarowe illegally walked away with thousands of dollars. The buyer, whose loan application was based on false income information, did not have the financial means to pay the mortgage and ended up in foreclosure.

These men took advantage of families pursuing the American dream of homeownership,” said Michigan Attorney General Mike Cox. “Today we are holding them accountable.”


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