Man Gets 14 Years for Bank Fraud

Allison Tussey —  April 26, 2011 — 3 Comments

Delroy Oliver Davy, 38, Lithonia, Georgia, was sentenced by United States District Judge J. Owen Forrester to serve 14 years in federal prison on charges of bank fraud and conspiring to commit bank, mail and wire fraud. Davy‘s sentence is to be followed by 5 years of supervised release, and he was ordered to pay  $5,504,431 in restitution. Davy pleaded guilty to the charges on March 23, 2010.

As previously reported by Mortgage Fraud Blog, and according to the charges and other information presented in court: Davy formed corporations and companies to purchase properties from financial institutions secured by the Federal Deposit Insurance Corporation (FDIC), including the now-failed Omni National Bank in Georgia. Davy would “flip” the properties within a short period of time to unqualified “investor” borrowers, at prices inflated by up to $100,000. Davy and his partner would recruit the “investors,” and arrange mortgage loans from banks based on false qualifying information, all while concealing from the lenders that his own companies had recently purchased the properties for amounts significantly less than the new loans. Davy paid kickbacks to a loan officer at Omni, as well as to employees at another lender, who approved funding for his “investors.” Ultimately, Davy‘s scheme forced many properties to go into foreclosure, causing lenders, insurers and others to incur millions of dollars in losses. Davy also collected money from investors by falsely promising they would receive property, which they never received.

Additional Omni-related prosecutions to date include:

Jeffrey L. Levine, 70, Atlanta, Georgia, was also sentenced by Judge Forrester, who ordered that Levine serve 5 years in federal prison for causing materially false entries that overvalued bank assets to be made in the books, reports and statements of Omni.

Karim Walthour Lawrence, 33, Atlanta, Georgia, pleaded guilty on January 5, 2011, to accepting bribes from contractors he selected to rehab Omni foreclosed properties while he was an officer of Omni. He will be sentenced before United States District Judge Willis B. Hunt, Jr. A sentencing date has not yet been set by the court.

Christopher Bernard Loving, 33, McDonough, Georgia, was sentenced on August 24, 2010, to 3 years probation for making false statements to agents of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the FDIC in connection with an investigation of kickbacks he paid Omni officer Karim Lawrence for construction contracts.

Brent Merriell, 39, Atlanta, Georgia, was sentenced on August 3, 2010, to over 3 years in prison for making false statements to the FDIC regarding short-sales of Omni-funded properties and aggravated identity theft. Merriel‘s conviction resulted from a SIGTARP/FDIC sting operation.

These cases are being investigated by Special Agents of a Mortgage Fraud Task Force formed for Omni-related cases, made up of the Housing and Urban Development (HUD) – Office of Inspector General, the United States Postal Inspection Service, the FDIC -Office of Inspector General, the Office of the Special Inspector General for the Troubled Asset Relief Program, and the Federal Bureau of Investigation. The task force is continuing a number of Omni-related investigations.

“The ripple effects from mortgage fraud devastate legitimate lenders, honest Americans trying to borrow money for a home, neighborhoods burdened with neglected houses, and investors who are duped into giving money to fraudsters,” said United States Attorney Sally Quillian Yates. “We will continue to use every available resource to punish the mortgage fraud thieves who have so substantially contributed to the housing and banking crisis in this country.”

Federal Deposit Insurance Corporation (FDIC) Inspector General Jon T. Rymer said, “The FDIC is tasked with liquidating the assets of failed banks such as Omni. Therefore, the FDIC OIG aggressively investigates and prosecutes fraudulent activities that undermine the integrity of the financial services system and impede the FDIC’s efforts to maximize recoveries. We are pleased to have partnered with our law enforcement colleagues in bringing about these successful actions today.”

Christy Romero, SIGTARP Acting Special Inspector General said, “Today’s sentencing of Delroy Oliver Davy signals that those individuals who exploit the mortgage lending industry will be held accountable for their actions. For four years, Davy took advantage of several banks, banks that later failed as part of the financial crisis, by executing a fraudulent scheme to obtain millions of dollars in mortgage loans in the names of borrowers who received neither the property nor the loan. Davy is yet another example of a person who preyed on the vulnerability of people during the financial crisis and that SIGTARP is committed to holding accountable.”

HUD Acting Inspector General Michael P. Stephens said, “Mortgage fraud and white collar crimes strike at the economic heart of the American system. To the extent that we can uncover and prosecute these crimes, it is to everyone’s benefit, and with the support of the people and working together, law enforcement will continue to make gains in the fight against these criminals.”

Martin D. Phanco, Postal Inspector in Charge of the Atlanta Division, said, “It is a difficult task to follow the circuitous paper trail of complex white collar crimes. Our investigators, working with the other federal agencies in this case, found hard evidence behind one of our area’s most significant bank failures, and has meticulously gathered that evidence which has resulted in the court actions today. A failed bank has ripple effects on the community, and hopefully these prosecutions will send a powerful message to those who might consider such fraud.”

This investigation is part 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.
Assistant United States Attorneys Gale McKenzie and Christopher Bly prosecuted the case.

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Allison Tussey

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3 responses to Man Gets 14 Years for Bank Fraud

  1. Thanks for highlighting this ongoing problem in our society. However, the dilemma is even worse than you stated. Number of people already found guilty of the crime yet there still individuals doing it. The cases you presented should serve as an example to others, so that others will not follow their steps.

  2. very good work on the part of the investigators. I know that it is not always as simple as it looks to convict white color crimes. Good job.

  3. Very satisfying to see so many who are the root cause of this financial meltdown are getting their due. These law enforcement activities send a clear message that defrauding banks isn’t a joke.

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