William E. McKanry, 70, Warrenton, MO, was convicted of multiple conspiracy and fraud charges involving the multi-million dollar sale of 12 local properties.
McKanry owned, operated and managed USA Properties, LLC; his son, William C. McKanry owned, operated and managed USA Title, LLC; and Paula Enders, was a licensed mortgage broker. She operated under the mortgage brokerage company known as Foundation Mortgage, Inc.
According to testimony presented at trial, between December 2005 and January 31, 2006, the McKanrys‘ sold twelve real estate properties through Enders. The properties are located in Florissant, St. Charles, O’Fallon, Hazelwood, Lake St. Louis, Ballwin, St. Louis City and County, and the total sale price of the properties was approximately $2.7 million.
Enders would shop on-line to obtain mortgage financing for all of the 12 properties. On the loan applications for these properties Enders falsified that the source of the down payments, settlement charges, and subordinate finances were to be made by the buyer of these properties, when they were actually made by William E. and William C. McKanry, the sellers of the properties. All closings were made at USA Title, LLC, St. Louis County, and documents falsely showed the buyer as making cash payments that were actually made by the McKanrys.’
At the closings, Enders received $226,000 above her commission fees as the mortgage broker to buy Foundation Mortgage, Inc. On the seller’s settlement statement these monies were falsely represented to be construction rehab costs on the particular properties. Money would be going to Paula Enders at the closings as construction rehab on these properties when they actually were to be used to purchase Foundation Mortgage, Inc.
Since the closing on the 12 properties at USA Title, 11 out of 12 properties ended up in foreclosure and were resold for $1.2 million for a loss of approximately $1.5 million.
USA Properties, LLC maintained and provided a list of their “for sale” properties to area brokers and real estate agents. The list identified the particular property address and corresponding “retail value” and “sale price”. In order to sell the properties, USA Properties, LLC was willing to sell these properties below the purported appraised value to buyers. This market of favorably priced real estate to which Paula Enders, William C. McKanry and William E. McKanry had access provided an opportunity. By matching USA Properties, LLC with buyers, they exploited the difference between what USA Properties, LLC was willing to take for a property “sale price” and what a prospective investor, induced by special deals, willing to pay, i.e., the “spread” or “retail value”.
William E. McKanry was convicted of one felony count of conspiracy to commit bank, wire and mail fraud; one felony count of making false statements; four felony counts of wire fraud; and three felony counts of mail fraud. The five-day trial was held before United States District Judge Charles A. Shaw.
Conspiracy to commit bank fraud carries a maximum penalty of five years in prison and/or fines up to $250,000; each count of mail and wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $1,000,000; making false statements carries a maximum of 10 years in prison and/or fines up to $250,000. Restitution is mandatory. Sentencing has been set for December 22, 2009.
William C. McKanry, 43, St. Albans, MO; pleaded guilty June 25, 2009, to related charges and is scheduled for sentencing October 15; Paula Enders, 37, Florissant, MO, pleaded guilty in December 2008, and awaits sentencing October 22, 2009.
Acting United States Attorney Michael W. Reap announced the conviction.
Reap commended the work on the case by the Missouri Department of Insurance, the United States Postal Inspection Service and the Federal Bureau of Investigation; and Assistant United States Attorneys Tom Albus and Jeff Jensen, who prosecuted the case for the U.S. Attorney’s Office.