Charles R. Schulte, 57, St. Louis, Missouri, was sentenced to serve 19 months in federal prison followed by 3 years of supervised release and was ordered to pay $1,176,098.80 in restitution to 19 different lenders. Schulte plead guilty to one count of wire fraud on March 17, 2004. Click here to view a copy of the Judgment that breaks down the restitution amount by lender.

In connection with the sentencing, Schulte argued that the restitution order should only extend to the one count to which he plead guilty (resulting in losses of $25,000) rather than lender losses relating to the entire scheme. The government successfully argued that, as a scheme to defraud is an element of the offense of wire fraud, restitution could be ordered as to all mortgage companies that suffered losses as a result of his conduct in the course of the conspiracy (losses on 45 loans).

According to the Superceding Indictment, Schulte worked as a real estate agent for The Buyers Rep Realty LLC. Buyers Rep primarily represented people who purchased property for investment purposes. Green Valley Mortgage LLC was a loan brokerage affiliated with Buyers Rep.

Charles R. Hamilton would purchase residential real estate in St. Louis, Missouri for prices close to fair market value. Shortly after the purchase, Hamilton would sell the properties for prices significantly in excess of fair market value to persons unable to afford minimum down payments.

Schulte acted as the buyer’s real estate agent in some of the purchases. The real estate commissions under the contract typically ranged from 15% to 25% of the purchase price – far in excess of the standard 6%-7% commission ordinarily paid in St. Louis, Missouri. The contracts also provided for payment of bonuses to Buyer’s Rep and often included repair allowances to buyers through Buyer’s Rep.

Once the contracts of sale were negotiated, someone affiliated with Buyers Rep and Green Valley would obtain an inflated appraisal for the subject property. Persons associated with Buyers Rep and Green Valley would submit documents containing false information to mortgage companies in order to obtain mortgages to finance the purchases, including false lease agreements, false settlement statements and altered bank statements. Schulte prepared some of the false lease agreements. Loan applications contained false income and employment information for borrowers and incorrectly reflected the source of down payments. The borrowers did not actually make any down payments from their own funds. Instead, the excess commissions, bonuses and repair funds were used to cover the required borrower contributions.

The title company would issue checks to Buyers Rep in the amount of the down payments. The checks were converted to cashier’s checks in the amounts of the down payments and the property purchasers' names would be listed as remitters. The cashier’s checks were then used as down payments. After the purchases were complete, the title company would divide the remaining moneys between Charles R. Hamilton and Buyers Rep (for payment of commissions, bonuses and repair allowances). Buyers Rep would then distribute part of the sale proceeds to Schulte as real estate agent and to Charles R. Hamilton.

The scheme operated from 1998 through June 2000.

Other individuals have already been convicted and sentenced in connection with the scheme, including:

Charles R. Hamilton plead guilty to wire fraud on March 25, 2004 and was sentenced to serve 12 months and one day in federal prison, serve 3 years supervised release and pay $763,834 in restitution to 11 lenders. Click here to view the Hamilton Judgment that reflects the allocation of the restitution order per lender

Richard J. Avetta plead guilty to wire fraud on January 17, 2003 and was sentenced to 3 years probation and ordered to pay restitution of $440,048.02 to nine lenders. Click here to view the Avetta Judgment that reflects the allocation of the restitution order per lender.

Edmund H. Kinghorn, Sr., plead guilty to wire fraud on June 20, 2002 and was sentenced to 13 months in federal prison, two years supervised release and was ordered to pay restitution of $98,926.00 to four lenders. Click here to view the Kinghorn Judgment that reflects the allocation of the restitution order per lender.

Shawn D. Hopkins plead guilty to wire fraud on May 31, 2002 and was sentenced four years probation and ordered to pay restitution of $445,386.49 to seven lenders. Click here to view the Hopkins Judgment that reflects the allocation of the restitution order per lender.

David C. Hopkins plead guilty to three counts of wire fraud on May 31, 2002 and was sentenced to 15 months in federal prison, 3 years supervised release and was ordered to pay restitution of $2,053,596.72 to 29 lenders. Click here to view the Hopkins Judgment that reflects the allocation of the restitution order per lender.

Lajuana Hinch plead guilty to wire fraud on March 13, 2001 and was sentenced to six months in federal prison, three years supervised release and was ordered to pay restitution of $142,177.21 to two lenders. Click here to view the Hinch Judgment that reflects the allocation of the restitution order per lender.

Darin Diana plead guilty to wire fraud on March 9, 2001 and was sentenced to five years probation and ordered to pay restitution of $204,922.00 to one lender. Click here to view the Diana Judgment that reflects the restitution order.