Twelve people were indicted by an Illinois grand jury in connection with a FHA-insured mortgage scheme that involved 48 properties in the Freeport, Illinois area over a period of almost three years. The individuals indicted include not only the ringleaders and recruiters but also individuals who signed false VOEs and credit letters verifying false financial information on behalf of borrowers.
The individuals charged in the indictment are as follows:
Price Brooks, 50, Freeport, Illinois, worked at Brooks Detail Shop
Todd Ernst, 44, Freeport, Illinois - Owner of Ernst Roofing, Freeport, Illinois
Shawn Fleming, 21, Freeport, Illinois
Douglas Hastings, 39, Lena, Illinois – Owner of several businesses including Stagecoach Trail Realty & Auction, Lena, Illinois, Presidents Club (a bar in Freeport, Illinois) and Brooks Detail Shop (a car wash in Freeport, Illinois).
Edward Martins, 40, Lena, Illinois - Principal of R&J Renovations, Freeport, Illinois
Jeffrey Meyer, 50, Winslow, Illinois – Owner of independent insurance agency known as “Meyer Insurance Agency.”
Philip Miskimon, 49, Winslow, Illinois, Principal of R&J Renovations, Freeport, Illinois
Dale Nelson, 49, Freeport, Illinois – Owner of AMD Sales & Services, Freeport, Illinois, a computer sales and services business
Chad Nicks, 30, Freeport, Illinois – Owner of Planet Wireless, a cellular telephone business, Freeport, Illinois
Akia Sanders, 23, Freeport, Illinois
Julie Smith, 47, Lena, Illinois -Vice President of an independent insurance agency known as the Marvin Uecker Agency, Lena, Illinois
Tasha Thompson, aka Tasha M. Barnes, 25, Freeport, Illinois
Hastings and his wife were in the business of buying and selling residential properties in Freeport, Illinois. Miskimon and Martins were in the business of rehabilitating and selling residential properties in Freeport, Illinois as R&J Renovations.
The indictment alleges that between January 21, 2000 and October 15, 2003 the defendants conspired to defraud HUD by obtaining FHA insured mortgages based on false information and documents.
According to the indictment, Hastings and his wife purchased numerous inexpensive houses in Freeport, Illinois and elsewhere. Miskimon and Martins would cause minor repairs and improvements to be made to the houses in order to inflate the prices. Hastings then sold the houses at inflated prices that were far more than he paid for them.
As part of the conspiracy, Miskimon and Martins actively recruited buyers and would pay a $500 fee to anyone who referred them to a buyer. Sanders and Fleming each recruited several buyers. Miskimon and Martin would arrange for HUD loans for the buyers and would prepare and falsify documents necessary for buyers to meet HUD requirements including fraudulent VOEs and pay stubs. Nelson, Ernst and Brooks signed false VOEs fraudulently representing that buyers worked for their businesses. The business owners were often paid $500 to execute a false VOE. In exchange for $100 per letter, Meyer, Smith, Nelson and Nicks signed false credit letters stating that buyers had made regular payments on accounts with their businesses.
Sanders, Ernst and Thompson posed as relatives of the buyers, contributing gift funds to meet the 3% equity requirements. Hastings would actually provide the gift funds and Miskimon and Martin would deposit those funds to the account of the person posing as a relative of the buyer. Immediately after deposit, the funds would be withdrawn in the form of cashier’s checks or official bank checks made payable to the buyers and reflecting the false relative as the remitter. Copies of the checks would be placed in the buyer loan files. Then the checks would be cashed and the proceeds would be returned to Hastings.
The loan packages containing false documents were submitted to HUD approved mortgage companies that issued the loans.
The sixty-one separate counts of the indictment detail numerous loan transactions and allege conspiracy and false statements. In total, 48 properties were involved in the scheme, 40 of which have already been foreclosed by HUD.
Rachel Dollar, the editor of Mortgage Fraud Blog is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors.