First Magnus Financial Corporation (FMFC) filed a civil lawsuit in the Federal Court for the Western District of Missouri, Kansas City Division, against the following defendants whose roles, as indicated in the complaint, are also included:
Summit Mortgage, L.L.C, mortgage broker
Joe Richardson, principal/alter ego, member, employee and/or agent of Summit
Dwayne Maddy, principal, employee and/or agent of Summit
Frank Strauss, principal, employee and/or agent of Summit
Rob Adrian, principal, employee and/or agent of Summit
David L Peterson, appraiser
Peterson Appraisal Service, LLC, appraiser
Edwards Appraisal Services, LLC, appraiser
Terence Edwards, appraiser
David Edwards, appraiser
Jason Morgan, appraiser
Kevin Casburn, appraiser
Nicolace Appraisals, appraiser
Paul E. Nicolace, appraiser
Hometown Appraisals, Inc., appraiser
Hometown Appraisals, LC, appraiser
Hometown Property Management, LC (previously Hometown Appraisals, LC)
Dominique P Allen, appraiser
Dennis C. Kiethley & Associates, appraiser
Dennis C. Keithley, appraiser
Mississippi Valley Title, title
First American Title Missouri Agency, Inc. dba First American Title of Kansas City, title
Premier Title Company, title
Realty Title Company, title
Commonwealth Land Title Insurance Company, title
First American Title Insurance Company, title
Old Republic Ins Co, title
Chicago Title Insurance Company, title
Wade Rustici, property seller
Global Assets, property seller
Brian Valet, property seller
Judy Valet, property seller
Kathy Schilt-Richardson, property seller
Kory J. Oline, property seller
K.C. Rehab Inc. , property seller
Mark Owen, property seller
Mark Meirath, property seller
Becky Meirath, property seller
Paul Zarrillo, property seller
Vicki Zarrillo, property seller
Rebecca Case, property seller
In its complaint, FMFC alleges that the defendants conducted a 'massive scheme of fraudulent real estate transactions' involving 19 flip transactions involving FMFC, in the greater Kansas City, Missouri area. Summit acted as the mortgage broker for all of the transactions.
According to the complaint, each of the fraudulent transactions began with the acquisition of a subject property, usually through a foreclosure sale. After acquiring a subject property, the Defendantss made or claimed to have made cosmetic repairs and quickly flipped it to an unwitting buyer at a much higher price. The repairs were often nonexistent or nominal. In some cases, buyers were not creditworthy, requiring Defendants to misrepresent buyer financial information, employment history and other pertinent financial data.
In order to substantiate inflated contract prices, according to the complaint, the appraisers would manipulate the comps and chose comps that were 'blatantly incomparable' to the subject property in that the subject properties were smaller, shoddier and in less desirable areas than the properties used as comps. In some efforts, inaccurate property attributes were provided. Title companies are alleged to have 'ratified the inflated appraisals' and should have known that the closing statements misrepresented and concealed material facts, namely buyer's financial information, source of the down payment and other material information.
The properties referenced in the complaint are:
419 Montgal, Kansas City, Missouri
2327 Cedar, Independence, Missouri
816 Monroe Avenue, Kansas City, Missouri
126 South Topping Avenue, Kansas City, Missouri
5218 College Avenue, Kansas City, Missouri
4041 Woodland, Kansas City, Missouri
3209 Jackson, Kansas City, Missouri
3015 Quincy, Kansas City, Missouri
2410 Spruce Avenue, Kansas City, Missouri
3426 Indiana Avenue, Kansas City, Missouri
2822 Bales, Kansas City, Missouri
5235 Highland, Kansas City, Missouri
3725 Higland, Kansas City, Missouri
2529 Askew, Kansas City, Missouri
2807 E. 38th Street, Kansas City, Missouri
8320 Sni-A-Bar Road, Kansas City, Missouri
2539 Olive Street, Kansas City, Missouri
1123 East 79th Street, Kansas City, Missouri
The complaint includes causes of action for RICO, RICO Conspiracy, fraud, negligent misrepresentation, negligence, breach of contract and civil conspiracy.


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.