Jeffrey Tyler Wine, 28, real estate investor, Kansas City, Missouri was charged by information and pleaded guilty to a federal information that charges him with mortgage fraud conspiracy and money laundering in connection with a $17.5 million mortgage fraud scheme that involved 280 residential properties.
“Not only were dozens of financial institutions directly victimized,” United States Attorney Bradley J. Schlozman said, “but this type of fraud scheme ultimately impacts all consumers. When unscrupulous individuals lie on loan applications and misrepresent the condition of properties, they undermine the integrity of the real estate market and the local economy suffers as a result. We will prosecute criminals who steal with the stroke of a pen as aggressively as we prosecute those who carry a gun.”
By pleading guilty, Wine admitted that, from November 2001 to May 2005, he conspired with others to defraud mortgage lenders by inducing them to loan victim-investors $17,558,440 to purchase 280 residential properties. Wine was in the business of purchasing, rehabilitating, managing and selling residential properties in the metropolitan area through various business entities that he created and operated, including Sunrise Equities, Inc.; Sunrise Assets, LLC; Sunrise Investments Holdings, LLC; Brooklyn Properties, LLC; Arsenal Investments, LLC; sunrise St. Louis, LLC; Woodland Properties and Larch Investments.
According to Schlozman, Wine acquired residential properties at reduced rates at foreclosure sales, tax sales and bankruptcy sales. After rehabbing the properties (which at times was done in a shoddy manner doing poor quality work), they were advertised for sale as investment properties with no money down. Victim-investors were told that Sunrise Equities would provide the down payment and closing costs for the sale, secure renters for the property and manage the properties for the first year after purchase, including all maintenance costs and tenant contracts. Victim-investors were also told that Sunrise Equities would ensure that mortgage payments were paid even if the properties were not rented, and that a positive cash flow from the properties was guaranteed.
Co-conspirators, who included mortgage brokers, prepared false and fraudulent loan applications and supporting documents to submit to mortgage lenders in the names of victim-investors. Sometimes Wine and co-conspirators provided money to the victim-investors to deposit into their bank accounts to mislead the lenders regarding the buyers’ assets. They also furnished money for the victim-investors to take to closing to pay the buyers’ closing costs.
While Wine and co-conspirators managed the rental properties, they submitted false monthly reports to victim-investors of rent received, expenses incurred, and income earned, and paid to the victim-investors the amount of income reflected. This induced victim-investors to purchase additional properties.
Wine also pleaded guilty to money laundering, admitting that he engaged in a monetary transaction involving criminally-derived property, by drawing upon the funds obtained by fraud to purchase a 400-ounce gold bar for $177,000 on May 24, 2005.
Under federal statutes, Wine could be subject to a sentence of up to 15 years in federal prison without parole, plus a fine up to $500,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
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.