Dack Daugherty, St. Louis, Missouri, was sentenced to 44 months in prison on conspiracy and money laundering charges in connection with a mortgage fraud ring that operated primarily in South St. Louis, Missouri. Additionally, as part of his sentence, Daugherty was ordered to pay $576,390 to twenty-one different banks and mortgage companies.

According to the Indictment, Daugherty and a number of others, including real estate appraisers and loan officers, arranged for the fraudulent purchase of 52 properties. As part of the scheme, Daugherty convinced corrupt appraisers to inflate the values of properties he would arrange to buy. Daugherty then convinced corrupt loan officers to make up favorable information about the income and assets of the buyers Daugherty had lined up. In all, Daugherty admitted to defrauding lenders of more than $500,000 and agreed to pay that money back. Daugherty also admitted laundering the proceeds of the scheme through a local credit union.

In an unusual twist, Daugherty admitted to a second fraud scheme, which resulted in an increased sentence. In a rare post-plea filing, Daugherty admitted going on a "spending spree" as his criminal indictment for mortgage fraud loomed, borrowing hundreds and thousands of dollars for classic cars, a grand piano, motorcycles, commercial equipment and even a high-end Jacuzzi spa. Just as his borrowers did in the fraud scheme, Daugherty lied in his credit applications for these items and, after successfully deceiving the lenders, never made a payment on any of these purchases. Most of the items have been successfully repossessed.

Daugherty pled guilty last September and appeared today for sentencing before United States District Judge E. Richard Webber. After his indictment in June, Daugherty's parole through the State of Missouri was revoked and he has been in state custody since the summer.

"Dack Daugherty was a particularly effective criminal engaged in a particularly harmful crime," said Hanaway. "Daugherty's initiation of a second fraud scheme while trying to resolve the first makes this case unusual, and the substantial sentence and other penalties handed down today particularly satisfying." "This office remains committed to vigorously prosecuting the insidious crime of mortgage fraud and, hopefully, lessening the harm it visits on our neighborhoods and economy."