F. Jeffrey Miller and two business associates have been convicted on federal charges of conspiracy, bank fraud, and money laundering in a $5 million mortgage fraud scheme. Mortgage Fraud Blog carried full coverage of the trial, as reported by Anne Mitchell, which can be viewed here.

The trial, which is the first of two trials developer F. Jeffrey Miller faces in federal court in Topeka, began November 17,2008. Jury deliberations started December 16, 2008. On Thursday afternoon, December 18, 2008, the jury returned the following verdicts:

F. Jeffrey Miller, 47, Stanley, Kansas: Guilty on count 1 (conspiracy), count 5 (unlawful monetary transactions), count 9 (criminal contempt), and count 10 (criminal contempt).

He was acquitted on count 2 (bank fraud), count 3 (bank fraud), count 4 (unlawful monetary transactions), count 6 (destruction of records), count 8 (interfering with a witness), count 11 (criminal contempt), and count 12 (criminal contempt).

Stephen W. Vanatta, 45, Lenexa, Kansas: Guilty on count 1 (conspiracy), count 2 (bank fraud), count 4 (unlawful monetary transactions), count 5 (unlawful monetary transactions), count 9 (criminal contempt), and count 10 (criminal contempt).

He was acquitted on count 3 (bank fraud), count 6 (destruction of records), count 8 (interfering with a witness), count 11 (criminal contempt), and count 12 (criminal contempt).

Hallie Irvin, 29, Lenexa, Kansas: Guilty on count 1 (conspiracy), count 2 (bank fraud), count 4 (unlawful monetary transactions), count 5 (unlawful monetary transactions), count 9 (criminal contempt), and count 10 (criminal contempt).

Irvin was acquitted on count 3 (bank fraud), count 6 (destruction of records), count 8 (interfering with a witness), count 11 (criminal contempt), and count 12 (criminal contempt).

Sandra Joy Harris, 42, Overland Park, Kansas, was acquitted on all counts.

A fifth defendant in the case, James Sparks, 37, Lawson, Missouri, previously pleaded guilty in September 2008. He is scheduled for sentencing January 12, 2009.

The government is seeking the forfeiture of $5 million it alleges the conspirators obtained as a result of the fraud. That phase of the trial is set for January 20 and 21, 2009.

Miller still faces federal charges of conspiracy, bank fraud and money laundering in a related case. Co-defendants in that case are Todd Earnshaw, Brian Rouse, Angela Parenza, Elizabeth Hessel, James Moser, Steve Middleton, Lanny Ross and Judy Brumble. Five of those defendants – Ross, Brumble, Middleton, Parenza and Hessel – have entered guilty pleas and are awaiting sentencing. As in any criminal case, a person is presumed innocent until and unless proven guilty. The outstanding indictment merely contain allegations of criminal conduct.

Miller, a building contractor in Kansas, Missouri and other states, sold homes under the name of Miller Enterprises, Star Land and Development, Dutch Custom Homes and other companies. He first was indicted May 17, 2006, along with eight other people on charges of conspiracy to commit bank fraud and money laundering. The government sought the forfeiture of more than $25 million in proceeds from the alleged fraud. In the May 2006 indictment, Miller and the conspirators were accused of targeting home-buyers with poor credit, obtaining inflated appraisals, submitting false information to lenders, and manipulating home buyers to move into homes before closing and then increasing the purchase price at closing when buyers were under pressure to accept the terms for fear of losing their homes.

After he was indicted, Miller was released on his own recognizance pending trial. He was allowed to continue doing business under an arrangement in which he agreed to abide by all federal, state and local laws and to permit his business transactions to be monitored by Meara King & Company of Kansas City.

During the trial leading to the verdict, prosecutors presented evidence that Miller’s illegal activities did not stop with his indictment in May 2006. Evidence showed Miller, Vanatta, Irvin and Harris participated in a conspiracy to obtain mortgages from federally insured lenders by submitting fraudulent information. The conspirators were responsible for 29 fraudulent loans totaling more than $5 million.

Evidence presented at trial showed that:

– Miller knew when he signed a monitoring agreement that he was in fact continuing to engage in criminal conduct through a new conspiracy with Stephen Vanetta, Hallie Irvin, James Sparks and others.

– Miller induced Vanatta and Irvin to cooperate in the conspiracy, Miller agreed to cosign a note to allow Vanetta and Irvin to buy a property at 415 Regency Cove, Lake Ozark, Mo. Miller agreed with Vanatta and Irvin that they would use part of the money to purchase from him a 1998, 45-foot Sea Ray boat known as “Bling Bling.” The conspirators knew that Vanatta and Irvin could not provide a legitimate history of assets and income to qualify for the loan. They created and presented false documents to obtain the loan from First National Bank, Lake Ozark, Mo.

– Miller, Vanatta and Irvin ran an office at 10777 Barkley, Overland Park, Kan., where they marketed homes under the names Miller Enterprises, Dutch Custom Homes, Star Land and Development and Somerset Homes. They created advertisements soliciting home buyers with credit problems, promising no money down and financing by the builder.

– James Sparks was a loan broker in the greater Kansas City area who referred home buyers by Miller, Vanatta and Irvin. He collaborated with Miller, Vanatta and Irvin by knowingly preparing and submitting false financial information for home buyers who were applying for loans from federally insured lenders. Sparks paid kickbacks to Irvin on behalf of Vanatta of 40 percent of loan closings to maintain business with Miller Enterprises. He provided down payments to home buyers and referred falsified and inflated sales contracts to appraisers selected by Vanatta knowing that they would inflate appraisals to cover altered sales prices.

Sentencing is set for May 4, 2009. The defendants face the following penalties:

– Conspiracy: A maximum penalty of 30 years in federal prison and a fine up to $250,000.

– Bank fraud: A maximum penalty of 30 years and a fine up to $1 million on each count.

– Unlawful monetary transactions: A maximum penalty of 10 years and a fine up to $250,000.

– Criminal contempt: A maximum penalty of 5 years and a fine at the court’s discretion.

Acting U.S. Attorney Marietta Parker announced the verdict and commended IRS-Criminal Investigation, Housing and Urban Development’s Office of Inspector General, Assistant U.S. Attorney Richard Hathaway, and Assistant U.S. Attorney Christine Kenney for their work on the case.

Miller also faces federal charges in a related case