Kathleen Harps, 51, Chesapeake, Virginia, was sentenced in Norfolk, Virginia, federal court to 54 months in prison for operating a foreclosure rescue mortgage fraud scheme. Chief United States District Judge Rebecca Beach Smith imposed the sentence.  Harps previously pled guilty on August 23, 2011.

According to court documents, during 2006 Harps owned and operated the now defunct Hampton Roads businesses, New Beginnings Group, LLC, and IMAK Group, LLC, which specialized in "foreclosure rescue."  Through these businesses, Harps and others solicited homeowners in financial distress and facing foreclosure, to agree to sell their homes to Harps or straw buyers working with her.  Harps promised the homeowners that, during a one year period after the sale, they could remain in their homes without having to pay the mortgage, while simultaneously putting their financial affairs back in order, so that they could buy back their homes at the end of the year.  This, however, failed to occur. 

Instead, court records show that Harps and her straw buyers made assorted false statements to fraudulently obtain mortgage loans, upon which they later defaulted.  As a result, foreclosures soon followed and the homeowners lost both their homes and substantial sums of homeowner equity, which was siphoned out of the closing transactions and paid to Harps' businesses.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement.

This case was investigated by the Federal Bureau of Investigation.  Assistant United States Attorney Robert J. Krask is prosecuting the case on behalf of the United States.