A mortgage executive and a binge-drinking Realtor have been sentenced to prison for their roles in a $50 million mortgage fraud scheme.
Kelvin Mitchell was recently sentenced in a Cincinnati federal court to 30 months in prison, according to case documents. He had previously admitted to bank fraud, income tax evasion and conspiracy.
The former branch manager for Mortgages Unlimited was also ordered to make $71,000 in restitution and pay $41,895 in back taxes.
The sentencing was the result of Mitchell’s participation in a $50 million property flipping scheme involving real estate in Cincinnati — a case that has yielded convictions of nearly 40 people. Phony appraisals, false documents and straw buyers were all part of the scam, according to prosecutors.
Also sentenced was David Lockwood, the former operator of Lockwood Real Estate Holding Co. In addition to a two-year sentence, he was ordered to pay $4.5 million in restitution, court documents show.
Lockwood has pleaded guilty to charges of bank fraud, conspiracy and money laundering through a plea agreement with federal prosecutors.
“Lockwood furthered this scheme by serving as the seller of many ‘flipped’ properties,” prosecutors charged. “Lockwood purchased properties at market value and then placed them in his name or the name of one of his companies … and then sold them at artificially inflated values.
“In addition, during many of the closings Mr. Lockwood signed various forms containing false information,” prosecutors said. “Moreover, Mr. Lockwood was aware that the buyer often received a ‘kickback’ outside of the closing, which was not disclosed to the lender.”
Living in Florida and working in the real estate business, Lockwood was estranged from his wife and drinking too much.
“Since I began in the real estate business, I would drink socially two to three nights a week,” Lockwood, 41, said in federal court documents. “Typically up to a 12-pack of beer a night.”
Soon he was drinking every night, spending, by his own estimate, up to $300 a night on alcohol. Vodka and Sugar Free Red Bull, an energy drink often used to prolong drinking binges, became his drink of choice.
As part of his plea agreement, Lockwood has agreed to not take another job in the mortgage business without court approval. He also agreed to stop drinking while he awaits the start of his prison term early next year. And until he begins serving the sentence, Lockwood must equip his car with a device that detects alcohol use if he chooses to drive.
Such devices will not allow the vehicle to be operated if the driver has been drinking. It works similar to the devices law used by law enforcement to detect if a driver has been drinking by measuring alcohol through a breath test.
