Federal prosecutors in Detroit have charged 20 people in an alleged $10 million mortgage fraud ring that was under investigation for more than two years.
More than 100 FBI agents fanned out across the city last week and rounded up “loan officers, straw buyers, collusive sellers, real estate appraisers and closing agents,” according to a statement from Stephen J. Murphy, U.S. Attorney for the Eastern District of Michigan in Detroit.
By the end of the day, 17 of the 20 charged were in custody, authorities said.
Warrants were also served at One Source Mortgage in Shelby Township near Detroit, according to the prosecutor’s office.
“Honesty and integrity in the mortgage lending business are crucial to protecting home owners, lending institutions and borrowers,” Murphy said in the statement. “When mortgage fraud is widespread, it undermines the stability of the housing market and the ability of lending institutions to protect themselves from debilitating losses.”
According to a 20-count indictment, the scheme began in January 2003 and was designed to steal money from lenders by using mortgage fraud.
“The defendants conspired to obtain fraudulent mortgage loans on numerous properties and arranged to have the illegal proceeds of the fraud split…among themselves,” Murphy said.
The apparent ring leaders were Myron L. Hooker, 39, of Southfield, Mich., and Peter Garland, 36, also of Southfield. Murphy said they recruited the loan officers, appraisers and fake buyers in the scheme to use false documents to secure loans for people who would not have normally qualified for loans.
The false appraisals were used to artificially the values of the homes. Once the loans were made the members of the ring carved up the money for themselves and didn’t bother paying on the mortgages, Murphy said.
“For instance,” Murphy said, “Hooker and Garland obtained falsely inflated appraisals on real estate and paid straw buyers to act as purchasers of the property. To bolster the straw buyer’s credit-worthiness, false income and asset documentation was provided by Hooker and Garland.”
Lenders, relying on the phony information allegedly orchestrated by the pair, made the mortgage loans, many of which went into default and caused the lenders to suffer losses.
To help bust the ring, FBI agents went undercover, posing as sellers and buyers.
“Mortgage fraud generally requires ‘insider’ involvement’, so the FBI has found that undercover operations are highly effective in uncovering those criminal acts,'” Daniel D. Roberts, an FBI agent, said in the statement.
Also charged were Antwan Mcrae, 31; Keith Lakey, 43; Monique Bankhead, 32; Michael Bigbee, 27; Elbe White, 33; Tyrone Claybrook, 33; Chad Evans, 38; Sylvester Hickson, 56; Darrick McCaster, 36; Kara Motley, 38; Yolanda Lance, 33; Jennie Moore, 24; Maxine Matthews, 62; Jerry Matthews, 34; Timothy Nowc, 35; Rex Reddick, 37; and Jeffrey Stillman, 45.
The charges include wire fraud, mail fraud and conspiracy to commit fraud.
