Federal prosecutors in Ohio have snared their first guilty plea in their investigation of a large drug ring that used a mortgage brokerage to launder some of its ill-gotten funds.
Kimberly Kay McGinnis, 42, a former employee of mortgage loan brokerage American Funding Group in Dayton, Ohio, has pleaded guilty to conspiracy to launder money and failing to file a tax return. She faces up to four years in prison.
McGinnis is one of 17 people charged in what federal and local authorities have described as the largest drug ring in Dayton, a city about 40 miles north of Cincinnati.
The ring, led by a man prosecutors identified as Earl Marshall, allegedly sold more than 150 kilograms with a potential street value of more than $7.5 million. Working with the operators of American Funding Group — Glen and Debra Hurst — McGinnis was charged with laundering about $120,000 of drug money by using phony documents to secure mortgage loans.
Glen and Debra Hurst have also been charged and are scheduled to go on trial in June.
Mortgage lenders stung by the scam included Accredited Home Lenders, Aegis Mortgage Co. and Option One Mortgage Corp., according to the indictment.
“The object of the conspiracy was to obtain mortgage loans from various lenders based on fraudulent information,” prosecutors said. “The loans would sometime be in the same names of the straw purchasers with defendant Earl Marshall providing any money necessary to complete the loan and purchase process.”
At least nine properties were involved, according to the 38-page indictment. Prosecutors say the Hursts and McGinnis created documents to “fraudulently” obtain mortgage loans ranging from $33,000 to $165,750. Some of the properties were used to prepare the drugs for sale while other purchases were part of an elaborate scheme to launder drug money, according to the indictment.
Appraisals were inflated and the true identities of buyers were often hidden on mortgage loan applications, prosecutors said.
Phony pay stubs, employment histories, tax forms and other documents were used as part of a “scheme and artifice to defraud and to obtain money and property by false and fraudulent pretenses.”
Money from drug transactions were also used to purchase properties as part of the scheme to launder the money and hide its true origins from lenders and investigators, authorities said.
Members of the ring, including Marshall, purchased properties “knowing that the transaction was designed in whole and in part to conceal and disguise the nature, location, source, ownership and control of the proceeds,” according to the indictment.
