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Pastor, Broker Both Convicted of Fraud

MAR 7, 2013 4:53pm ET
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PENNSYLVANIA PASTOR AND MORTGAGE BROKER CONVICTED OF MORTGAGE FRAUD

FACTS

On Feb. 26, Michael Wilkerson and Denise Haines were convicted of engaging in a scheme to defraud JP Morgan Chase’s predecessor, Chase Manhattan Bank, by fraudulently obtaining home loans valued at more than $6 million for properties located in Schwenksville and Glenmoore, Montgomery County, Pa.

Wilkerson, pastor of New Millennium Life Restoration Fellowship, with locations in Phoenixville and Spring City, recruited several of his congregants and the congregants’ families and friends to participate in a number of real estate transactions. If they had good credit and acted as straw purchasers, he would pay them $15,000. Wilkerson paid the recruits another $5,000 if they referred other straw purchasers to him. Wilkerson recruited at least six individuals who agreed to be straw purchasers of homes.

Haines, a mortgage broker with American Group Mortgage Corp., submitted fraudulent loan applications in the transactions to Chase Manhattan Bank. These fraudulent loan applications falsely represented the appraised value of the homes, the identification of the “straws,” the source of funds, the borrower’s income and assets and their intent to take possession of the homes as their primary residence. Based on the representations made in the loan documents, Haines knew she could get Chase Manhattan Bank to approve the loans with little verification of the information on the loan applications.

Wilkerson’s wife Joyce, who pleaded guilty, assisted in the scheme by writing out the checks to the “straws” and also pretended to be a co-purchaser of each of the homes at the time of settlement. Lee Garell, a real estate broker who also pleaded guilty, prepared the sales paperwork for each of the homes that was sold to the “straws” and, along with Michael Wilkerson, dictated the fraudulent terms set out in the settlement sheets.

When the loans were funded at the time of settlement, the defendants manipulated the documents prepared at settlement and, later, forwarded the settlement documents to Chase Manhattan Bank to make it appear to the bank that the “straws” brought considerable cash to the closings. In fact, all of the money involved at the settlement actually came from Chase Manhattan Bank. The defendants shared in the profits from the fraudulent sales.

After settlement on the homes, Michael Wilkerson took possession of all of the homes, rented at least two of them and lived in another. He paid the mortgages with the proceeds from the fraudulent mortgage transactions and with rental income for approximately six months and then told the “straw” purchasers that they had to pay the mortgages. This last act led to the loans falling into default and then foreclosure, resulting in a loss of approximately $3 million.

U.S. District Court Judge Mitchell S. Goldberg scheduled a sentencing hearing for June 3 for Michael Wilkerson and for June 17 for Haines. Each faces a maximum possible sentence of 180 years in prison, five years’ supervised release, a fine of up to $6 million, and a $600 special assessment. Sentencing hearings are scheduled for Garrell and Joyce Wilkerson on April 30 and May 6 respectively.  (usattyedpa22613)

MORAL

Have you noticed that the mortgage fraud prosecutions go on and on and on and on? It makes for good statistics to the prosecutors and bad news for those caught. It is not likely to end soon. So if you have any suspicions of an investigation then you might want to consult with legal counsel now as opposed to waiting until someone visits you and hands you a business card with language that makes your heart skip a couple of beats.

ALL WAYS FINANCIAL SERVICES OWNER/CEO SENTENCED TO 18 MONTHS FOR MORTGAGE FRAUD AND TAX EVASION INVOLVING 2006-2007 LOANS

FACTS

On Feb. 25, Cynthia Suratos Lorica was sentenced to 18 months in prison and ordered to pay more than $1 million in restitution for bank fraud and tax evasion. Lorica, of Hayward, Calif., waived indictment and pleaded guilty to information charging her with bank fraud and tax evasion.

Lorica admitted to participating in a fraudulent scheme to obtain money from Washington Mutual Bank in 2006 and 2007 by making false statements in loan applications secured by real property. During that time period, she was the owner and CEI of All Ways Financial Services Inc., and an officer of Absolute Value Financial Inc. Absolute Value was licensed by the state of California to originate mortgage loans and to engage in real estate transactions. Lorica was involved in the preparation and submission of loan applications to various federally insured financial institutions and other lending institutions.

Lorica also admitted to evading taxes on income she received in 2006 and 2007. She admitted to substantially under-reporting her gains from the sale of real estate as well as under-reporting her income from All Ways Financial and claiming a mortgage interest deduction that she was not entitle to receive.

The sentence was handed down by Chief U.S. District Court Judge Claudia Wilken following a guilty plea on one count in violation of 18 U.S.C. § 1344(2) and one count in violation of 26 U.S.C. § 7201. Judge Wilken also sentenced the defendant to a three year period of supervised release. The defendant will begin serving the sentence on March 27.  (usattyndca22613)

MORAL

Notice the prosecutors are still chasing loans that funded in 2006 and coming forward.  They have 10 years to file a criminal indictment. So they can go back to 2003 at this time and come forward. And they are very busy at it according to some of our clients. If you have reason to be concerned do not wait until a federal agent hands you a business card.

WHAT TYPE OF INSURANCE SHOULD CONSUMERS HAVE WHEN THEY PURCHASE OR OWN A RESIDENCE THEY INTEND TO OR ALREADY OCCUPY TO PROTECT THEMSELVES

Comments (1)
A lesson learned many years ago in this business: be very cautious with "Holy" loans.
Posted by ROBERT P | Monday, March 11 2013 at 1:12PM ET
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