Fraud and Prevention

California Woman Pleads Guilty to Missouri Mortgage Fraud Scheme

By James Comtois
July 29, 2009

Cheryl Ann Romero of Santa Fe Springs, Calif., pleaded guilty in federal court for her role in a $12.6 million mortgage fraud conspiracy that involved 25 upscale residential properties in Lee's Summit and Raymore, Mo.

According to Matt J. Whitworth, acting U.S. attorney for the Western District of Missouri, Romero is one of 17 defendants initially charged in an October 2008 federal indictment and among 10 defendants who have pleaded guilty to the scheme to buy and sell new homes, all of which were built by Jerry R. Emerick, in the Raintree and Belmont Farms subdivisions in Lee's Summit and the Eagle Glen subdivision in Raymore.

During the course of the scheme, buyers purchased the homes at inflated prices, obtaining mortgage loans for more than the actual sale price by providing false information to mortgage lenders, then kept the extra proceeds. Buyers then created shell companies for the purpose of receiving those kickbacks from Emerick, with kickbacks of up to $125,000 on each house.

Emerick owned and operated Ty Construction and Residential Contracting LLC, which engaged in residential construction, primarily in Lee's Summit and Raymore. He pleaded guilty in April to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines.

In total during the course of the conspiracy from June 2005 to May 2007, mortgage lenders approved loans for 25 homes totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders' knowledge.

For her role in the scheme, Romero purchased two Lee's Summit properties from Emerick. In obtaining mortgage loans to make the purchases, Romero made material misrepresentations in the loan applications upon which the lenders relied and received money back unbeknownst to the lenders.

Romero received a $519,900 loan to purchase the property at 4101 S.E. Canter Dr., for which she received a $90,000 kickback. Romero also received a $549,900 loan to purchase the property at 4513 Admiral Byrd Dr., for which she again received a $90,000 kickback. Both payments were made from the loan proceeds by the title company to Miracle Management, a company Romero set up for that purpose.

Sentencing will be scheduled after the U.S. Probation Office completes a pre-sentence investigation.