Former Georgia Loan Officer Sentenced for Fraud

U.S. District Judge William C. O'Kelley sentenced Andrew John Smith of Cleveland, Ga., to serve three and a half years in prison, followed by five years of supervised release on charges arising from a mortgage fraud scheme. The court also ordered Smith to pay restitution but has not yet set a final amount. According to the information presented in court, in early 2007, Smith was employed as a part-time loan officer at a Buford, Ga.-based mortgage firm when he originated a fraudulent loan for his own residence. An alleged co-conspirator not named in the indictment later recruited Smith to refinance loans with other lenders, as well as to sell foreclosed properties on which construction was not complete to unqualified straw borrowers funded by other lenders, according to court information. Smith's own loan for his residence had been included in the company's portfolio of nonperforming loans facing imminent foreclosure. In June 2008, Smith and his alleged co-conspirator were caught in an FBI sting after Smith had arranged for the sales price of a property to be inflated to $4 million from $2 million. Prior to his arrest, Smith submitted fraudulent documents to federally insured banks to arrange a $3.2 million purchase money mortgage loan to finance the purchase of the property. Smith then allegedly negotiated a side agreement with the sellers who were, unbeknownst to Smith, cooperating with the FBI, for a $2 million kickback to his shell company. Federal agents at the property arrested Smith during a subsequent meeting to negotiate his multi-million dollar kickback for the fraudulent deal. The property was sold for its true market value of $1.8 million immediately upon conclusion of the FBI's sting operation. The FBI's investigation is ongoing.