Two loan processors who defrauded lenders of $6 million have been sentenced to prison terms that will last from two to five years.
Kirk Kirby and Sholonda Johnson pleaded guilty in the Eastern District of Pennsylvania to three counts each of wire fraud in connection with this fraudulent scheme. Kirby has to serve a prison term of 60 months, while Johnson was sentenced to 30 months.
To operate the scheme, Kirby pretended to be a licensed mortgage broker by being the owner of Invictus Financial Group. Between June 2006 and December 2007, Kirby found properties across the country that he was interested in purchasing, but needed unsuspecting investors to help him acquire the assets.
Kirby recruited individuals close to him who made a steady income, such as local church members, fraternity brothers and friends, as investors who purchased the properties located in Pennsylvania, New Jersey, Georgia, Arizona and Nevada. Similarly to a Ponzi scheme, Kirby promised the investors that there was no risk of loss and guaranteed returns.
In order to purchase the properties, Kirby acted as a dual agent where he negotiated one price with the seller and a higher price for the investor, with the difference in profit being inherited by the defendant.
For every asset acquired by an investor, a different lender was used to close the deal because the defendants created false documents to obtain loans in order to acquire the properties.
Johnson served as the loan officer at several mortgage brokerage companies. He concealed from the lenders that the defendants had obtained multiple mortgages in one investor’s name.
According to the indictment, the defendant promised investors that he would manage all responsibilities of the property, such as finding tenants, collecting rents, conducting repairs and maintenance, and making mortgage payments. Also, if the property was not rented and failed to cover the mortgage payments, Kirby falsely told investors that he had an insurance policy to cover their losses.
When the defendant could not make the required mortgage payments, the investors were forced to default on the property.
In addition to the prison terms, U.S. District Court Judge Harvey Bartle III ordered Kirby to pay restitution of more than $3.9 million and at least $2.4 million to be paid by Johnson.
