Jeffrey Whaley, 49, of Sevierville, Tenn., faces five years in prison for his May 2012 federal convictions for wire fraud, bank fraud and money laundering arising from a mortgage fraud scheme.
His sentencing by a U.S. District Court Judge in Knoxville, Tenn., this week followed that of his co-defendant, Sevierville title attorney
Whaley and Kerley were convicted of conspiring to defraud lenders in New Tazewell, Tenn., and Richmond, Va.
The conspiracy involved “straw borrowers” who were induced to obtain mortgages in their names via promises that they would not have to make a downpayment or mortgage payments for the property, would receive cash at closing and would share in the profit following a resale.
As part of the conspiracy, materially false representations were made to the lenders. These included false representations related to the straw borrowers’ source of funds for downpayments and amounts recorded as “cash from borrower” on HUD-1 settlement statements and loan applications for the purpose of inducing the lenders to disburse the mortgage proceeds they had wired to and entrusted with Kerley’s title company.
Kerley and Whaley concealed eight real estate transactions from the lenders that the borrower did not provide at closing the money identified as the cash from borrower on the HUD-1 settlement statement. In those eight transactions, the lenders, in total, wired more than $6 million in loan proceeds a title company for disbursement.
Kerley, a Tennessee-licensed attorney, was the owner of the title company where the fraudulent loans were closed. Whaley conducted business through a company which received substantial sums of money from the loan proceeds. Kerley and Whaley committed money laundering offenses through financial transactions that involved proceeds from the mortgage fraud scheme.
