FOR IMMEDIATE RELEASE CIV THURSDAY, APRIL 24, 1997 (202) 616 2765 TDD (202) 514-1888 SHREVEPORT ATTORNEY PAYS $130,000 TO SETTLE HOUSING FRAUD SUIT WASHINGTON, D.C. -- A Shreveport, Louisiana, attorney will pay the United States $130,000 to settle allegations he assisted in a fraudulent scheme to illegally obtain Federal Housing Administration (FHA) insured mortgages, the Department of Justice announced today. Assistant Attorney General Frank W. Hunger of the Civil Division and U. S. Attorney Michael D. Skinner of Shreveport said the agreement settles claims that William Robert McKenzie defrauded the FHA by assisting former Shreveport real estate developer Michael Willis in fraudulently obtaining favorable FHA mortgages on 25 townhouse properties in the same subdivision in 1985. FHA regulations prohibited a single individual from obtaining mortgages on more than seven properties in a single subdivision. The government alleged that Willis, with McKenzie's knowledge, paid a number of individuals to act as "straw buyers" for the properties to evade the seven property restriction. In exchange for a payment of $2,000 from Willis, the fictitious buyers used their good credit records to obtain approval for FHA- insured mortgages. The FHA is a Department of Housing and Urban Development agency which enables people with low incomes to purchase homes by insuring their loans. At the real estate closing in McKenzie's office, the straw buyers immediately conveyed the properties back to Willis, who made all down payments and closing costs, even though documents submitted to HUD falsely stated that the straw buyers were the real mortgage holders. The mortgages eventually went into default, and the FHA was forced to pay insurance claims on the loans. The agreement settles a suit, United States v. William Robert McKenzie, filed by the Department in U.S. District Court in Shreveport. The case was conducted jointly by the Department's Civil Division and the U.S. Attorney's office in Shreveport with the assistance of HUD's Office of Inspector General in Ft. Worth, Texas, and HUD offices in Shreveport and Washington, D.C. ##### 97-172