FOR IMMEDIATE RELEASE                                         CIV
TUESDAY, FEBRUARY 4, 1997                          (202) 616-2765
                                               TDD (202) 514-1888

                                 
 U.S. GETS $650,000 FRAUD JUDGMENT AGAINST MISSISSIPPI DEVELOPER 

     WASHINGTON, D.C. -- The United States has obtained a consent
judgment of $650,000 against Samuel Magee Milton Jr., a former
Clinton, Mississippi, real estate developer who defrauded the
Department of Housing and Urban Development by securing
federally-insured mortgages for residential properties that later
went into default, the Department of Justice announced today.
  
     Assistant Attorney General Frank Hunger of the Civil
Division and U.S. Attorney Brad Pigott of Jackson, Mississippi,
said the judgment, signed by a judge in U.S. District Court in
Jackson, resolves a False Claims Act action filed in 1993 by the
Department against Milton.  Milton is the eighth defendant to
settle with the government in the scheme.

     "This settlement indicates the United States will
aggressively prosecute abuses of federal programs," said Pigott.
     Hunger said, "This is a substantial step forward in the
Department's effort to root out and penalize those who
participate in fraud schemes perpetrated against federal
programs." 
 
     In its suit, the government alleged that Milton recruited
loan applicants--so-called straw buyers--to apply for HUD-insured
loans on single-family homes in Clinton, Mississippi.  They posed
as legitimate buyers for at least 13 residential properties by
falsely claiming to HUD they were making down payments on the
properties.  In fact, they made no down payments.
  
     The straw buyers also submitted personal financial data that
represented their credit and income history rather than that of
Milton.  Relying on these false loan applications, HUD insured
the properties, which quickly went into default and foreclosure. 
     Milton used the straw buyers so he could convert short term,
high interest construction loans into HUD-insured loans and take
as cash the difference between the balances of the construction
loans and the HUD-insured loans. 
 
     The straw buyers, who got the HUD insured loans from 1984
through 1986, never made any mortgage payments.  Rather, they
transferred the property titles to others who ultimately
defaulted on the loans, forcing HUD to pay the mortgage insurance
claims and take title to the properties.
  
     From 1993 through January 1997, the United States has
settled allegations in the same case with the closing attorneys,
Bob McHann Jr. and Don McLemore; one of the lenders, Troy &
Nichols; Leon Ghetti; Mississippi Valley Title; Jerry Brocato:
and Patricia Strain. The government said they violated the False
Claims Act by knowingly taking part in the fraud scheme.
97-048                        #####