COLUMBUS, Ohio – Todd M. Gongwer, of Columbus, Ohio, was sentenced today to two years in prison for conspiring with convicted Columbus area home builder Thomas Parenteau to commit a mortgage fraud scheme in which the pair defrauded banks into lending more than $10 million to Gongwer, his nominees and unqualified borrowers, the Justice Department announced today. Gongwer was also sentenced for committing tax evasion by using bank accounts of others to hide the income that he earned from ReMax Affiliates from 2000 through 2005.
In addition to the prison term, U.S. District Court Judge Michael H. Watson ordered Gongwer to forfeit $250,000 and pay restitution to the Internal Revenue Service (IRS) and the financial institutions he defrauded in amounts to be determined by the court.
On May 4, 2009, Todd Gongwer pleaded guilty to a two-count information charging conspiracy to commit bank fraud and tax evasion. According to court documents and testimony, Gongwer became a licensed real estate agent in 1998. During 2005 through 2007, Gongwer and others negotiated and participated in five real estate deals in which Gongwer, a nominee or another buyer would purchase a luxury home for a falsely-inflated purchase price and receive a kick-back. In each transaction, the buyer, or Gongwer on the buyer’s behalf, would misrepresent his or her income and assets in order to obtain approximately financing for approximately 90 percent of the inflated purchase price. The parties to the transactions attempted to justify the inflated purchase prices by creating false work-change orders and addenda that created the appearance that the inflated prices represented additional, substantial work to be completed on the homes. The object of each transaction was to use the loan proceeds in excess of the actual purchase price to fund hundreds of thousands of dollars in kick-back payments to the buyers. The buyers have been unable to maintain the mortgage payments on the luxury homes and have all defaulted on the loans.
Gongwer negotiated a sixth transaction that was similar to the luxury home transactions but involved the sale of 15 condominium units in three buildings located in Columbus. The condominium transaction involved inflated purchase prices, fraudulently obtained financing and a substantial kick-back payment to the buyer. The total fraud loss caused to the lenders was more than $5 million.
During tax year 2004, Gongwer worked for ReMax Affiliates Inc. and was paid approximately $158,333.32 in gross income. Gongwer deposited that income into nominee accounts to conceal his receipt of that income from the IRS. Gongwer failed to file income tax returns for tax years 2000 through 2005. The tax loss including relevant conduct is more than $200,000.
In imposing the sentence, Judge Watson lauded Gongwer’s cooperation with the government but said that "avarice and greed were [Gongwer’s] primary and motivating factors." The judge also said that he had seen "physical assault victims who were less devastated" than Gongwer’s aunt, whose identity Gongwer stole. In considering the amount of restitution due to the defrauded banks, Judge Watson said that he was "frustrated because of the willful blindness of the lending institutions, and the cooperation and participation of appraisers and many others."
IRS Criminal Investigation investigated the case, and Trial Attorneys Richard M. Rolwing and Sean O’Connell of the Justice Departments’s Tax Division prosecuted the case.