Three Ohio Residents Plead Guilty to Conspiracy to Commit Bank Fraud for Fraudulent Real Estate Loan Scheme
WASHINGTON - Todd Gongwer of Dublin, Ohio; Lance Parker of Dublin, Ohio; and Joel Lee, of Galena, Ohio, pleaded guilty today to conspiracy to commit bank fraud, the Justice Department and Internal Revenue Service (IRS) announced. Gongwer, a licensed real estate agent, also pleaded guilty to tax evasion in the hearing before Judge Michael H. Watson in Columbus, Ohio. Parker also pleaded guilty to illegally structuring cash transactions.
According to the plea agreements and evidence presented during the plea hearings, from 2005 through 2007, Gongwer, Parker, Lee and others negotiated and participated in real estate deals in which each of them purchased a luxury home for a falsely inflated purchase price from real estate builder Thomas Parenteau in exchange for an undisclosed or disguised kickback. Gongwer admitted to using nominees to purchase at least two other luxury homes for inflated prices with kickbacks.
According to the plea agreements and evidence presented during the plea hearings, in each transaction, the buyers misrepresented their income and assets in order to obtain approximately 90% financing of the inflated purchase price. The buyers, seller Parenteau and Parenteau’s realtor, Bonnie Helt, attempted to justify the inflated purchase prices by creating and signing false work change orders and addendums which created the appearance that the inflated price represented additional substantial work to be completed on the homes. However, no such agreement was actually intended by any party, and the documents were not disclosed to the lenders. 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 kickback payments to the buyers. The loans associated with the real estate purchases of Gongwer, Parker and Lee have all gone into default.
Gongwer and Parker also admitted to conducting a similar transaction involving Parker’s purchase of 15 condominium units in three buildings located in Columbus, Ohio, from Parenteu’s associate and architect, William Tarcy. Tarcy pleaded guilty to conspiracy to commit bank fraud and agreed to forfeit assets related to the offense in March 2009. Tarcy’s sale of the condominiums also involved inflated purchase prices, fraudulently obtained financing by Parker, and substantial kickback payments to Parker as the buyer.
Gongwer accepted responsibility for causing a fraud loss between $2.5 million and $7 million. Additionally, Gongwer pleaded guilty to tax evasion for failure to report income he received. According to his plea agreement, Gongwer worked for ReMax Affiliates Inc. in 2004 and was paid approximately $158,333.32 in gross income. Gongwer deposited that income into nominee accounts in order to conceal his receipt of that income from the IRS. Gongwer also failed to file income tax returns for tax years 2000 through 2005. The tax loss caused by his conduct is between $200,000 and $400,000.
Parker and Lee each accepted responsibility for causing a fraud loss between $400,000 and $1 million. Parker also pleaded guilty to structuring transactions to avoid federal reporting requirements. During 2007, Parker engaged in cash transactions in amounts less than $10,000 for the purposes of withdrawing cash from his bank accounts in order to finance gambling vacations in Las Vegas and to avoid federal currency transaction reporting requirements.
Judge Watson scheduled sentencing of all three defendants for a date after the July 2009 trial of Tom Parenteau, his accountant Dennis Sartain and his realtor Bonnie Helt, who were charged in April 2009 in a tax fraud and money laundering scheme. Gongwer faces a maximum sentence of 10 years in prison and a maximum fine of $500,000. Parker faces a maximum sentence of 10 years in prison and a maximum fine of $500,000. Lee faces a maximum sentence of five years in prison and a maximum fine of $250,000.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Tax Division Trial Attorneys Richard M. Rolwing, Jill M. Cassara, and Sean B. O’Connell.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.