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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Pennsylvania

FOR IMMEDIATE RELEASE
Tuesday, April 8, 2014

Philadelphia Man Pleads Guilty To Multi-Million Dollar Mortgage Fraud Scheme

    

PHILADELPHIA – Eric Sijohn Brown, 46, of Philadelphia, pleaded guilty today to 20 counts in connection with a mortgage fraud scheme involving KREW Settlement Services.  Brown pleaded guilty to conspiracy, two counts of FHA loan fraud, 12 counts of loan fraud, and three counts of tax evasion.  Between May 2004 and February 2009, Brown and his co-conspirators inflated purchase prices on loan documents for more than 100 Philadelphia properties resulting in more than $20 million in fraudulent loan proceeds.  A sentencing hearing is scheduled for July 8, 2014.  Brown faces a maximum possible sentence of 486 years in prison,  including a mandatory two year term, five years of supervised release, a fine of up to $15 million, and $2,000 special assessment. A forfeiture notice was also filed seeking more than $13.7 million from all defendants.

KREW Settlement Services was a Philadelphia real estate settlement company and Brown was a general contractor who worked with his co-defendants to identify distressed properties to purchase, typically in the West Philadelphia area.  The scheme involved recruiting “straw buyers” whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take title to the properties, when, in reality, the properties were owned and controlled by the defendants.  Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties.  Mortgage brokers - including Roderick Foxworth, Walter Brown, and John William Polosky (charged separately in the Western District of Pennsylvania) - allegedly submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false. 

Charged with Brown were Roderick L. Foxworth, Sr., Cynthia Evette Brown, Walter Alston Brown, Jr., and Kevin Joseph Franklin.  Cynthia Brown is alleged to have falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not.  Kevin Joseph Franklin, a title agent, is alleged to have falsely prepared two deeds and settlement statements (referred to as "Form HUD-1") – one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price.  Franklin is also alleged to have created false title insurance policies for the lenders. 

After the loans funded, the seller was paid the agreed-upon purchase price, and the difference between the actual purchase price and the false purchase price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown, and many of these payments were not reflected on the HUD-1 forms.

In addition to the five defendants charged with Brown, and the three defendants charged by the Western District of Pennsylvania, seven defendants were charged by information.    

            The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, and the Department of Housing and Urban Development’s Office of Inspector General.     It is being prosecuted by Assistant United States Attorney Michael S. Lowe.

As alleged in the indictment, “KREW” is an acronym of the first names of Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525