Office of the United States Attorney, Ann Birmingham Scheel
District of Arizona
March 08, 2012
FORMER COUNTRYWIDE LOAN OFFICER SENTENCED TO 15 YEARS IN PRISON AND ORDERED TO PAY $22,000,000 IN RESTITUTION
PHOENIX – On March 7, 2012, Paige Kinney, aka Jamie Lee Lawler, 43, of Phoenix, was sentenced to 15 years in prison by U.S. District Judge Neil V. Wake. Kinney had previously pleaded guilty to various charges related to a mortgage fraud scheme and to charges of bankruptcy fraud, wire fraud, mail fraud, and bank fraud in two separate indictments.
Ann Birmingham Scheel, Acting U.S. Attorney for the District of Arizona, highlighted the significance of this sentence by stating, “Mortgage fraud has deflated property values, harmed lending institutions, and ruined entire neighborhoods in our community. This defendant was undaunted by the mortgage fraud indictment and continued to commit fraud crimes while awaiting trial on those charges. I commend the IRS and the FBI on a tenacious and thorough investigation that led to this significant sentence.”
“This sentence signifies the continued determination by the FBI, the Arizona Mortgage Fraud Task Force, and the United States Attorney’s Office, in targeting those individuals who conspire to commit mortgage fraud,” said FBI Special Agent in Charge James L. Turgal Jr., Phoenix Division. “The FBI and its law enforcement partners will continue to aggressively pursue those who are involved in these types of fraudulent schemes. Mortgage fraud has had a tremendous adverse impact on both the economy and the citizens of Arizona. It will continue to remain a top criminal priority of the FBI.”
Dawn Mertz, Special Agent in Charge of Internal Revenue Service Criminal Investigation said, “Ms. Lawler used her position as a loan officer, to carry out a $40 million mortgage fraud scheme. After she was charged in the mortgage fraud case, she continued to commit egregious financial crimes. She used her position and her knowledge to manipulate and erode our financial systems. Ms. Lawler’s sentence reflects the severity of the financial crimes she imposed upon our community.”
According to court documents related to the first indictment, Kinney played a leadership role in a $40 million mortgage fraud scheme that targeted Countrywide Home Loans and other lenders. According to Kinney’s plea agreement on those charges, from January, 2005, through December, 2007, Kinney and others conspired to commit mortgage fraud by using unqualified straw buyers to purchase properties, knowing that the straw buyers did not intend to live in the homes or be responsible for the loan payments. As part of the scheme, Kinney would obtain mortgage financing to purchase homes in the names of the straw buyers by submitting fraudulent mortgage loan applications and altering documents, such as bank statements, to misrepresent the straw buyers’ assets, income, and employment status, liabilities and other debts, sources of earnest money and down payments, and their intent to make the property a primary residence. Based on these misrepresentations regarding the buyers’ ability to qualify for loans, lenders issued loans that exceeded the homes’ sales prices. Once the funds were obtained from the lenders, the extra proceeds, known as “cash-back,” were directed to bank accounts that Kinney controlled. In total, Kinney caused lending institutions to issue $38,745,215.00 in fraudulent loans. Out of those loan proceeds, $8,754,485.17 was directed as “cash back” to bank accounts controlled by Kinney and other conspirators. Kinney used the “cash-back” for personal expenses; for the purchase of luxury vehicles, jewelry, and homes in Phoenix and San Diego; to make mortgage payments; and to compensate straw buyers for their involvement in the scheme.
Kinney continued her illicit activities while she was pending trial on the mortgage fraud indictment. According to her plea agreement on the second indictment, Kinney declared bankruptcy and then attempted to hide assets and liabilities from the Bankruptcy Court by falsifying her name and social security number. Kinney also committed additional financial fraud by arranging for friends to fraudulently obtain a loan to purchase a Mercedes. In addition, she committed insurance fraud by staging a phony burglary of her residence and then collecting $130,000 from Allstate Insurance Company.
Judge Wake noted that the defendant engaged in a “breathtakingly aggressive fraud” when sentencing Kinney to 10 years in prison on the mortgage fraud scheme and to five years in prison on the second indictment, to run consecutively to the mortgage fraud sentence. Judge Wake also ordered Kinney to pay $22,000,000 in restitution.
The investigation in this case was conducted by the Internal Revenue service, Criminal Investigations Division and the Federal Bureau of Investigation. The prosecution is being handled by Kevin M. Rapp and Monica B. Klapper, Assistant U.S. Attorneys, District of Arizona, Phoenix.
CASE NUMBER: CR-10-796-PHX-NVW and CR 11-491-PHX-NVW
RELEASE NUMBER: 2012-058(Kinney)
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/