Office of the United States Attorney, Ann Birmingham Scheel
District of Arizona
March 20, 2012
FORMER PHOENIX REAL ESTATE AGENT SENTENCED TO 51 MONTHS IN PRISON FOR MORTGAGE FRAUD SCHEME
PHOENIX – On March 19, 2012, Chief District Judge Roslyn O. Silver sentenced Joseph Bowen Brown, 31, of Mesa, Ariz., to 51 months in federal prison for conspiracy to commit wire fraud as part of a mortgage fraud scheme based in Phoenix. Five others have entered guilty pleas in the same scheme. Four are awaiting sentencing. Co-defendant Benjamin Jackson was sentenced to 13 months in prison earlier this year for his role in originating seven loans based on false information.
The case against Brown and his co-conspirators resulted from an investigation conducted by the Internal Revenue Service’s Criminal Investigations Division. Brown acknowledged in his guilty plea that as a principal of The Solid Group, a local real estate firm that has since collapsed, he orchestrated illegal “cash back” mortgage sales on homes in the Phoenix area. From mid-2005 through mid-2007, he, and others at The Solid Group, purchased properties at or below market value and re-sold them based on inflated appraisals. They used some of the profits to provide cash kickbacks to the buyers and failed to disclose those cash payments to the mortgage lenders. Brown and his co-conspirators then pocketed the difference. Many of the buyers were vastly unqualified for the mortgage loans and only obtained them because of false statements made on loan applications concerning income, employment, and assets.
In total, 49 properties were involved in the scheme, all of which have gone into foreclosure. The scheme resulted in nearly $10 million in losses to the mortgage lenders. Brown admitted in his plea agreement that he and his co-conspirators pocketed almost $2.5 million in the deals.
“This is yet another reminder of the damage that mortgage fraud has caused to our communities,” said Acting U.S. Attorney Ann Birmingham Scheel. “The mortgage crisis wasn’t just the result of an economic downturn. That crisis was increased in scope and became more painful for all of us because real estate professionals engaged in criminal activity in order to earn fraudulent profits.”
Special Agent in Charge of the IRS Criminal Investigation Division for the Phoenix Field Office, Dawn Mertz, stated, “This case encompassed a large conspiracy with millions of dollars in proceeds resulting from kickbacks and the overvaluation of properties. These types of crimes create a significant loss of tax revenue, drive buyers into foreclosure, leave lenders burdened with bad loans and neighborhoods with abandoned and deteriorating properties. IRS CI, along with our law enforcement partners, will continue to pursue individuals who create such havoc.”
This case is one in a series of recent successful federal mortgage fraud prosecutions in Arizona. Many of the prosecutions were the result of a multi-agency initiative called “Operation Stolen Dreams,” in which dozens of defendants were indicted in the summer of 2010.
The investigation in this case was conducted by the Internal Revenue Service, Criminal Investigations Division. The prosecution is being handled by Kevin M. Rapp and Monica B. Klapper, Assistant U.S. Attorneys, District of Arizona, Phoenix.
CASE NUMBER: CR-10-0825-1-PHX-ROS
RELEASE NUMBER: 2012-069(Brown)
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.usdoj.gov/usao/az/