Fraudsters Sentenced To Prison For "Reverse Mortgage" Scheme
ATLANTA, GA - A group of mortgage fraud conspirators have been sentenced to prison by United States District Court Judge Julie Carnes today in federal district court on multiple charges relating to a “reverse mortgage” scheme targeting the elderly. KELSEY TORREY HULL, 39, of Lithonia, Georgia; JONATHAN ALFRED KIMPSON, 28, of Lithonia, Georgia; JAMES MICHAEL GREEN, 44, of Lilburn, Georgia; HERBERT BUSH, 31, of Atlanta, Georgia; WILBUR “SONNY” LETAK, 44, of Atlanta, Georgia; KEVIN CLAUDE BARNETT, 28, of Atlanta, Georgia; were all sentenced for their roles in the scheme.
United States Attorney Sally Quillian Yates said, “HUD’s Home Equity Conversion Program was designed to enable seniors to buy a home or to stay in a home at a time in their lives when it may be very difficult for them to obtain a conventional loan. These defendants took money out of the hands of the elderly and then put them in houses worth only a fraction of the amounts represented. This case represents yet another variation of mortgage fraud we are combatting through investigation and prosecution.”
Lisa Gore, Acting Special Agent in Charge, U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG), said, “This investigation demonstrates that HUD’s Office of Inspector General is committed to aggressively pursuing and defending the interest of America's seniors from those who target them through the reverse mortgage process, and bring to justice those who defraud FHA's mortgage insurance programs.”
Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, said, “Those individuals who attempt to defraud such federally funded programs will continue to be a priority for the FBI's Financial Crimes program. The defendants in this case disregarded the needs and the welfare of the elderly that these programs were meant to help. The FBI will continue to work with its various law enforcement partners in protecting the integrity of these federally funded programs and asks that the public report any related fraud to law enforcement officials.”
HULL was sentenced to 151 months in prison to be followed by 6 months of home confinement and 5 years of supervised release, and
KIMPSON was sentenced to 102 months in prison to be followed by 6 months of home confinement and 5 years of supervised release, and
GREEN was sentenced to 37 months in prison to be followed by 6 months of home confinement and 5 years of supervised release, and
BUSH was sentenced to 37 months in prison to be followed by 6 months of home confinement and 5 years of supervised release, and
LETAK was sentenced to 30 months in prison to be followed by 6 months of home confinement and 5 years of supervised release, and
BARNETT was sentenced to five years of probation.
The defendants pleaded guilty to the charges in separate hearings between June 2010 and August 2011. Another co-defendant in the case, GIA JOY GLASSE-HARRIS, 28, of Atlanta, Georgia, was sentenced on November 3, 2011, by United States District Judge Amy Totenberg to 2 years, 7 months in prison and 6 months of home confinement to be followed by 3 years of supervised release, and was ordered to pay $174,000 in restitution. GLASSE-HARRIS was convicted on a charge of conspiracy to defraud mortgage lenders and the FHA insurer of the loans.
According to United States Attorney Yates, the charges and other information presented in court: So-called “reverse” mortgages in HUD's Home Equity Conversion Program were designed to assist with the financial security of seniors, ages 62 or older. There are two types of reverse mortgages. In a “refi-reverse,” the senior homeowner receives money from the lender for a portion of the equity in the home they own. In a “purchase-money reverse,” the senior receives money from the lender toward the purchase of a new home. Under both types of reverse mortgages, the senior does not have to repay the lender for as long as the senior lives in the home. However, refi-reverse mortgages fund only a percentage of the property value, requiring a significant equity to remain in the property, and purchase money reverse mortgages require a significant down payment from the senior borrowers to establish equity in the property. The substantial equity must remain in the home to cover loan principal, interest, insurance and servicing costs upon FHA sale of the property when no longer occupied by the senior.
GREEN, the closing attorney for many of the fraudulent reverse mortgage loans, admitted he knowingly accepted senior down payments from HULL and KIMPSON, and returned the funds to them along with reverse proceeds. GREEN further admitted that he allowed HULL and KIMPSON to acquire properties controlled by BUSH, BARNETT, and others at greatly discounted amounts through “short sales,” and thereafter immediately resold the same properties to seniors at amounts up to 16 times the true acquisition costs. A “short sale” is the sale of real estate in which the sale proceeds are less than the balance owed on the loan, but approved by the lender to avoid foreclosure and related costs. GREEN concealed these “short sales” from the reverse lenders and insurers.
HARRIS attempted to take advantage of the reverse program by using forged deeds to transfer a property which the true owner had purchased for $25,900 into senior names at an amount fraudulently inflated by $125,000, and faking the required senior down payments of between $44,000 and $70,000 needed to qualify for the FHA-insured purchase money reverses which she attempted. She used bogus “gift” letters to the senior from non-existent relatives. Such down payments were to be fronted by those paid to do so by the defendant, and to be returned upon the reverse loan closings, along with profits substantially in excess of the true sales prices of the property. In one instance, HARRIS used a second senior to attempt a refi-reverse in that senior's name, relying on forged, back-dated deeds to make it appear that the senior had previously purchased the property from the true owner for $150,000, and therefore had substantial equity in the property which the defendant was attempting to refinance in his name.
HULL and KIMPSON fraudulently overvalued a number of properties, securing FHA-insured “reverse” loans, faked the required senior down payments needed to qualify for purchase money reverses, and back-dated property transfers into senior names at inflated amounts for refi-reverses. These defendants used bogus “gift” letters from non-existent relatives in amounts between $50,000 and $105,000, as well as fake “HUD-1" Settlement Statements reflecting the sale of non-existent senior assets closed by fictitious law firms to show the source of the required down payments. All down payments were actually supplied by the defendants, not the senior citizens, to be returned to the defendants upon the reverse loan closings, along with profits substantially in excess of their property acquisition prices.
KIMPSON was also convicted of aggravated identity theft, relating to his use of the stolen identity of realtors and their passwords to falsify Georgia MLS records to create fake property listings and sales at inflated amounts to support many of his and HULL's fraudulent appraisals.
LETAK was the loan originator for many of the fraudulent reverse mortgages, and admitted submitting bogus documentation of senior down payments to reverse lenders for HULL and KIMPSON to obtain purchase money reverses. LETAK also submitted back-dated deeds transferring properties into senior names at amounts inflated by bogus liens payable to HULL and KIMPSON companies to attain refi reverses.
BUSH operated “shell” companies in Georgia which had “employees” who applied for mortgage loans. The “employees” actually lived in New York, and used bogus borrower paystubs, W2's, bank statements and BUSH’s shell companies to verify non-existent Atlanta employment, income and residency. When his recruited borrowers could not pay their mortgages, BUSH provided HULL a list of properties to negotiate “short sales” from BUSH's New York borrowers to HULL. Later, HULL arranged for those borrowers to again sell the same properties just sold to HULL to seniors at greatly increased prices. HULL completed two of these transactions for BUSH before being stopped by law enforcement.
BARNETT fraudulently obtained mortgages in unqualified borrowers’ names, including his own name. BARNETT also could not make the monthly payments, and he allowed KIMPSON to negotiate “short sales” from himself to KIMPSON. Almost immediately, KIMPSON arranged for BARNETT to again sell the same properties to seniors at greatly inflated prices. KIMPSON completed two of such transactions for BARNETT before being stopped by law enforcement.
These cases are part of President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
These cases were investigated by Special Agents of the HUD-Office of Inspector General and the Federal Bureau of Investigation (FBI). Assistance in this case was provided by the U.S. Secret Service, the U.S. Department of Treasury Financial Crimes Enforcement Network (FINCEN) and the Georgia Multiple Listing Service.
Assistant United States Attorneys Gale McKenzie and Chris Bly prosecuted the cases.
For further information please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through the U.S. Attorney's Public Information Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney's Office for the Northern District of Georgia is www.justice.gov/usao/gan.