Former Credit Union Loan Officer, Real Estate Agent And Appraiser Charged With Mortgage Loan Fraud
Springfield, Ill. - A federal grand jury today charged a former credit union loan officer, a real estate agent and an appraiser with scheming to “flip” real estate properties in Decatur, Illinois, and profiting as much as $1.9 million, as announced by U.S. Attorney Rodger A. Heaton, Central District of Illinois. Those charged are:
- Diane Shelton, 60, of the 1700 block of East Barrington, Decatur, Illinois, who was employed as a senior loan officer at Staley Credit Union in Decatur;
- Terry Hart, 56, of the 1400 block of Post Court, Decatur, a licensed realtor who operated Hart Realty in Decatur; and,
- Mark Brown, 43, of Moweaqua, Illinois, a licensed real estate appraiser who operated a real estate appraisal business in Decatur, Illinois.
The three defendants are each charged with nine counts of mail fraud alleging they devised a scheme to defraud Staley Credit Union and various buyers of real estate in Decatur from at least 2002 through at least July 2005. The indictment alleges the three participated in as many as 40 or more fraudulent real estate sale and financing transactions totaling as much as $5 million or more and profiting as much as $1.9 million for their personal use.
The indictment alleges the defendants made false representations, including fraudulent appraisals prepared by Brown and used by Hart and Shelton, to cause buyers to purchase and Staley Credit Union to finance residential real estate properties, some of which were owned by Hart and were financed at amounts substantially higher than their reasonable value. Hart and Shelton allegedly received payment of loan proceeds and paid appraisal fees and kickbacks to Brown.
To carry out the scheme, the indictment alleges Hart recruited buyers to purchase homes in the Decatur area. These buyers typically had little or no experience in real estate financing. Hart and Shelton represented that they would assist buyers to obtain financing through Staley Credit Union not only for purchase of the home but also for refinancing of the buyers’ pre-existing personal debt.
Brown allegedly performed more than 40 fraudulent appraisals, for which he was paid approximately $16,000 in appraisal fees. As further inducement to Brown, Hart allegedly made additional payments to Brown of approximately $10,000.
According to the indictment, Staley Credit Union’s loan policy provided, among other things, that the credit union offered home equity loans to customers who already owned their homes. The credit union’s policy did not provide for offering loans to customers to purchase a residence but provided that customers would be referred to another lending institution that provides such services.
Hart and Shelton allegedly represented that buyers would be provided with conventional 15 to 30-year mortgage financing, when in fact they knew financing was in the form of balloon loans with much shorter maturity dates. The indictment alleges Shelton fraudulently represented to Staley Credit Union officials that the financing was in the form of home equity financing when she knew it was being provided to buyers for actual purchase of properties and refinancing of pre-existing personal debt. To conceal the fraud, Hart and Shelton allegedly prepared quit claim deeds to the buyers, the result of which was to reflect that the buyers were owners of the properties at the time the credit union provided mortgage financing.
The charges are the result of an investigation by the U.S. Postal Inspection Service, the Federal Bureau of Investigation, and the Illinois State Police. Staley Credit Union cooperated and provided assistance in the investigation. The case is being prosecuted by Assistant U.S. Attorney Timothy A. Bass.
It is anticipated that a summons will be issued for Hart, Shelton and Brown for initial appearance in federal court in Urbana, Illinois. If convicted, each offense of mail fraud carries a maximum statutory penalty of up to 30 years imprisonment and a fine of $1,000,000.
Members of the public are reminded that an indictment is merely an accusation; the defendants are presumed innocent unless proven guilty.
James A. Lewis
welcomes you to the Central District of Illinois
Below 100 is an initiative to reduce police line-of-duty deaths to fewer than one hundred per year.
Ready Illinois offers homeland security information and planning tips for emergencies and disasters.
A basic primer for the federal judicial system.