NEW INDICTMENT CHARGES KANSAS CITY HOME BUILDER
WITH TRYING TO DERAIL FEDERAL INVESTIGATION

Grand jury returns indictments against F. Jeffrey Miller and others
for conspiracy, bank fraud, unlawful monetary transactions, destroying records, criminal contempt and interfering with a witness

TOPEKA, KAN. – A grand jury in Topeka has returned an indictment charging a Kansas City home builder with violating a court order and trying to interfere with a federal investigation.

Already under indictment on charges including conspiracy to commit bank fraud and money laundering, F. Jeffrey Miller, 45, Stanley, Kan., was allowed to continue doing business after agreeing that an outside consultant could monitor his activities on behalf of the court.

“The new indictment charges that Mr. Miller continued to operate illegally while being monitored, and conspired with others to interfere with the federal investigation into his business practices,” said U.S. Attorney Eric Melgren.

Miller was arrested Thursday morning and set for a hearing a detention hearing at 2:30 p.m. today before U.S. Magistrate Judge James P. O'Hara at federal court in Kansas City, Kan.

Charged along with Miller in the new indictment are Stephen W. Vanatta, 43, Lenexa, Kan., Hallie Irvin, 26, Lenexa, and James Sparks, 35, Lawson, Mo.

Miller, a building contractor in Kansas, Missouri and other states, sold homes under the name of Miller Enterprises, Star Land Development, Somerset Homes, Dutch Custom Homes and other companies. He was indicted May 17, 2006, along with eight other people on charges of conspiracy to commit bank fraud and money laundering. The government sought the forfeiture of more than $25 million in proceeds from the alleged fraud. In the May indictment, Miller and the conspirators were accused of targeting home-buyers with poor credit, obtaining inflated appraisals, submitting false information to lenders, and manipulating home buyers to move into homes before closing and then increasing the purchase price at closing when buyers were under pressure to accept the terms for fear of losing their homes.

After he was indicted, Miller was released on his own recognizance pending trial. He was allowed to continue doing business under an arrangement in which he agreed to abide by all federal, state and local laws and to permit his business transactions to be monitored by Meara King & Company of Kansas City.

The new indictment

The new indictment charges that:

– Miller knew when he signed the monitoring agreement that he was in fact continuing to engage in criminal conduct through a new conspiracy with Stephen Vanetta, Hallie Irvin, James Sparks and others.
– To induce Vanatta and Irvin to continue to cooperate in the conspiracy, Miller agreed to cosign a note to allow Vanetta and Irvin to buy a property at 415 Regency Cove, Lake Ozark, Mo. Miller agreed with Vanatta and Irvin that they would use part of the money to purchase from him a 1998, 45-foot Sea Ray boat known as “Bling Bling.” The conspirators knew that Vanatta and Irvin could not provide a legitimate history of assets and income to qualify for the loan and would have to create and present false documents to obtain the loan from First National Bank, Lake Ozark, Mo.
– Miller, Vanatta and Irvin ran an office at 10777 Barkley, Overland Park, Kan., where they marketed homes under the names Miller Enterprises, Dutch Custom Homes, Star Land Development and Somerset Homes. They created advertisements soliciting home buyers with credit problems, promising no money down and financing by the builder.
At 10777 Barkley, the conspirators kept business records including credit information, loan application information, sales contracts and falsified rent verification documents that they referred to as “friend letters.” Among the records was evidence that the conspirators unilaterally increased the sales price on homes before closing, forged buyers’ signatures and caused buyers to submit “friend letters” that contained falsified rent history in order to obtain loans that they would not otherwise qualify to receive.
In August 2006, federal investigators obtained a subpoena for the conspirators’ business records based on information that “friend letters” containing falsified rent histories were being kept at 10777 Barkley. An employee who worked for the conspirators received the federal subpoena and notified Vanatta that she would retrieve the records to comply with the court order. When the employee got to the office, the files had been sanitized to remove the incriminating evidence.
– James Sparks was a loan broker in the greater Kansas City area who referred home buyers to Miller, Vanatta and Irvin. He collaborated with Miller, Vanatta and Irvin by knowingly preparing and submitting false financial information for home buyers who were applying for loans from federally insured lenders. Sparks paid kickbacks to Irvin on behalf of Vanatta of 40 percent of loan closings to maintain business with Miller Enterprises. He provided down payments to home buyers and referred falsified and inflated sales contracts to appraisers selected by Vanatta knowing that they would inflate appraisals to cover altered sales prices. At Vanatta’s direction, he shredded and deleted incriminating documents.

In the 12-count indictment returned Wednesday, Miller, Vanatta, Irvin and Sparks each are charged with:
– One count of conspiracy to commit bank fraud
– Two counts of bank fraud
– Two counts of engaging in unlawful monetary transactions
– One count of destroying records in a federal investigation
– Four counts of criminal contempt of a court order

In addition, Miller, Vanatta and Irvin are charged with one count of attempting to intimidate a federal witness by inducing Sparks to withhold records and testimony in a grand jury investigation.

In the 12th count, the government seeks the forfeiture of more than $5 million in proceeds from the crimes, including the assets of Miller Enterprises, Star Land Development, Somerset Homes, Dutch Custom Homes, HCI, Innovative Designs and any other entities organized by Miller, Vanatta, Irvin and Sparks. Property listed in the forfeiture count includes a residence at 425 Regency Cove, Lake Ozark, Mo.; a 1998, 45-foot Sea Ray boat known as “Bling Bling;” a 2006, 50-foot Sea Ray boat known as “Pipe Dream;” and a 1998 Piper Seneca V Aircraft.

Upon conviction, the crimes carry the following penalties:
– Conspiracy: A maximum penalty of 5 years in federal prison and a fine up to $250,000.
– Bank fraud: A maximum penalty of 30 years and a fine up to $1 million on each count.
– Unlawful monetary transactions: A maximum penalty of 10 years and a fine up to $250,000.
– Destruction of records in a federal investigation: A maximum penalty of 20 years and a fine up to $250,000.
– Attempting to intimidate a witness: A maximum penalty of 10 years and a fine up to $250,000.
– Criminal contempt: A maximum penalty of 5 years and a fine at the court’s discretion.

IRS-Criminal Investigation and Housing and Urban Development’s Office of Inspector General investigated the case. Assistant U.S. Attorney Richard Hathaway and Assistant U.S. Attorney Christine Kenney are prosecuting.

OTHER INDICTMENTS
`
Other indictments returned Wednesday by a federal grand jury meeting in Topeka include the following:

Noelia Garza-Sotelo, 31, Amarillo, Texas; Beatris Vasquez, 57, Amarillo, Texas; and Miguel Rubalcava-Roacho, 36, Amarillo, Texas, are charged with one count of possession with intent to distribute more than 5 kilograms of cocaine, and one count of possession with intent to distribute more than 500 grams of methamphetamine. The crimes are alleged to have occurred Oct. 1, 2006, in Pratt County, Kan.

If convicted, they face a penalty of not less than 10 years and not more than life and a fine up to $4 million. The Kansas Bureau of Investigation prepared the case. Assistant U.S. Attorney Lanny Welch is prosecuting.

Juan Jose Avila, 25, Phoenix, Ariz., and Dwayne Carr, 34, Chicago, Ill., are charged with one count of conspiracy to distribute 10.1 kilograms of cocaine and one count of possession with intent to distribute 10.1 kilograms of cocaine. In addition, Carr is charged alone with possession with intent to distribute 91 kilograms of marijuana. The crimes are alleged to have occurred in July 2005 in Wabunsee County, Kan.

Upon conviction, they face a penalty of not less than 10 years and not more than life and a fine up to $4 million on the cocaine charges. Carr faces a maximum penalty of 20 years and a fine up to $1 million on the marijuana charge. The Drug Enforcement Administration investigated. Special Assistant U.S. Attorney Jason Coody is prosecuting.

Scott Richard Johnson, 42, Salina, is charged with possession with intent to distribute 31 grams of methamphetamine. The crime is alleged to have occurred Sept. 7, 2006, in Saline County, Kan.

If convicted, he faces a penalty of not less than 5 years and not more than 40 years and a fine up to $2 million. The Salina Police Department investigated. Special Assistant U.S. Attorney Jason Coody is prosecuting.

Nahum Cruz-Rojas, 29, a citizen of Mexico, is charged with one count of possessing a fraudulent document to be employed in the United States, two counts of aggravated identity theft; and one count of possessing a counterfeit Social Security Card. The crimes are alleged to have occurred Oct. 28, 2006, in Sedgwick County, Kan.

If convicted, he faces a maximum penalty of 10 years in federal prison without parole and a fine up to $250,000 on the fraudulent document charge, a mandatory 2 years to run consecutively to other sentences and a fine up to $250,000 on each of the identity theft charges; and a maximum penalty of 15 years in federal prison without parole and a fine up to $250,000 on the counterfeit document charge. Immigration and Customs Enforcement investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.

Felix Ordonez-Quiroga, a citizen of Mexico, is charged with one count of unlawfully re-entering the United States after being convicted of an aggravated felony and deported. He was found Nov. 15, 2006, in Wichita, Kan.

If convicted, he faces a maximum penalty of 20 years in federal prison and a fine up to $250,000. Immigration and Customs Enforcement investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.

Jose Chairez-Hernandez, a citizen of Mexico, is charged with one count of unlawfully re-entering the United States after being convicted of an aggravated felony and deported. He was found Nov. 15, 2006, in Garden City, Kan.

If convicted, he faces a maximum penalty of 20 years in federal prison without parole and a fine up to $250,000. Immigration and Customs Enforcement investigated. Assistant U.S. Attorney Brent Anderson is prosecuting.

As in any criminal case, a person is presumed innocent until and unless proven guilty. The indictments filed merely contain allegations of criminal conduct.

 

##