Oct.17 , 2006

 

TWO PLEAD GUILTY TO ROLE IN $25 MILLION BANK FRAUD SCHEME

TOPEKA KAN. – A former loan officer and a former office manager have pleaded guilty to taking part in a $25 million scheme to boost a Kansas City home builder’s business through bank fraud and money laundering.

Angela Parenza, 39, Kansas City, Mo., a former office manager, and Elizabeth L. Hessel, 46, Overland Park, Kan., a former loan officer, each pleaded guilty to one count of conspiracy to commit bank fraud and money laundering. They entered the pleas during a hearing Monday before U.S. District Judge Julie A. Robinson.

“The criminal conspiracy in which these two defendants took part was designed to lure low income home buyers with promises of easy credit,” said U.S. Attorney Eric Melgren. “The conspirators profited by manipulating appraisals and submitting false and fraudulent loan applications.”

In their pleas, Parenza and Hessel admitted that they were loan officers for Associated Capital, a company started by F. Jeffrey Miller, owner of Miller Enterprises and Star Land Development. Miller was in the business of building and developing homes in the greater Kansas City area. Miller targeted selling his homes to buyers with credit problems and little or no money for a down payment. He would steer buyers to Associated Capital, which would prepare loan applications to federally insured lenders.

At Miller’s direction, Hessel and Parenza would do anything required to complete a loan closing, including but not limited to forging potential buyers’ signatures on loan documents and providing home purchasers with down payments and closing costs.

In their pleas, Parenza and Hessel admitted that as part of the conspiracy in which they participated:

– Miller inflated appraisals by refusing to pay appraisers if his price were not met, selling homes in subdivisions to employees at inflated prices and agreeing to forgive second mortgages and by providing Miller-built homes a primary comparables. Through these deceptive practices, he caused lenders to lend up to and in excess of 100 percent of the value of the properties.
– Miller and others falsified loan documents including tax returns, employment verifications, and rental agreements to obtain loans for buyers that they were not qualified to receive.
– Conspirators provided home buyers with down payments and closing costs without the knowledge of lenders.
– Conspirators increased the sales price of houses before or during closing and caused a second mortgage to be prepared on the difference at an illegal interest rate.
–Conspirators manipulated home buyers into moving into Miller-built houses in advance of closing. When prices increased at closing, the buyers were under pressure to accept the terms or face eviction.
– Conspirators sold houses in volume to investors who intended to resell them or refinance them and withheld information from lenders.
– Conspirators obtained a total of more than $25 million in loans from federally insured institutions and used the funds to finance the conspiracy, pay off construction loans and enrich the conspirators.

Parensa and Hessel each face a maximum penalty of 5 years in federal prison and a fine up to $250,000. Sentencing is pending the trial of the con-conspirators.

Co-conspirators charged in the case, all of whom are awaiting trial, include:

– F. Jeffrey Miller.
– Todd Earnshaw
– Brian Rouse
– Paul E. Nicolace
– James Moser
– Steve Middleton
– Lanny Ross

Melgren commended Housing and Urban Development, Office of Inspector General, which investigated the case, as well as Assistant U.S. Attorney Richard Hathaway and Assistant U.S. Attorney Christine Kenney, who are 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.

 

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