Mortgage Company Owner Pleads Guilty In $1.3 Million Fraud Scheme
Falsified Home Buyers’ Information to Generate Fraudulent Loan Applications in Order to Collect Commissions, Origination and Broker’s Fees
Greenbelt, Maryland - Shola Risikat Balogun, age 46, of Upper Marlboro, pleaded guilty today to conspiring to commit wire fraud in connection with a mortgage fraud scheme that she organized and managed which resulted in over $1.352 million of actual losses to mortgage lenders.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge David Beach of the United States Secret Service – Washington Field Office; Inspector General Jon T. Rymer of the Federal Deposit Insurance Corporation; and Special Agent in Charge Joe Clarke of the Housing and Urban Development Office of Inspector General - Office of Investigations.
According to her plea, Balogun was a licensed mortgage broker and sole proprietor of Newgate Mortgage. Balogun and others contacted individuals who wished to purchase homes. The buyers typically had moderate to low incomes, and provided the conspirators with accurate income and employment information.
The conspirators then typically inflated the buyer’s income and created bogus employment information in an effort to qualify these individuals for loans that they otherwise were unqualified to secure. In some cases, no payments were made and the property went swiftly into default. In other cases, the borrowers attempted to make mortgage payments for a period of time until they could no longer make payments. Balogun and others profited from these fraudulent transactions by collecting origination fees, commissions, yield spread premiums and broker’s fees from each loan that closed. Balogun admits that she was a leader of the scheme.
Balogun will be required to pay restitution and forfeit $1,352,378, the amount of actual losses suffered by the mortgage lenders as the result of Newgate brokering at least 20 transactions in furtherance of the fraud scheme.
Balogun faces a maximum sentence of 20 years in prison and a fine of $250,000. No sentencing date has been scheduled at this time.
The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available www.justice.gov/usao/md/Mortgage-Fraud/index.html.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein commended the U.S. Secret Service, FDIC and HUD-OIG for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Sujit Raman, who is prosecuting the case.