News and Press Releases

News and Press Releases

Savage man sentenced for participating in $13 million mortgage fraud scheme

FOR IMMEDIATE RELEASE
March 30, 2012


MINNEAPOLIS – Earlier today in federal court, a 37-year-old Savage man was sentenced
for participating in a $13 million mortgage fraud scheme that involved no fewer than 25
properties in Prior Lake, Savage, and Minnetonka, among other Minnesota communities. United
States District Court Judge Ann D. Montgomery sentenced Ericvan Anthony McDavid to 45
months on one count of wire fraud. He was indicted, along with two co-defendants, on June 15,
2010, and pleaded guilty on January 26, 2011.

In his plea agreement, McDavid admitted that between April of 2005 and February of 2009,
he conspired to obtain loan proceeds fraudulently by making false representations and promises
as well as by withholding material information. During that time, McDavid was either an owner
or co-owner of several businesses, including EVM Properties, Skyy Realty, and Universal, Inc.,
through which he bought, sold, and managed real estate.

To carry out this fraud scheme, McDavid recruited “straw buyers” to purchase selected
properties by promising them payments of $15,000 to $52,000 per transaction. Once a buyer
agreed to purchase a particular property, McDavid provided that buyer with funds to put toward
the purchase, thereby misleading the lender into believing that the buyer actually had a financial
interest in repaying the loan, when, in reality, that was not the case.

McDavid then produced or caused the production of false loan applications on behalf of the
buyers. Those applications overstated the buyers’ assets and employment status. Because of the
false applications, mortgage loans were approved in no fewer than 25 real estate transactions,
with total loan proceeds amounting to approximately $13 million. While those proceeds were
intended to pay for the properties and other transaction-related expenses, McDavid admittedly
used portions of them to benefit himself personally.

Ultimately, the properties involved in the fraudulent transactions fell into default and ended
up in foreclosure. Following foreclosure, they were sold for a total of about $4 million, resulting
in a loss due to this scheme of about $9.2 million.

On April 29, 2011, McDavid’s sister, Renee Lynise McDavid, age 40, of Brooklyn Park,
was sentenced to three years of probation on one count of conspiracy to commit wire fraud. She
was charged on January 19, 2011, and pleaded guilty on January 25, 2011.

In her plea agreement, Renee McDavid admitted participating in the scheme from 2006
through 2008. In her capacity as a licensed real estate agent and mortgage broker, she was
responsible for losses incurred in five of the 25 property transactions noted above. In those
instances, she entered false information on loan applications so straw buyers would qualify for
mortgage loans they otherwise would not be eligible to receive. Again, those misrepresentations
included overstating applicant income and falsifying employment histories. As a result of the
material misrepresentations in those five instances alone, lenders issued loan proceeds totaling
more than $1.7 million and ultimately incurred a loss of approximately $768,000.

Ericvan McDavid’s two other co-defendants were sentenced on July 12, 2011, each on one
count of conspiracy to commit wire fraud. Larry Africanus Hutchinson, age 41, of St. Paul, was
sentenced to 21 months in prison, and Jerone Ian Mitchell, age 36, of Minneapolis, was
sentenced to 12 months and one day in prison. They pleaded guilty in September of 2010.

These cases were the result of investigations by the Federal Bureau of Investigation and the
Minnetonka Police Department. They were prosecuted by Assistant U.S. Attorney Christian S.
Wilton.

This law enforcement action is in part sponsored by the interagency Financial Fraud
Enforcement Task Force. The task force was established to wage an aggressive, coordinated and
proactive effort to investigate and prosecute financial crimes. It 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, 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.

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