Seven more defendants sentenced for mortgage fraud;
$12.6 million scheme involved new, upscale homes in Lee's Summit, Raymore
KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced today that seven more defendants have been sentenced in federal court for their roles in a $12.6 million mortgage fraud conspiracy that involved 25 upscale residential properties in Lee’s Summit, Mo., and Raymore, Mo.
Stefan M. Guerra, 31, of Lee’s Summit, Mo., Jerome Shade Howard, 41, of Anaheim, Calif., Michael Conrad Smith, 49, of Lancaster, Calif., and Gerald D. Williams, 49, and his wife, Judith E. Williams, 49, both of Bunkie, La., were sentenced in separate hearings today by U.S. Chief District Judge Fernando J. Gaitan. James F. Simpson, 41, of Lee’s Summit, and Cheryl Ann Romero, 52, of Santa Fe Springs, Calif., were sentenced on Thursday, July 22, 2010.
Howard was sentenced to three years in federal prison without parole, and ordered to pay $5,945,996 in restitution and to forfeit $900,731 to the government. Guerra was sentenced to one year and one day in federal prison without parole, and ordered to pay $2,425,787 in restitution. Smith was sentenced to five years of probation, including six months of home detention and 4,000 hours of community service, and ordered to pay $640,289 in restitution. Gerald Williams was sentenced to five years of probation, including six months of home detention and 2,000 hours of community service, and ordered to pay $238,008 in restitution. Judith Williams was sentenced to five years of probation, including four months of home detention and 100 hours of community service, and ordered to pay $238,008 in restitution.
Simpson was sentenced to one year and one day in federal prison without parole, and ordered to pay $495,578 in restitution. Romero was sentenced to five years of probation, including six months of home detention and 4,000 hours of community service, and ordered to pay $488,102 in restitution.
They are among 18 defendants who have pleaded guilty in connection with a conspiracy to defraud mortgage lenders from June 2005 to May 2007. Eleven co-defendants have now been sentenced.
Conspirators were involved in buying and selling new homes in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans by providing false information to mortgage lenders, then keeping the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from the builder, Jerry R. Emerick, 40, of Raymore. Kickbacks ranged from $60,000 to $125,000 on each house.
Emerick, who pleaded guilty to conspiracy to commit mortgage fraud and wire fraud and to transfer funds obtained by fraud across state lines, is scheduled to be sentenced on July 30, 2010. Angela R. Clark, 41, of Lee’s Summit, a real estate agent who sold new homes for Emerick, has also pleaded guilty to her role in the conspiracy and awaits sentencing. Co-defendant Cynthia Jordan, 43, of Lee’s Summit, another mortgage broker, has also pleaded guilty and awaits sentencing.
In total during the course of the conspiracy, mortgage lenders approved 25 loans totaling $12,616,990. From that total, buyers received approximately $2,343,337 without the lenders’ knowledge. Lenders sustained actual losses totaling $6,434,043.
Guerra was a mortgage broker who obtained loans for co-defendants to purchase 11 properties in the fraud scheme. The loan applications were fraudulent, and all the loans went into default and were foreclosed. Some of the property buyers in the scheme purchased more than one property. In those instances, Guerra processed the loans quickly so that the loans for the subsequent purchases would be completed before the earlier purchases showed up on the buyers’ credit reports. Guerra also used different lenders for multiple loans to avoid the risk that the lender would notice an individual was buying more than one property.
Howard purchased two properties in the fraud scheme and recruited five other California residents – including Romero and Smith – who completed a total of 10 additional purchases. Howard acted as the middleman or contact person for the California buyers. He also provided false Social Security numbers to co-defendants Ronald E. Brown, Jr., 40, of Gladstone, Mo., and Daryle A. Edwards, 39, of Olathe, Kan. Brown and Edwards were sentenced on June 11, 2010. All the loans for Howard and the buyers he recruited went into default and were foreclosed. The properties were then sold to third parties, with a net loss of $5,945,996.
Romero was vice president and branch manager of Bank of the West in Pico Rivera, Calif., and became acquainted with Howard as a customer of the bank. Romero purchased two properties in Lee’s Summit as part of the mortgage fraud scheme and obtained $180,000 in kickbacks from the loan proceeds.
Smith, Howard’s brother-in-law, purchased two properties in Lee’s Summit as part of the mortgage fraud scheme and obtained $180,000 in kickbacks from the loan proceeds.
Simpson purchased four properties in Lee’s Summit and Raymore as part of the mortgage fraud scheme and obtained $301,500 in kickbacks from the loan proceeds. The loans for all four properties went into default; Simpson arranged a short sale of one of the properties to his parents and the rest of the homes went into foreclosure. The foreclosed properties were sold to third parties, with a loss of $676,413.
Gerald and Judith Williams purchased one property in Lee’s Summit as part of the mortgage fraud scheme and obtained $100,150 in kickbacks from the loan proceeds. They defaulted on the loans and the loans were foreclosed, for a loss of $238,008.
This case is being prosecuted by Assistant U.S. Attorneys Linda Parker Marshall and Kathleen D. Mahoney. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation.