Three Permian Basin Business Owners And Title Company Executive Indicted In Multi-Million Dollar Mortgage Fraud Scheme
Federal authorities have arrested three Permian Basin business owners and a title company executive charged in connection with a mortgage fraud scheme that involved approximately 800 real estate properties and about $45 million in loans announced United States Attorney Robert Pitman and Federal Bureau of Investigation Special Agent in Charge Douglas E. Lindquist, El Paso Division.
A two-count indictment, returned yesterday and unsealed this afternoon, charges 58–year-old Stephen Mark Hilliard, owner of Comeback Properties, LLC, Hilliard Properties, LLC, SMH Properties, LTD, and Katpast Enterprises, LP; 42-year-old Michael Duraine Cowan, II, owner of TLC Properties, LLC, and MCBW Properties, LTD; 61-year-old Odessa real estate agent Cynthia Gayle Hirsch; and, 55-year-old Berta Laura McFaddin, Division Vice President of Administration for Stewart Title Company in Midland, with one count of conspiracy to commit bank fraud. Hilliard and Cowan are also charged with one count of conspiracy to commit money laundering.
The indictment alleges that from March 2003 until August 2011, the defendants were allegedly involved in a fraudulent “same-day property flip” scheme. According to the indictment, defendants Hilliard and/or Cowan would purchase a specific property utilizing one of their respective investment companies, then re-sell the same property on the same day at an “inflated” sales price to another Hilliard and/or Cowan investment company. Hilliard and/or Cowan obtained mortgage loans by submitting to the bank fraudulent and misleading documentation created by the defendants and without disclosing to the bank the initial sale of the property.
Upon conviction, each defendant faces up to 30 years in federal prison for bank fraud conspiracy. Hilliard and Cowan also face up to 20 years in federal prison upon conviction of money laundering conspiracy. The indictment also seeks a $27 million monetary judgment against the defendants representing the alleged proceeds derived from their fraudulent scheme.
Yesterday’s arrests and indictment resulted from an investigation conducted by the Federal Bureau of Investigation together with the Texas Department of Insurance. “This investigation demonstrates our commitment to the community of Midland that this type of crime will not be tolerated and will be aggressively investigated,” stated FBI SAC Douglas E. Lindquist.
Assistant United States Attorney Austin Berry is prosecuting this case on behalf of the Government.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendants are presumed innocent until proven guilty in a court of law.