FOR IMMEDIATE RELEASE Sept. 21, 2011
TWO UTAH MEN CHARGED IN FEDERAL MORTGAGE FRAUD SCHEME
CHARLESTON, W.Va.— U.S. Attorney Booth Goodwin announced today that charges have been filed against two Utah men for their involvement in a multimillion-dollar mortgage fraud scheme linked to properties at a Putnam County, West Virginia subdivision. Raymond Paul Morris, 51, of South Weber, Utah, was arrested on Monday based on an 18-count indictment filed last week containing wire fraud, bank fraud and conspiracy charges. According to the indictment, Morris was involved in a sophisticated, multimillion dollar mortgage fraud scheme along with co-conspirators Deborah L. Joyce, 38, of Hurricane, West Virginia and Michael Hurd, 37, of Utah. A single-count Information was filed today against Hurd in the Southern District of West Virginia, charging him with conspiracy to commit wire fraud and bank fraud. A single-count Information was also filed today against Hurd in the Eastern District of California charging him with mail fraud linked to 20 properties in Modesto and Stanislaus Counties, California.
“These two prosecutions drive home the point that, although our area has not been as hard hit by the mortgage fraud crisis, the devastating financial tides can quickly wash up in our pleasant communities,” U.S. Attorney Booth Goodwin said. “Mortgage fraud has left many communities across this country devastated by foreclosures, plummeted home values and cost many citizens their jobs and savings. My office will remain committed to pursuing mortgage fraudsters to protect neighborhoods and communities across the Southern District of West Virginia.”
U.S. Attorney Benjamin B. Wagner said, “The Eastern District of California has been one of the hardest hit by the mortgage fraud crisis, and the people in our communities and across the nation have suffered the consequences of it — from steeply reduced home values, to ruined credit, to foreclosures and evictions. Lenders have suffered losses as a result of fraud by real estate and mortgage professionals, their own employees, and buyers, all of whom took advantage of an atmosphere where fraud was rife and commissions were easy. This district has dedicated extraordinary resources to pursuing those who perpetrate mortgage fraud and continues to increase its efforts, follow new trends, and achieve significant results.”
The mortgage fraud scheme based on properties in the Stonegate subdivision involved illegal property “flipping” to out-of-state borrowers at inflated prices using defendant Hurd’s company called “The Gift Program” or “Advanced Capital Services.” As set forth in the Indictment, the mortgage fraud plot was initiated by the co-conspirators using the following process:
- Joyce would approach the Stonegate homeowner and negotiate a sales price at or near the then-current market value;
- To further the scheme, Joyce and Morris would secure false and inflated appraisals doubling the current market value of the Stonegate homes;
- James R. Thornton and Mark E. Greenlee, both licensed appraisers, previously pleaded guilty to aiding and abetting Joyce, Morris and Hurd in the fraud scheme;
- According to the indictment, Morris would take those false appraisals and share them with members of “100X,” a real investment club headquartered in Utah that he led, claiming that the properties were significantly undervalued. Therefore, Morris led 100X members to believe that the properties could “flipped” again for a quick profit;
- To entice the 100X member to purchase the property, Morris convinced them that the purchase was a “no risk” proposition because they would have to put no money down and be given cash back at closing to make the initial mortgage payments while Joyce marketed the property on their behalf at an even higher price;
- Morris explained that the funds were coming from co-conspirator Hurd’s The Gift Program, which he described as a “seller-funded down payment assistance program”
- According to the indictment, Hurd and Morris concealed the source of the funds, including setting up sham bank accounts and falsifying loan documents;
- To complete the fraud, Morris and others ensured that the lender was in the dark regarding the real sales price, the source of the down payment funds, cash back to the lender, and “commissions” that Morris, Hurd and others received for arranging the fraudulent transactions.
In total, Morris, Joyce, Hurd and others were able to close loans on six Stonegate properties as part of the fraud scheme.
Deborah L. Joyce was sentenced in April to 46 months in prison and five years of supervised release for her involvement in the Stonegate subdivision mortgage fraud scheme. Joyce’s husband, Todd Joyce, 38, of Hurricane, Putnam County, West Virginia was also sentenced in April to 18 months in prison on mortgage fraud and tax evasion charges.
The Information filed in the Eastern District of California charges that Hurd used “The Gift Program” to fraudulently obtain over $14 million in loans causing a loss to lenders in California of $7.2 million. An Indictment against a second defendant allegedly involved in this scheme in California, Tony Havens, is currently pending before the Honorable Lawrence J. O’Neill.
Morris faces up to 540 years in prison and a $1 million fine.
Hurd faces up to 60 years in prison and a $2 million fine.
This case is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigative Division. Assistant United States Attorney Thomas Ryan is in charge of the prosecution in the Southern District of West Virginia, and Assistant United States Attorney Mark J. McKeon is in charge of the prosecution in the Eastern District of California.
This case was prosecuted as part of President Obama’s Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force 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, to 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.
PLEASE NOTE: The Fifth Amendment and applicable Federal law gives a criminal defendant a personal right of Indictment by grand jury for Federal crimes punishable by more than one year imprisonment. An Indictment is a formal, written accusation by a grand jury. An Indictment is not proof of guilt, and the defendant is presumed innocent until and unless the defendant is found guilty.
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