Raleigh Real Estate Broker Sentenced To 42 Months In Prison For His Role In Mortgage Fraud Scheme
RALEIGH - United States Attorney Thomas G. Walker announced that in federal court today before Chief United States District Judge James C. Dever, III, MARK HENRY TKAC, 49, of Raleigh, was sentenced to a 42 month term of imprisonment, followed by 5 years of supervised release, on a charge of Conspiracy to Commit Mail, Wire, and Bank Fraud, in violation of Title 18, United States Code, Section 1349. TKAC was also ordered to pay $1,612,612.94 in restitution.
Assistant United States Attorney William M. Gilmore stated, “This case reaffirms the commitment of this office to hold accountable those who knowingly used their expertise in the real estate industry for their own fraudulent gain in the midst of the mortgage bubble of the 2000’s. I commend the IRS Criminal Investigation for its perseverance to see these offenders brought to justice, despite the passage of time since the height of the mortgage crisis.”
Daniel D. Burget, Acting Special Agent in Charge, IRS Criminal Investigation stated, "Every year, fraudulent schemes victimize individuals and businesses from many walks of life, including struggling low income families lured into loans they cannot afford and legitimate lenders are saddled with over inflated mortgage loans. This investigation shows IRS Criminal Investigation’s commitment to not allowing those responsible to gain financially from their fraud."
Count One of the Criminal Information charged that between August of 2006 and May of 2008, TKAC was a licensed real estate broker who worked in the Wake County area. TKAC had knowledge of the rules and regulations of the mortgage industry. Nevertheless, TKAC participated with others, including developer David Lewis Johnson, developer Arthur Lee Barnes, mortgage broker Mark Thomas Bowe, and attorney Jeffrey Scott Taggart, in a real estate flipping scheme which defrauded various banks and lenders. Johnson, Barnes, Taggart, and Bowe were previously sentenced to prison for their roles in the scheme.
The mortgage fraud conspiracy in which TKAC became a member involved convincing individuals, referred to as “straw buyers,” to allow their name and credit to be used to secure mortgage loans in return for a kickback from the loan proceeds. The straw buyers lacked the financial means to service the debt on the loans acquired in their names. The straw buyers also did not have a long-term interest in the properties that TKAC and others purchased in their names. TKAC and other coconspirators recruited straw buyers under the guise that they were participating in an investment plan.
TKAC participated in the conspiracy first by acting as a straw buyer, and later recruiting others to serve as straw buyers for Johnson and Barnes. TKAC, Johnson, and Barnes arranged for straw buyers to execute a contract to purchase a home for an inflated price. TKAC, Johnson, and Barnes then directed the straw buyers to attorney Taggart to close the transactions. Taggart prepared false HUD-1 settlement statements for execution by the straw buyers as a part of the real estate closing and loan funding process. Taggart then caused the false HUD-1 settlement statements to be transmitted via mail and wire to banks and mortgage lenders, including FDIC regulated financial institutions, under the pretense that they reflected the economic truth of the underlying transaction.
In fact, however, the HUD-1 settlement statements prepared by Taggart as a part of the scheme routinely contained false statements that were material to the lenders' funding decisions including the existence and degree of the buyer's down payment, as well as kickbacks to the buyers and other conspirators. TKAC and other conspirators generally received several thousand dollars in kickbacks from each fraudulent transaction closed by Taggart.
The various banks and mortgage lenders who issued loans related to the mortgage fraud scheme were deceived by the use of straw buyers, in addition to the foregoing false and fraudulent statements made by TKAC, and other co-conspirators in connection with the loan closings.
Ultimately, borrowers defaulted on many of the transactions brokered by TKAC, resulting in substantial losses to various banks and lenders.
On May 24, 2012, TKAC was named in a one-count Criminal Information charging TKAC with Conspiracy to Commit Mail, Wire, and Bank Fraud. TKAC pleaded guilty to the charge on the same date.
Investigation of this case was conducted by the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorney William M. Gilmore represented the United States.