Accountant Sentenced to Federal Prison for $1.4 Million Mortgage Fraud Scheme Involving Baltimore City Properties
Baltimore, Maryland – U.S. District Judge James K. Bredar sentenced Cecil Sylvester Chester, age 70, of Mitchellville, Maryland today to two years in prison, followed by three years of supervised release, for a mortgage fraud scheme involving the fraudulent purchase of seven properties in Baltimore, using fraudulent loan documentation and straw purchasers, resulting in losses of over $1.4 million. Judge Bredar also ordered Chester to pay restitution of at least $1.483 million, with the exact amount to be determined by the Court.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation; Special Agent in Charge Bertrand Nelson of the U.S. Department of Housing and Urban Development Office of Inspector General; and Special Agent in Charge Brian Murphy of the United States Secret Service - Baltimore Field Office.
Chester worked as an accountant from an office located on New Hampshire Avenue in Hyattsville, Maryland. Co-conspirator Andreas Tamaris purchased, renovated, and then resold distressed row houses in Baltimore City, primarily in the Highlandtown area. Co-conspirators Michael Camphor was a real estate agent and Christopher A. Kwegan was a real estate agent and general contractor.
According to his guilty plea, from February 2008 to July 2009, Chester and his co-conspirators, found buyers for Tamaris’ properties and for other property owners. Chester persuaded individuals, who were inexperienced with residential real estate transactions and who lacked the funds needed to pay the down payment and closing costs, to purchase Baltimore row houses owned by Tamaris or otherwise located by the conspirators. Chester advised these “straw purchasers” that they didn’t need to contribute funds for the down payment or closing costs to buy these properties. Chester also advised that he would place tenants in the properties whose rent payments would cover the monthly mortgage payments after the transactions closed, and that Chester would collect the rent and make the mortgage payments.
Chester and his co-conspirators set the purchase price for the properties to exceed their actual fair market value, thereby generating excess proceeds from the transactions from which they could profit. For example, when Kwegan located a house he wanted to sell, he sought assistance from Chester and real estate agent/consultant Michael Camphor, who were already operating a mortgage fraud scheme. Chester, Kwegan and Camphor set the price of a row house in Baltimore at $250,000, rather than the actual market price of approximately $75,000. Kwegan derived over $100,000 in proceeds from the sale of this home to a straw purchaser and paid another $40,000 to Chester for his assistance.
Chester, Camphor, and others recruited buyers to purchase houses, knowing that they did not qualify for the home mortgages. The conspirators provided false information about the straw purchasers’ employment, income and financial assets, as well as fraudulent supporting documentation to the mortgage loan brokers to enable the straw purchasers to qualify for home mortgage loans. The conspirators falsely indicated to the mortgage loan brokers that the straw purchasers each intended to use the property as their primary residence following the purchase. Tamaris and other individuals supplied the funds needed for the down payment and closing costs on each of the transactions, and were in turn reimbursed from the loan proceeds at settlement.
Chester brought the straw purchasers to the closing, and then caused the straw purchasers to falsely sign certifications in the closing documents affirming that they intended to use the properties as their primary residence and that no portion of the down payment and closing costs were borrowed. Following the settlement on each transaction in which they participated, Chester and the other conspirators received substantial payments drawn from the proceeds of the loan.
Few, if any, payments were made towards the mortgages. The seven properties in which Chester was involved all went into foreclosure, resulting in a loss of at least $1.483 million.
In related proceedings, Andreas E. Tamaris, age 46, of Bel Air, Maryland, Christopher A. Kwegan, age 59, of Randallstown, Maryland, Michael Gerard Camphor, age 60, of Baltimore, and Alexander Sivels, II, age 32, of Baltimore, previously pleaded guilty to their roles in this, or related mortgage fraud schemes. Tamaris was sentenced to 15 months in prison and was ordered to pay $1,229,206.28 in restitution. Sivels and Kwegan were each sentenced to 27 months in prison. Judge Bredar ordered Sivels to pay restitution of $1,317,314.35, and ordered Kwegan to pay restitution of $530,641.27. Camphor is scheduled to be sentenced on December 19, 2016.
The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available at http://www.justice.gov/usao-md/financial-fraud-and-identity-theft .
Today’s announcement is part of the efforts undertaken in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
United States Attorney Rod J. Rosenstein commended the FBI, HUD OIG - Office of Investigations and the U.S. Secret Service for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Jefferson M. Gray, who is prosecuting the case.