Three Men Indicted in $1.7 Million Mortgage Fraud Scheme Involving Baltimore City Properties
Perpetrators of Mortgage Fraud Steal From Lenders and Damage Neighborhoods
Baltimore, Maryland – A federal grand jury indicted three defendants on charges arising from the fraudulent purchase of seven properties in Baltimore, using fraudulent loan documentation and straw purchasers, resulting in losses of over $1.7 million:
Cecil Sylvester Chester, age 68, of Mitchellville, Maryland;
Michael Gerard Camphor, age 59, of Baltimore; and
Christopher Andy Kwegan, age 58, of Randallstown, Maryland.
The indictment was returned on June 24, 2015 and unsealed today upon the arrests of the defendants.
The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Special Agent in Charge Cary A. Rubenstein 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.
“Mortgage fraud perpetrators steal from lenders that are induced to make loans that will never be repaid and damage neighborhoods when the resulting foreclosures drive down property values,” stated U.S. Attorney Rod J. Rosenstein.
Chester worked as an accountant from an office located on New Hampshire Avenue in Hyattsville, Maryland. Camphor had worked as a real estate agent for a company and also operated a real estate consulting business called Ron Gerard LLC, a/k/a Ron Gerard & Associates. Kwegan worked as a real estate agent for another company and also bought and sold residential properties on his own.
According to the 23 count indictment, from February 2008 to July 2009, the defendants identified houses in Baltimore that were for sale, many of which had been purchased and renovated by co-conspirator Andreas Tamaris. Tamaris owned and operated a company that purchased and renovated row homes in the Highlandtown neighborhood of Baltimore City. The three defendants 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.
Chester and Camphor persuaded individuals who were inexperienced with residential real estate transactions to allow them to use their names, identifying information and credit histories to purchase Baltimore row houses owned by Tamaris or otherwise located by the conspirators. The indictment alleges that Chester and Camphor advised these “straw purchasers” that they didn’t need to contribute funds for the down payment or closing costs to buy these properties. Chester and Camphor also advised that they would place tenants in the properties whose rent payments would cover the monthly mortgage payments after the transactions closed, and that Chester and Camphor would collect the rent, manage the tenants and make the mortgage payments.
Chester and Camphor are alleged to have provided false information about the straw purchasers’ employment, income and financial assets, as well as false and fraudulent supporting documentation to the mortgage loan brokers to enable the straw purchasers to qualify for home mortgage loans. Chester and Camphor 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, including Kwegan, 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.
The indictment alleges that following the settlement on each transaction in which they participated, the three defendants received substantial payments drawn from the proceeds of the loan. Few, if any, payments were made towards the mortgages, and each of the seven properties went into foreclosure, resulting in a loss of at least $1.7 million.
The indictment seeks forfeiture of at least $1,571,631 from Chester, $962,274 from Camphor and $242,500 from Kwegan.
All three defendants face a maximum sentence of 30 years in prison and a $250,000 fine for conspiring to commit wire and mail fraud and for wire fraud. Chester and Camphor also face a maximum sentence of 30 years in prison and a $250,000 fine for mail fraud. An initial appearance was held for Kwegan yesterday, and Camphor’s initial appearance is scheduled for 3:00 p.m. today, in U.S. District Court in Baltimore. Chester is expected to have his initial appearance in federal court in New York today.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
In a related proceeding involving two of the properties at issue in the instant case, co-conspirator Andreas E. Tamaris, age 44, of Bel Air, Maryland, previously pleaded guilty to one count of conspiracy to commit mail and wire fraud, and awaits sentencing.
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 http://www.justice.gov/usao/md/priorities_financialfraud.html.
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.