Low-Income Housing Developer Sentenced to Prison for Creating a False Pass-Through Company in Scheme to Defraud Lenders and USDA

DES MOINES, Iowa —On June 19, 2019, Jeffrey W. Voorhees, age 75, of Waukee, Iowa, was sentenced by United States Southern District of Iowa Senior Judge Robert W. Pratt to two years in federal prison, announced United States Attorney Marc Krickbaum. Voorhees pleaded guilty on November 1, 2018, to one count of wire fraud affecting a financial institution. Voorhees was ordered to pay $416,440 in restitution and a fine of $25,000.

During the sentencing hearing, Judge Pratt stated the defendant conducted a “sophisticated, long-running device or scheme.” According to court documents, Voorhees, acting through his own consulting company and what he purported to be a not-for-profit entity called National Affordable Housing Foundation, purchased and rehabilitated seven properties which together formed what was referred to as Candleridge VII. The properties were rehabilitated with a private bank loan, guaranteed by the United States Department of Agriculture in the event of default. Voorhees artificially inflated construction costs and created a pass-through shell company in order to obtain approximately $359,000 in artificially inflated loan proceeds. The loan proceeds were to be repaid using USDA-subsidized tenant rents.

The purpose of the USDA loan programs that the defendant defrauded is to support the development of rental units in rural areas for low- and moderate-income individuals and families. USDA regulates how the loan proceeds can be spent, and also imposes requirements on the borrowers to disclose any identity of interest relationships. According to court records, Voorhees was an expert in these regulations but did not follow them in order to unlawfully profit from the USDA loan programs.

The United States Department of Agriculture - Office of Inspector General investigated this matter. The case was prosecuted by the United States Attorney’s Office for the Southern District of Iowa.