Cook Sentenced To 36 Months In Prison In Connection With Mortgage Fraud Scheme
SALT LAKE CITY – Keith Nelson Cook, age 57, of Emmett, Idaho, who pleaded guilty in March to three counts of mail fraud; three counts of wire fraud; and one count of money laundering in connection with a scheme to defraud students and mortgage lenders, will spend 36 months in federal prison. Cook is a former resident of Layton and Salt Lake County.
U.S. District Judge Richard J. Shelby imposed the sentence Monday afternoon in U.S. District Court. Cook was ordered to pay $1,905,651.68 in restitution to victims of his fraud scheme. He will be on supervised release for 36 months after he completes his prison sentence.
From 2006 through 2011, Cook controlled a number of companies, including Avalon Group; Avalon Management Group LLC; White Mountain Management, Inc.; TNA Resource Consulting, LLC; The Turnberry Group; and Desert Management Group. As a part of a plea agreement reached with federal prosecutors, Cook admitted he devised a scheme to use these entities to obtain money and property from students and mortgage lenders.
According to the plea agreement, Cook, or individuals working under his direction, recruited students willing to pay a fee to be coached in the art of investing in real estate at a profit. During this recruitment effort, Cook hired people to mass market the real estate program opportunity by phone. During the calls, individuals acting at Cook’s direction made one or more fraudulent statements, including telling students that he was a nationally recognized real estate expert who had made millions of dollars syndicating apartment and commercial properties in California; telling them that he was looking for students to become a part of his “Success Team” and guaranteeing that the student’s participation in his program would result in either doubling the student’s income or a gain of $50,000 during the first year of participation, among many other things.
Cook concealed the fact that he had felony convictions in Utah for fraud and in California for grand theft.
Cook solicited payments of between $15,000 and $30,000 from prospective students, and also received the students’ financial and credit information in order for them to become part of the Success Team. Cook admitted that after accepting the application fees, he immediately began ignoring certain students and refused to take their telephone calls or talk to them. He refused to provide the promised coaching and diverted the $15,000 to $30,000 application fees for those dropped students for his own unauthorized business or personal use. According to the plea agreement, Cook solicited $427,500 from students.
Cook admitted that he induced certain students to become straw buyers of residences in Salt Lake County, causing the purchase and sale of a number of residential properties. He represented to the straw buyers that they would not have to make a down payment or invest any money of their own to buy the home; that the straw buyer would have no financial risk from the transaction and would have no obligation to make loan payments, among other things. Likewise, a number of misrepresentations were made to mortgage lenders.
Cook’s entities made payments on the properties to give the mortgage lenders the false impression that the loans were preforming appropriately. However, at some point he stopped making payments on the loans, leaving the straw buyers with mortgages they did not have the ability to repay and mortgage lenders with significant losses on the non-performing loans. The total loss amount incurred by the straw buyers and the mortgage lenders in the scheme was $1,905,651.68.
Cook admitted that he used the proceeds of the straw purchase scheme to pay personal expenses and to meet ongoing expenses related to his entities. For instance, in June 2007, he transferred or withdrew $70,500 from a business-account to purchase a cashier’s check.