KC Business Owners Sentenced for $1 Million Fraud Scheme of Debt-Stressed Clients
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that the husband and wife owners and operators of a Kansas City, Mo., firm that promised to help financially-strapped clients get out of debt were sentenced in federal court today for defrauding 81 clients and the government of more than $1 million.
John Lee Norris, 43, and Julie Tina Hatcher, 39, both of Kansas City, Mo., were each sentenced by U.S. District Judge Brian C. Wimes to nine years in federal prison without parole. The court also ordered Norris to pay $1,081,658 in restitution and Hatcher $1,067,131.
Norris and Hatcher, who are married, operated Reaper Investment Partners, LLC; they also did business as Hydra International. In August 2011 they formed Death Productions LP, which maintained an office in Mission, Kan., before moving to Kansas City, Mo.
On May 28, 2014, both Norris and Hatcher pleaded guilty to participating in a conspiracy to defraud homeowners and other debtors who were in financial distress (as well as their victims’ lenders and the Federal Housing Administration) from August 2010 to June 28, 2013.
In addition to the conspiracy, Norris and Hatcher each pleaded guilty to one count of mail fraud. Hatcher also pleaded guilty to one count of Social Security disability fraud. Hatcher admitted that she failed to report her work activities and income while she received Social Security disability benefits from August 2010 through April 2012.
Norris and Hatcher recruited and targeted homeowners and others who were in financial difficulties with promises that they would be rescued from their financial problems, including foreclosure. Norris and Hatcher made promises and assurances to homeowners and other debtors that in exchange for a monthly payment RIP would stop and/or prevent the debtor from losing his or her home.
Norris and Hatcher admitted that they spent the payments received from RIP’s clients for their personal use. Dozens of client victims, as well as lenders, suffered hundreds of thousands of dollars in losses as a result of the conspiracy, including the loss of homes and vehicles. The federal indictment refers to victims from Lee’s Summit, Mo., St. Joseph, Mo., Gardner, Kan., Paducah, Ken., and North Wales, Penn.
A total of 81 individual client/victims have been identified, who claim to have lost a total of $759,344 in the fraud scheme. In addition to the individual victims, the Department of Housing and Urban Development sustained losses on the foreclosures of four properties in the total amount of $317,704. The total combined loss of the individual victims and HUD is thus approximately $1,091,070.
Among the examples of victims cited in court documents are a couple who came home to find a notice posted on their front door that the home had been sold on the courthouse steps and they had days to vacate; on moving day the husband had a stroke from the stress and died six months later. A single older woman who took in foster children lost her home in foreclosure and is now paying rent to the purchaser. Another older woman lost her home (which she had built for her specially) in foreclosure and is now living elsewhere.
Even after learning of several lost homes, RIP continued to accept monthly payments for services and continued to accept new clients with promises that clients would not lose their homes. They continued operating the scheme after they were contacted by law enforcement, after interviews by the FBI and for several months after they were indicted by a federal grand jury. When one victim told them he had been interviewed by the FBI, they reassured him and continued taking his $910 per month payment.
Norris and Hatcher promised RIP would refinance homeowners’ existing home loans at a significantly lower principle amount and low interest rate. They told homeowners RIP would get title to the properties. Upon entering into the contract, homeowners were to stop making payments to their lenders and instead pay the agreed amount to RIP. Homeowners were promised that when the refinanced RIP loan was paid off, they would get title to their property.
Norris and Hatcher claimed that RIP would draft, serve, file, and record legal forms, pleadings, and other documents; and would conduct necessary legal processes, contact the relevant parties, and implement administrative procedures to stop its clients from losing their home or property. When their clients contacted them and told them they had received notice that their homes were being foreclosed and that they had received eviction notices, Norris and Hatcher reassured them. Norris and Hatcher told their clients not to worry because these notices were part of the process, and RIP continued accepting payments. Even after several clients lost their homes to foreclosure, Norris and Hatcher reassured them that RIP would get the houses back. RIP continued to take payments from other homeowners.
After informing law enforcement that they were no longer doing business, Norris and Hatcher continued to accept payments from at least one client and reassured at least one client that they were still working on the homeowner’s behalf. After closing RIP, they continued to accept payments.This case was prosecuted by Assistant U.S. Attorneys Linda Parker Marshall and Brian P. Casey. It was investigated by the FBI, the U.S. Secret Service, the U.S. Department of Housing and Urban Development – Office of Inspector General, the Social Security Administration – Office of Inspector General, the Johnson County, Kan., District Attorney’s Office and the Kansas City, Mo., Police Department.