Three Permian Basin Business Owners And Title Company Executive Sentenced For Their Roles In Multi-Million Dollar Mortgage Fraud Scheme
In Midland, three former Permian Basin business owners and a title company executive were sentenced this afternoon for their roles in a mortgage fraud scheme that involved approximately 800 real estate properties and about $45 million in loans announced Acting United States Attorney Richard L. Durbin, Jr., and Federal Bureau of Investigation Special Agent in Charge Douglas E. Lindquist, El Paso Division.
This afternoon, United States District Judge Robert A. Junell sentenced:
- Stephen Mark Hilliard, age 59, owner of Comeback Properties, LLC, Hilliard Properties, LLC, SMH Properties, LTD, and Katpast Enterprises, LP, to three years in federal prison followed by four years of supervised release. On August 12, 2014, Hilliard pleaded guilty to one count of conspiracy to commit bank fraud and one count of conspiracy to commit money laundering;
- Michael Duraine Cowan, II, age 43, owner of TLC Properties, LLC, and MCBW Properties, LTD, to three years in federal prison followed by four years of supervised release. On August 5, 2014, Cowan pleaded guilty to one count of conspiracy to commit bank fraud and one count of conspiracy to commit money laundering;
- Berta Laura McFaddin, age 56, former Division Vice President of Administration for Stewart Title Company in Midland, to one year and one day in federal prison followed by four years of supervised release. Judge Junell also ordered McFaddin to pay a $25,000 fine. On July 29, 2014, McFaddin pleaded guilty to one count of conspiracy to commit bank fraud; and,
- Cynthia Gayle Hirsch, a 62-year-old Odessa real estate agent, to five years probation including one year of home confinement and ordered to complete 300 hours of community service. On August 12, 2014, Hirsch pleaded guilty to one count of conspiracy to commit bank fraud.
As part of the plea agreements, Judge Junell ordered Hilliard to pay a $1 Million money judgment; Cowan to pay a separate $1 Million monetary judgment; and, Hirsch to pay a $100,000 monetary judgment. Also, Hilliard forfeited to the Government a 2009 Lincoln MKX, 2003 Mercedes Benz SL500R, 2004 GMC Yukon, and two 2006 Yamaha Waverunners. These monetary amounts and property represented the proceeds derived from their fraudulent scheme.
According to court records, from March 2003 until August 2011, the defendants were involved in a fraudulent “same-day property flip” scheme. Admittedly, Hilliard and Cowan purchased a property utilizing one of their respective investment companies, and then re-sold the same property on the same day at an “inflated” sales price to another one of their investment companies.
In order to substantiate inflated prices, Hirsch admittedly created a Broker’s Price Opinion for each property in the amount directed by Hilliard or Cowan. McFaddin, admittedly, assisted in the completion of HUD-1 forms on the same-day property flips. Hilliard and/or Cowan obtained mortgage loans by submitting to the bank fraudulent and misleading documentation created by the defendants and without disclosing to the bank the initial sale of the property.
“Today’s sentencings culminate a multi-million dollar mortgage fraud scheme which was investigated over several years. The success of this investigation relied heavily on interagency cooperation between the FBI, Texas Department of Insurance and various private sector entities. The diligence displayed by investigators and professional staff proved to Midland area residents this type of crime will not be tolerated during the economic growth being experienced in the surrounding communities,” stated FBI SAC Douglas E. Lindquist.
Assistant United States Attorney Austin Berry prosecuted this case on behalf of the Government.