Lawyer v Non-Lawyer Mortgage Bank Fraud Sentencing in S.D. Federal Court(s) in Texas; the Disparity is “Clear and Obvious”.
Fraudsters Sentenced in Second Chance Lending Scheme
McALLEN, Texas – Three men have been ordered to prison following their convictions related to a “second chance” mortgage lending scheme, announced Acting U.S. Attorney Abe Martinez. A federal jury convicted Luis Antonio Rodriguez, 37, of Mission, and Rogelio Ramos Jr., 37, of Pharr, of conspiracy to commit wire fraud late Friday, May 26, following a seven-day-trial and approximately nine hours of deliberation. Also sentenced today was another co-conspirator – Guadalupe Artemio Gomez, 32, of Mission – who had pleaded guilty prior to trial.
Today, U.S. District Judge Randy Crane ordered Rodriguez to serve a total of 13 years in federal prison, while Ramos received a 90-month term of imprisonment. Gomez received a four-year sentence. At the hearing, the court heard from all three defendants as well as numerous victims who provided testimony that described the substantial harm they and their families suffered as a result of the fraud.
The three men were further ordered to serve five years of supervised release and ordered to pay $1,858, 997.75 in restitution to the victims of the scheme.
All three were accused of operating a “second chance” financing business under the names of T.G. and Wealth, Infinite Properties and Me In 3D, focusing on individuals who were financially unable to apply for traditional home financing. The investigation revealed Gomez, Rodriguez and Ramos conducted business in McAllen, Mission, Edinburg, Houston and San Antonio by hiring recruiters to funnel prospective home buyers to Infinite Properties. The homebuyers then gave 10 percent of the purchase price as a down payment to Infinite Properties.
During trial, the jury heard from victims, law enforcement and an FBI forensic accountant who testified that instead of using the down payments as intended, the money was used for personal expenses, trips to Las Vegas and to purchase other real estate.
Gomez testified at trial against Rodriguez and Ramos stating the two men received more than $1 million in the mortgage scheme in 2016.
The defense claimed they had no intent to defraud the victims because they had attempted to get a $10 million loan. The jury was not convinced and found both men guilty as charged.
Previously released on bond, the three men were taken into custody following the sentencing today where they will remain pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The FBI, Texas Department of Insurance and police departments in McAllen, Mission and Edinburg conducted the investigation.
Assistant U.S. Attorneys Robert L. Guerra Jr. and Andrew Swartz prosecuted the case.
Lake Jackson Area Attorney Sentenced in Scheme to Commit Bank Fraud
HOUSTON ‐A 65-year-old resident of Lake Jackson has been ordered to federal prison for his role in a mortgage fraud scheme, announced U.S. Attorney Ryan K. Patrick.
Kirk Lawrence Brannan pleaded guilty to bank fraud April 30, 2018, admitting he conspired with others from 2005 to 2009 to execute a scheme to defraud Wells Fargo Bank and other lenders.
Today, Chief U.S. District Judge Lee Rosenthal handed him a 36-month sentence to be immediately followed by three years of supervised release.
At the hearing, the court held that, in committing the crime, Brannan had used sophisticated means and had employed his special skills as an attorney and real estate agent. Judge Rosenthal noted that Brannan had created false HUD-1 settlement forms and title documents that purported to show the sale of three of his properties to his children at grossly inflated prices. These HUD-1 forms then became the three comparable sales that appraisers relied upon in over-valuing the rest of Brannan’s beach home properties which Brannan then sold through the fraud scheme at inflated prices.
In imposing the sentence, Judge Rosenthal balanced Brannan’s honorable military service and other aspects of what, up to the time of the fraud, had been an exemplary life, with the tremendous damage mortgage fraud had done to the U.S. financial system and economy and the fact that Brannan had been a knowing and willing participant in such a scheme. She also pointed out that some individuals much less sophisticated than Brannan had suffered severe economic harm as a result of Brannan’s scheme.
He was further ordered to pay $5,317,350 in restitution. A money judgement was previously entered in the amount of $2,401,368.
Brannan sold 10 beach homes in the Freeport/Surfside area to “straw buyers” at exorbitant prices. Other co-conspirators recruited straw buyers who created loan applications with misrepresentations that lenders relied upon in deciding to make the mortgage loans. The applications contained misrepresentations of the buyer’s address, employer, income and expenses. The applications also suggested the buyers were much better credit risks than they actually were. Brannan admitted he paid kickbacks to co-conspirators each time one of the beach homes was sold to a straw buyer.
The beach properties were sold at two to three times the appraised values. The mortgage lenders, including Wells Fargo Bank, were induced to lend the inflated amounts for the purchases through flawed or fraudulent appraisals which were based on comparisons Brannan manufactured to further the scheme.
Brannan created settlement statements that suggested he sold three of his properties to his children at exorbitant prices. Appraisers relied upon these “sales” as comparable sales in appraising Brannan’s remaining properties sold to straw buyers. As a result of the fraudulent appraisals, he and his co-conspirators were able to inflate the values for his properties and deceive the lenders into approving home loans at those exorbitant amounts.
All of the straw buyers defaulted on the mortgages, and all 10 of the beach properties ended up in foreclosure.
The fraudulent mortgage loan scheme resulted in a loss of $5,317,350 to Wells Fargo Bank and the other lenders. Brannan paid $2,401,368 to his co-conspirators as part of the scheme.
Previously released on bond, Brannan was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
Co-conspirators Chucoboie Lanier, 42, David Lee Morris, 56, and Derwin Jerome Blackshear, 52, all of Houston, previously pleaded guilty for their roles in the scheme. Lanier received a sentenced of 36 months while Morris was ordered to serve a 42-month prison term. Blackshear is set for sentencing April 9.
The Texas Department of Public Safety and the FBI conducted the investigation. Assistant U.S. Attorneys Robert Johnson and Michael Day are prosecuting the case.