View Full Version : Dallas FBI "Operation Stolen Dreams" Busting the Bad Guys!

07-16-2010, 09:53 PM
Federal Bureau of Investigation - The Dallas Division: Department of Justice Press Release (http://dallas.fbi.gov/dojpressrel/pressrel10/dl061710.htm)

Department of Justice Press Release

For Immediate Release
June 17, 2010 United States Attorney's Office
Eastern District of Texas
Contact: (409) 839-2538
Financial Fraud Enforcement Task Force Announces Results of “Operation Stolen Dreams” in Eastern District of Texas

PLANO, TX—Following an announcement today by Attorney General Eric Holder in Washington, DC, representatives of the Financial Fraud Enforcement Task Force in Plano, Texas, including U.S. Attorney John M. Bales, announced the regional results of the nationwide takedown, Operation Stolen Dreams, which targeted mortgage fraudsters in the Eastern District of Texas and throughout the country and is the largest collective enforcement effort ever brought to bear in confronting mortgage fraud.

George B., Jr., 35, of Dallas, pleaded guilty to an Information on June 16, 2010, charging him with mail fraud. George entered his plea before U.S. Magistrate Judge Don Bush.

According to court documents, from July 2006 to November 2006, George a loan officer, devised a scheme to defraud mortgage lenders by submitting false information to secure mortgage loans for real estate purchases. George was a loan officer for either Meridias Capital, Inc. or for City Mortgage Holding, L.L.C., during this time.

If convicted, George faces up to 20 years in federal prison.

The sweep was organized by President Obama’s interagency Financial Fraud Enforcement Task Force, which was established to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. Starting on March 1, to date Operation Stolen Dreams has involved 1,215 criminal defendants nationwide, including 485 arrests, who are allegedly responsible for more than $2.3 billion in losses. Additionally, to date the operation has resulted in 191 civil enforcement actions which have resulted in the recovery of more than $147 million.

“Mortgage fraud ruins lives, destroys families and devastates whole communities, so attacking the problem from every possible direction is vital,” said Attorney General Holder. “We will use every tool available to investigate, prosecute, and prevent mortgage fraud, and we will not rest until anyone preying on vulnerable American homeowners is brought to justice.”

Unlike previous mortgage fraud sweeps, Operation Stolen Dreams focused not only on federal criminal cases, but also on civil enforcement, recovering money for victims and increasing cooperation with state and local partners.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit StopFraud.gov.

This case is being investigated by the FBI and prosecuted by Assistant U.S. Attorney J. Andrew Williams.

Other Operation Stolen Dreams cases in the Eastern District of Texas include:

United States vs. John Barry, et. al

A 16-count indictment was returned by a federal grand jury on Mar. 10, 2010, charging 40 defendants from Texas, Florida, Massachusetts, Tennessee, and Georgia with conspiracy to commit mail and wire fraud, mail fraud and money laundering.

According to the indictment, beginning in 2004, John Barry, 41, of Windemere, Florida, owned and operated, TKI Group, Inc. and JAB Consulting, businesses out of Florida through which he solicited real estate agents, property finders, mortgage brokers, title company attorneys or escrow officers, property appraisers, and straw buyers to facilitate this scheme. The purpose of the scheme was to defraud lending institutions by convincing them to approve mortgage loans for residential properties for which the property values had been fraudulently inflated. The indictment specifically lists 114 residential properties located in the Texas cities of Allen, Arlington, Cedar Hill, Coppell, Corinth, Cypress, Dallas, Flower Mound, Fort Worth, Frisco, Granbury, Heath, Highland Village, Houston, Keller, Lantana, Lewisville, Little Elm, Lubbock, Magnolia, McKinney, Plano, Roanoke, Southlake, Spring, The Woodlands, and Willis.

United States vs. Esshan Samuel Agha

Esshan Samuel "Sam" Agha pleaded guilty on Oct. 19, 2009, to conspiracy to commit mail fraud and was sentenced to 51 months in federal prison on Apr. 1, 2010. Agha was also ordered to pay restitution in the amount of $4,127,131.50.

According to information presented in court, from Oct. 2005 to Feb. 2008, Agha, a real estate investor, devised a scheme in which he solicited others to buy homes that in most cases were in fact owned by himself or an unnamed co-conspirator. A smaller number of homes were also owned by a third party for whom Agha brokered the sales. Agha facilitated the scheme by making false statements that included misrepresentations such as overstating the buyers' income and stating that the buyers intended to occupy the homes as their primary residence. All of the loans involved in the scheme went into default when the buyers failed to make the mortgage payments on the homes, which included 24 properties in Collin County and one in Tarrant County.

United States vs. Micaiah Pruitt, Jeanelle Richardson, Pierre Sowell and Reginald Davis

Micaiah Pruitt pleaded guilty on Sep. 30, 2009, to conspiracy to commit mail fraud and wire fraud and was sentenced to 71 months in federal prison on Mar. 18, 2010. Pruitt was also ordered to pay restitution in the amount of $1,384,015.26. Pruitt had been indicted by a federal grand jury on June 11, 2009.

According to information presented in court, from March 2005 to October 2006, Pruitt orchestrated a mortgage fraud scheme in which three individuals, Jeanelle Richardson, Pierre Sowell, and Reginald Davis, each bought two or more residential properties from Pruitt, or from someone for whom Pruitt was brokering the sale. In order to obtain the mortgage loans to make the purchases, Pruitt assisted Richardson, Sowell and Davis in making false statements in the mortgage loan applications, such as overstating income or representing that the borrowers intended to occupy each home as their primary residence. Pruitt profited from each of the sales and paid the three purchasers for making the purchases. The purchasers defaulted on all of the mortgage loans.

Richardson, 37, of Plano, Texas, pleaded guilty on May, 20, 2009, to conspiracy to commit mail fraud and wire fraud and was sentenced to 20 months in federal prison in Feb. 2010. She was also ordered to pay restitution in the amount of $468,838. Richardson had been indicted by a federal grand jury on Apr. 6, 2009.

Sowell, 37, of Grand Prairie, Texas, pleaded guilty on Aug. 13, 2009, to an information charging him with conspiracy to commit mail fraud and was sentenced to 20 months in federal prison in Feb. 2010. Sowell was ordered to pay restitution in the amount of $605,627.

Davis was indicted by a federal grand jury on Apr. 6, 2009, and charged with conspiracy to commit mail fraud and wire fraud. He pleaded guilty on July 9, 2009, and was sentenced in Jan. 2010 to 6 months in federal prison to be followed by 6 months' home confinement. Davis was also ordered to pay restitution.
Press Releases | Dallas Home
Scammers in Texas better watch out. I love working with the authorities to nail those bad guys!


07-16-2010, 10:02 PM
I worked closely on a case with the Department of Justice 2 years ago. I hope to add more names to that list. These mortgage scams were instrumental in sending us into the economic downturn we are experiencing. Homeowners taking out loans on homes they can't possibly afford needs to be stopped. I hope I can help with another interesting case!


07-18-2010, 09:47 AM
Loan applicants lying in their papers and shady loan officers pushing through fraudulent applications is not a rare thing. Thankfully, law enforcement is really cracking down and I am honored to be making reports to the FBI so possible mortgage fraud can be investigated. Anyone who would like to assist can e-mail me for records to send in for a possible case developing in the Dallas area.
Man Sentenced for False Statements in a Loan Application | (http://mortgagefraudandnews.com/2010/07/16/man-sentenced-for-false-statements-in-a-loan-application/)

Man Sentenced for False Statements in a Loan Application
Written by admin on July 16th, 2010
Steven F. Shaw, 49, a New York resident, was sentenced in United States District Court in Albany, New York, to 36 months in prison, to be followed by supervised release for 5 years, and to pay restitution in the total amount of ,653,530, upon his conviction of making false statements in a loan application, tax evasion, and conversion of the funds of a health care benefit program. Senior United States District Judge Thomas J. McAvoy imposed the sentence and directed Shaw to report on August 31, 2010, to the facility designated by the U.S. Bureau of Prisons to begin serving his sentence. The restitution amount was comprised of ,500,000 to Berkshire Bank, 2,530 to the Internal Revenue Service, and ,000 to the Capital District Physicians’ Health Plan for Tougher Industries, Inc.

In 2006, while Shaw was the President and Chief Executive Officer of Tougher Industries, Inc., a heating and air conditioning contractor based in Albany, New York, he caused Tougher Industries to apply for loans in the total amount of approximately million from Berkshire Bank. Because Tougher Industries‘ financial statements were not strong, the bank required Shaw to guarantee the loan personally. To satisfy this requirement, Shaw submitted personal financial statements, tax returns, and a personal biography in support of the loan application. The bank also required that Shaw provide supporting documentation for financial accounts that he had listed on his personal financial statements. The account statements, documents, and information provided by Shaw were false. Shaw inflated his financial statement, falsely represented that it had been prepared and reviewed by a Hartford Financial Services senior vice-president, and falsely claimed to have accounts at Bermuda Commercial Bank Limited, Smith Barney Citigroup, and American Funds.....

Lil Ol' Radical Me
07-18-2010, 10:23 AM
With a background of a world economic crisis, financial fraud, especially online fraud is on the increase and finds more and more takers amongst the desperate and needy. President Obama's Financial Fraud Enforcement Task Force is a very welcome addition to the fight against this insidious, bloodless but nevertheless very damaging crime. Likewise the visible change in attitude by law enforcement in stamping out financial fraud is a hopeful sign, especially the increased awareness of the importance and reach of cyber crime.

Mortgage Fraud is a particularly offensive crime, as it strikes at the heart of the life of every family affected by it, and has been an important factor in the present economic worldwide meltdown.

07-18-2010, 11:15 AM
More on foreclosure:

mortgageLife after foreclosure
If a foreclosure is an isolated event on an otherwise good credit record, consumers may be able to rehabilitate their record and garner better loans and card rates in 24 months, says Ulzheimer.

But since a foreclosure is rarely the former owner's only credit slip-up, and foreclosures are often combined with the fallout of punishing rates, some former homeowners will never climb back up to a good credit score, Ulzheimer says.

Buying another home of one's own
Fannie Mae has just upped the length of time it takes from the completion of a foreclosure sale until the borrower can get a new mortgage from four years to five years.

The extra year is designed to deter what Fannie Mae believes are borrowers who have made reckless debt decisions. But foreclosed owners who can explain that extenuating circumstances -- typically situations beyond someone's control, like a job loss -- are the impetus for the foreclosure must wait only three years.

Perhaps the best option for obtaining a mortgage after foreclosure is with a federally insured FHA loan, says Jerry DuPaw Jr., a McHenry, Ill., mortgage loan officer.

The minimum time between the completion of foreclosure until when you can be approved for an FHA loan is three years -- whether or not there are extenuating circumstances. Still, FHA borrowers will have to show that they've been practicing good bill-paying habits since the foreclosure.

Owing a potential employer an explanation
Should you lose your job as well as your home, your new job hunt shouldn't be hindered by the subject of your foreclosure coming up in job interviews -- unless you're applying for a job in which you handle money.

"We recommend that employers do credit checks when they are concerned about how financially responsible someone is -- which may be for any money-related position from a cashier to an accountant," says Robin Throckmorton, a Loveland, Ohio, human resources consultant.

The federal Fair Credit Reporting Act has rules employers must follow, such as notifying the applicant of the credit check, and most companies limit checks so as not to run afoul of the law.

If a foreclosed owner is applying for a financial job, he or she should have an explanation ready, perhaps describing how the foreclosure has changed some of his or her personal money-management skills today, suggests Throckmorton.

Getting hit with a tax bill
It seems like the ultimate injustice: You lose your home and then weeks or months later you open the mail and find a bill for taxes on the amount of mortgage that the lender was never able to recover from the sale of the property.

Anytime debt is forgiven, it's a potentially taxable event. You are not paying back money that you borrowed, so that money is considered income by the IRS.

Can a Lender Sue a Borrower for a Deficiency Judgment if the Lender is Still Owed Money After a Foreclosure Sale in Texas?

A Texas lender is allowed to sue a borrower for a deficiency judgment if the loan is not paid in full with the proceeds of a foreclosure sale. However, the amount that the lender can recover is limited to the difference between the amount owed and the fair market value of the property as determined by a property appraisal.
Those who are lying on loan applications and taking out loans that they could never possibly pay need to be stopped in their tracks. Scammers we have blogged about have bought millioniaire mansions and been foreclosed causing banks hundreds of thousands and some are right back at it again. The banks that were defrauded need to file suit and get judgments against these repeat offenders. The IRS needs to tax them for the hundreds of thousands of dollars in deficiency as well.

Our country can't be free and prosperous if financial fraud isn't kept in check. I am sure going to do my part to keep scammers from ripping off consumers with fruadulent loan schemes and from taking out loans themsleves that they can't possibly pay having lied on the applications!


07-18-2010, 12:25 PM
11 Indicted In Dallas For Mortgage Fraud Scheme Reporting
Jack Fink DALLAS (CBS 11 / TXA 21) ― Click to enlarge1 of 1

A motivational speaker is among 11 people indicted in a mortgage fraud scheme.

Eight of those people indicted appeared in Dallas Federal Court Wednesday afternoon. They face a 51-count indictment.

The alleged ring leader, Eric Farrington, is the ex-husband of Sheila Farrington-Hill, who was indicted in the Dallas City Hall scandal on unrelated charges.

Records show he served time in federal prison in 1995 for filing false tax returns and that he filed for bankruptcy two years ago.

But on his Web site for motivational speaking, he says he is a self-made millionaire and that he advises people to invest in real estate.

Besides Farrington, most of the others charged didn't want to comment as they left the courthouse.

They're all accused of illegally inflating the sales prices of houses so they could obtain larger loans, and eventually make more money on the deals.

Prosecutors say three houses in a North Dallas neighborhood near Arapaho and Hillcrest are among those involved in the alleged scheme.

Prosecutors say Farrington and the others will have to forfeit about $8.5 million. Before he could leave court, the judge ordered him to pay a $25,000 bond.

If convicted, Farrington and the others could face millions of dollars in fines and many years in prison.
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
I keep in touch with the local news channels and publications and am frequently submitting stroy ideas. With the prevalent mortgage fraud, numerous pyramid schemes and new online harassment laws I think the Dallas media outlets will be quite busy!


07-18-2010, 02:02 PM
There is a reason I am a consumer advocate / scambuster. Read what this local lawfirm says:

Bank & Mortgage FraudBank & Mortgage Fraud Defense Attorneys in Fort Worth, Texas
The recent turmoil in the housing market has led to increased efforts to identify and prosecute bank and mortgage fraud. If you find yourself in the cross hairs of state or federal fraud investigators, it is important to build a strong and effective criminal defense.

At !#$&^%%, we have extensive experience defending clients throughout Texas against charges of bank fraud, mortgage fraud and other white collar crimes. We will use our considerable skill and resources to fight for your rights.

Contact us today online or by telephone at 817...... to speak with an experienced Fort Worth, Texas, white collar crime defense lawyer.

Effective Fraud Defense
At !&%^%$$, we have a strong background in criminal law, having began our careers working for the prosecution. When building a defense for our clients who are facing bank and mortgage fraud charges, this experience can be extremely helpful. It helps us to anticipate the strategies they will use to win a conviction, and helps us to counteract those strategies.

Whether you are the buyer or seller of a property, or a real estate agent or investor, you can find yourself as the focus of a mortgage fraud investigation. It is important to start building a strong defense early on in the process to protect yourself from criminal liability

Our attorneys have extensive experience practicing in state and federal courtrooms throughout Texas. We have access to investigative resources as well as expert witnesses such as forensic accountants who help us build strong defenses for our clients.....

Leviticus 19:35 (The Message)
"Don't cheat when measuring length, weight, or quantity. Use honest scales and weights and measures. I am God, your God. I brought you out of Egypt.

Proverbs 12:11
He who works his land will have abundant food, but he who chases fantasies lacks judgment.

Proverbs 13:11
Dishonest money dwindles away, but he who gathers money little by little makes it grow.

Proverbs 14:23
All hard work brings a profit, but mere talk leads only to poverty.

Proverbs 21:25
The sluggard's craving will be the death of him, because his hands refuse to work.

Proverbs 22:9
A generous man will himself be blessed, for he shares his food with the poor.

Proverbs 22:26-27, 29
Do not be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.... Do you see a man skilled in his work? He will serve before kings; he will not serve before obscure men.

Proverbs 28:19
He who works his land will have abundant food, but the one who chases fantasies will have his fill of poverty

Matthew 6:24
“No one can serve two masters. For you will hate one and love the other; you will be devoted to one and despise the other. You cannot serve both God and money.

1 Timothy 6: 7-10
For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with that. People who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge men into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.

2 Timothy 2:15
Do your best to present yourself to God as one approved, a workman who does not need to be ashamed and who correctly handles the word of truth.

Romans 13:7
Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.


07-21-2010, 11:08 PM
Fourth person pleads guilty in Dallas-area mortgage fraud case | News for Dallas, Texas | Dallas Morning News | Dallas Business News (http://www.dallasnews.com/sharedcontent/dws/bus/stories/072110dnbusmortfraud.55cd872.html)

Fourth person pleads guilty in Dallas-area mortgage fraud case

12:15 PM CDT on Wednesday, July 21, 2010
By ERIC TORBENSON / The Dallas Morning News
A fourth person connected with a broad North Texas mortgage fraud investigation has pleaded guilty and been sentenced to 28 years in prison.

Darrell Marriott, 57, of Gun Barrel City, admitted to a count of execution of a document by deception. Marriott joined his wife, Kandace Marriott, 54, Kandace Marriott’s sister Karen Hayes, and the Marriott’s daughter, Kally Marriott, in creating false mortgage applications in Navarro County.

Kandace Marriott is serving a 99 year prison sentence; Hayes, 59, is serving an 18-year sentence, and Kally Marriott, 24, served four months in prison as part of her probation.

The Marriott’s scam extended into Ellis, Kaufman and Henderson counties, and the pleading and sentencing Wednesday brings to a close the investigation conducted by Texas Attorney General Greg Abbott’s White Collar Crime and Public Integrity Section.
Well isn't this fun. Possible mortage fraud can be reported to the local police where the home was purchased, the local FBI office and to the Attorney General's Office. Done and boy was it fun!!!


07-22-2010, 10:18 AM

Average Joe better watch out. Half of the mortgage fraud prosecutions are of borrowers that have lied on their applications. Folks are encouraged to contact their local FBI office and report such suspected fraud. I sure did!!!


07-22-2010, 11:02 AM
A link with the preceeding video states:

Mortgage Fraud

Frequently Asked Questions

What exactly is “mortgage fraud”?
Mortgage Fraud is defined as the intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan. Combating mortgage fraud effectively requires the cooperation of law enforcement and industry entities. No single regulatory agency is charged with monitoring this crime. The FBI, Department of Housing and Urban Development-Office of Inspector General (HUD-OIG), Internal Revenue Service, Postal Inspection Service, and state and local agencies are among those investigating mortgage fraud.

I pay my mortgage on time. Why should I care?

You should care because this kind of fraud affects the entire economy. Much of the recent recession can be blamed on the national “mortgage meltdown”. As housing prices stabilized or fell, lenders were left with too many shaky loans for properties that were overvalued. These bad loans forced the lenders into a dire financial situation, and they, in turn, helped bring down the entire U.S. economy.
Let's report all the suspected cases out there!


07-22-2010, 05:17 PM
Man gets 25-year sentence for mortgage fraud | McKINNEY Blog | dallasnews.com (http://mckinneyblog.dallasnews.com/archives/2009/07/man-gets-25-year-sentence-for.html)

Man gets 25-year sentence for mortgage fraud
12:46 PM Wed, Jul 15, 2009 | Permalink
Ed Housewright/Reporter Bio | E-mail | News tips

A Collin County judge sentenced a man to 25 years in prison today for a mortgage fraud scheme that prosecutors said caused millions in damage to a McKinney neighborhood.

Assistant District Attorney Benjamin Smith asked visiting judge John Nelms to sentence John Barry to life in prison.

"What he did to this community amounts to economic rape," Smith said.

Dan Guthrie Jr., Barry's attorney, asked the judge to give his client probation. He pointed out that Smith, who lived in Florida, had no prior criminal record.

"As misguided as this court may consider his actions to be ... I think the evidence shows Mr. Barry was not trying to cause the harm that came about," Guthrie said.

Barry, 41, could be eligible for parole in about six years. He also was ordered to pay a $10,000 fine.

Prosecutors argued that Barry and several associates concocted a plan to buy distressed homes in the Stonebridge Ranch community in 2006 and 2007, get inflated appraisals and qualify for mortgages using false information.

The partners would then sell the homes to someone involved in the scheme, and they would split the difference between the original purchase price and the loan amount.

The buyer wouldn't make the mortgage payments, and the house would eventually fall into foreclosure, lowering the value of surrounding homes and making them harder to sell, prosecutors said.

"The conduct of this defendant, and those like him, is the reason we're in the economic state we're in," Smith told Judge Nelms in closing arguments.

A jury convicted Barry on Tuesday after about an hour of deliberation. The trial lasted a week.

"Defending any allegation of mortgage fraud in the current environment before a jury is very difficult," Guthrie said. "People are really upset. If the prosecution presents someone accused of participating in that, a jury is going to react accordingly."
These criminals lying on mortgage applications are really getting the iron hand of justice in Texas. I hope we will be hearing about lots more tough sentences like this one!!!


07-23-2010, 08:08 AM
You guys know I always have my spies out. Strangely, one home that just sold and could have been bought in a fraudulent mortage deal had the accompanying file locked down by the real estate agent, so other agents couldn't access the information. That is very strange. Something to hide perhaps? I don't think the file will be secret for long with the FBI, local police, Department of Justice and Attorney General's office all in possession of detailed complaints.

The local media is ready to pounce on the naughty borrowers in Texas. The minute I get word one of our little fraudsters is going to get arrested or has been hauled in the cameras will be rolling! I always keep in touch with a number of media folks so the scammers will get all the attention they deserve. Fun, fun, fun......


07-23-2010, 11:59 AM
The Texas Attorney General's Office says:

Mortgage Fraud
Mortgage fraud is a criminal offense and primarily involves fraud against mortgage lenders. Generally speaking, it occurs when facts are misrepresented: the value of a house is inflated, or the lender is misled about the buyer's income, credit history or financial situation.

The fraud can involve the mortgage broker, real estate agent, appraiser and/or the buyer. The result is that too much money is loaned, and the house is not worth what the buyer -- and ultimately the lender -- paid for it.

Mortgage fraud bilks financial institutions, but it can also be devastating for borrowers and their families. It is having a broad negative effect on our economy, property values, and financial markets. It is, moreover a criminal offense.

Thanks to a veritable epidemic of mortgage fraud in an overheated housing market, many thousands of Texas homeowners are facing possible foreclosure. The Office of the Attorney General has mobilized to make every attempt to avert this looming crisis.

Residential Mortgage Fraud Task Force
HB 716, passed in the 2007 legislative session, directs the Attorney General to establish a Residential Mortgage Fraud Task Force to investigate and prosecute residential mortgage fraud and the perpetrators of mortgage fraud statewide.

The task force, headed by the Attorney General and including the Consumer Credit Commissioner, the Banking Commissioner, the Savings and Mortgage Lending Commissioner and other state officials, is charged by HB 716 "to take a proactive stance towards tracking and prosecuting mortgage fraud and the perpetrators of mortgage fraud statewide."

HB 716 also grants the OAG concurrent jurisdiction, with the consent of a county or district attorney, to prosecute mortgage fraud. Task force members will be sharing information and resources to help crack down on mortgage fraud.

Check out this one:

CORSICANA – The fourth member of a multi-county mortgage fraud scheme today pleaded guilty to a first-degree felony for his role in a multimillion dollar enterprise that defrauded government-backed mortgages.

Darrell Lynn Marriott, 57, of Gun Barrel City in Henderson County, was sentenced in Navarro County District Court to 28 years in prison for securing the execution of a document by deception. Under the terms of the plea deal, the defendant will now enter an identical plea in Kaufman County.

Texas Attorney General Greg Abbott’s White Collar Crime and Public Integrity Section prosecuted the cases along with the district attorneys in whose jurisdiction the scheme was perpetuated.

According to court documents, Marriott orchestrated a scheme wherein residential loan applications contained false information. As a result, otherwise unauthorized applicants were approved for government-backed residential mortgage loans. Marriott and his co-conspirators profited from the falsified loan applications because the defendants were selling dozens of parcels of their own land through the family’s businesses – One Way Home & Land in Navarro County and, later, Torenia Inc. in Kaufman County. By providing inaccurate loan documentation, Marriott and other family members were able to profit from property sales. When the purchasers could not afford to service the loan payments, the taxpayers were left owning the Marriotts’ property.

In a separate but related matter last month in Wilbarger County, Marriott pleaded guilty to the same charge involving a single home purchase. The district court sentenced him to nine years in prison. In that scheme, which involved a sale to a trusting relative, Marriott secured a fraudulent appraisal to inflate the value of the home, manipulated financial statements, padded original purchase documents, and turned a $27,000 profit in four months. That home is currently in foreclosure.

The defendant’s wife, Kandace Y. Marriott, 54, is currently serving a 99-year sentence after a Navarro County jury in March 2009 found her guilty of first-degree mortgage fraud. In July 2009, she was also sentenced to two 20-year terms after pleading guilty in Kaufman County. Her sister, Karen Hayes, 59, of Henderson County, is currently serving an 18-year sentence for falsifying documents to obtain property or credit. The Marriotts’ daughter, Kally Marriott, 24, of Rockwall, was also charged with engaging in organized criminal activity for securing the execution of a document by deception. She pleaded guilty to a third-degree felony last December and served four months in jail as a condition of her probation.

Today’s conclusive developments stem from the Marriott family’s involvement in a conspiracy to forge signatures and falsify home loan applications for prospective homeowners in Navarro, Kaufman, Ellis, and Henderson counties. The false loan applications involved creating and using numerous fraudulent documents containing statements the borrowers never made. The fraudulent documents were prepared for prospective low-income homeowners who otherwise would not have qualified for loans backed by the U.S. Department of Housing and Urban Development (HUD).

According to state investigators, the defendants’ scheme cost the federal government and taxpayers millions of dollars. Evidence uncovered by the state indicates that the defendants supervised the falsification of residential loan applications to ensure that the buyers’ loans would be approved by mortgage lenders. Investigators found that the defendants repeatedly falsified supporting documents and information, including the buyers’ rent payment verification statements, proof of employment and information about Social Security Administration benefits, among other documents.

Investigators brought evidence that the defendants manipulated government loan paperwork for lower-income purchasers who otherwise would be ineligible for loans, but whose loans were then guaranteed by HUD. As a result, when unqualified buyers defaulted on their home loans, mortgage lenders did not suffer the loss. HUD, as guarantor of the loans, had to cover these costs. In the Navarro County scheme alone, investigators believe the defendants cost the taxpayers more than $3 million.

The Office of the Attorney General initially worked with the Corsicana Police Department to hatch the investigation. The Attorney General’s investigators also received assistance from the Navarro and Kaufman County Criminal District Attorney’s Offices, the FBI and HUD’s Office of Inspector General. Attorney General Abbott’s Criminal Prosecutions Division led the prosecution of the four defendants with the cooperation of district attorneys’ offices in Navarro, Kaufman, Henderson, and Ellis counties.
Keep up the good work Mr. Abbott!