Tuesday, July 26, 2011

Two Arrested in $17 Million Mortgage Fraud Scheme

PHOENIX—A federal grand jury in Phoenix returned an indictment earlier this week against mortgage broker Michele Marie Mitchell, 43, of Glendale, and her alleged associate, Jeremy West Pratt, 32, of Phoenix. The indictment, returned on June 28, charged Mitchell and Pratt each with one count of conspiracy and one count of wire fraud. Special agents of the Internal Revenue Service and the FBI arrested Mitchell and Pratt on Thursday.

“With these arrests, we are confronted once again with the damage and pain that mortgage fraud caused in our community and to our economy,” said U.S. Attorney Dennis K. Burke. “Criminals out to make a fraudulent profit deepened this mortgage crisis and made recovery more difficult. We all appreciate the efforts of the IRS and the FBI in bringing this particular scheme to a stop, and we will continue to investigate and prosecute others like it.”

Special Agent in Charge Dawn Mertz of the IRS Criminal Investigation stated, “This case is yet another example of a ‘get rich quick’ scam gone bad. Unfortunately, mortgage fraud schemes such as this one impact all of us with deflated property values, empty homes, and significant financial consequences to banks, taxpayers, and neighborhoods.”

“Mortgage fraud continues to persist as a serious crime problem in Arizona,” said Steven R. Hooper, FBI Acting Special Agent in Charge, Phoenix Division. “This indictment signifies that the FBI’s Mortgage Fraud Task Force is continuing its efforts to protect our community and financial institutions from the effects of mortgage fraud.”

The indictment alleges that Mitchell portrayed herself as a mortgage broker, loan officer, and real estate investor. She allegedly did business at an office on East Vista Bonita Drive in Scottsdale. Pratt is alleged to be the president of Arizona Cooling Control Plus, Inc. and involved in construction and remodeling work. The indictment charges that as part of their alleged conspiracy, Mitchell and Pratt recruited people with good credit scores to act as straw buyers to ostensibly purchase one or more properties as investments. Mitchell and Pratt allegedly enticed the straw buyers by offering to pay a kickback of up to $15,000 per property or to make the mortgage payments until the property could be resold for a profit, or both. In addition, the indictment charges that the defendants submitted false loan applications and supporting documents to induce lenders to fund loans. Then, at the close of escrow, they enriched themselves by directing a portion of loan proceeds, or “cash back,” to a company which one of them controlled.

The indictment goes on to allege that between October 2005 and February 2007, Mitchell and Pratt obtained mortgage financing for 17 properties and induced lenders to fund approximately $17 million in loans, resulting in over $2.4 million dollars in cash back. The properties are located in Glendale, Scottsdale, Surprise, Peoria, Goodyear, and Phoenix. The indictment charges that the defendants failed to make the mortgage payments as promised and that each of the 17 properties went into foreclosure.

Conviction for the crimes of conspiracy and wire fraud each carries a maximum penalty of 30 years in prison, a $1 million fine, or both. This case has been assigned to United States District Judge James A. Teilborg. In determining an actual sentence, Judge Teilborg will consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges. The judge, however, is not bound by those guidelines in determining a sentence.

No comments:

Post a Comment