A federal grand jury in Louisiana has returned a 65-count indictment against an alleged mortgage fraud ring that included a mortgage broker, four loan processors and an appraiser. The bad deals were submitted to a now-defunct subprime subsidiary of Bank of America.
The ring used phony information — including bogus financial information and doctored photos — in a scheme that involved more than 50 properties in 15 Louisiana communities, according to a copy of the indictment.
Prosecutors say the defendants knowingly submitted “materially false qualifying information and documentation along with other false representations” on loan applications made to Equicredit Corp. of America, the former subprime unit of Bank of America.
The phony information included “false” financial figures, Social Security award letters, W-2 forms, work histories, Verification of Mortgages, or VOMs, and “other false documents in an attempt to get a loan processed for an otherwise unapprovable borrower who was not financially qualified,” the indictment charges.
The scheme lasted from April 1999 to November 2001, according to the indictment. All seven of the defendants have pleaded not guilty to charges that include conspiracy, bank fraud and mail fraud.
Among those named in the indictment is Anthony T. Grishby, identified as the president and managing partner of Infinity Mortgage Services of Lafayette, La. The indictment alleges that he used the company “to facilitate his illegal loan brokerage activity.”
But he also set up other companies to pull off the scheme, including GSA Financial Services Inc., First Premier Financial Services, First Chance Home Lending and Eminem Enterprise.
The defendants allegedly made money on the scheme by keeping part of the loan proceeds paid out to the fictitious companies established by Grishby.
As part of the scheme, Grishby sent up a fax machine to send VOMs to his Infinity office. “He would fax or cause faxes to be sent from the machine in an attempt to make the verifications look authentic,” according to the indictment.
Four loan processors who worked for Grishby were also indicted: Renay Matthews; Tameshia Matthews; Shawn Hollier; and Lori Moreau. Eric Broussard, a secretary at Infinity, was also charged.
The indictment alleges that Grishby and the processors were overcharging borrowers for services, including credit reports and appraisals.
In one instance a borrower was charged $650 for an appraisal report that actually cost $450, according to the indictment.
Another player in the alleged scheme was Howard McZeal, operator of McZeal’s Appraisal Services. According to the indictment McZeal “was hired (by) Grishby to determine market values of properties that were the subject of loans marketed by Infinity.
But McZeal illegally appraised the value of properties as part of the scheme, the indictment alleges.
“Howard McZeal manipulated the comparable sales process by carefully choosing home sales in different geographical regions to arrive at needed amounts,” according to the indictment.
McZeal also “doctored photographs used in appraisals to hide inferior qualities, reported first time purchases as being current owners of a property to facilitate a fraudulent refinance and inflated appraisals of homes,” the indictment charges.
