ABN AMRO Mortgage Group claims in a federal lawsuit it is the victim of a large scale fraud perpetrated by a mortgage broker, appraisers and a title company among others.
In the suit, filed in U.S. District Court for the Northern District of Indiana in Fort Wayne, ABN AMRO, operating through InterFirst Wholesale Mortgage Lending, says the defendants used inflated appraisals and fraudulent claims to receive $5.5 million in mortgage loans.
Those named in the suit are guilty of fraud, breach of contract, negligence, deception, conspiracy, racketeering and breach of contract, the company claims in the lawsuit.
“ABN has incurred a substantial loss, the amount still be fully calculated, as a result of buying and funding the loans,” according to the lawsuit. “The (defendants) did in fact plan and execute a scheme to defraud ABN.”
Among those named in suit are Maximum Mortgage Inc. and its owners Justin and Carrie Stuckey. Also named are a title company; Allen County Appraisal; Appraisal Source of Fort Wayne and appraiser Greg Chevalier; and property owner and investor Rex Wells. All are in the Fort Wayne area.
Maximum entered into a Wholesale Lending Agreement with ABN in March 2001.
The mortgage broker was approached by customers looking to finance four rental properties, and referred them to Wells — indicating he “was one of the most experienced and successful apartment owners in” the area, the complaint said. Wells then convinced the borrowers to buy dozens of his own properties.
Wells referred another buyer to Maximum to handle loans on several dozen more properties he sold.
The complaint went on to say that Maximum fraudulently presented the loans to ABN as refinances, when in fact they were purchase transactions.
ABN claims the defendants conspired to dupe the company into lending $5.5 million. But through the bogus appraisals and other schemes, the defendants concealed that the properties were worth only $3.1 million.
“Currently, the outstanding amounts due…is a sum in excess of $6.8 million,” ABN said. “Each of the 149 mortgages are in default.”
All of the loans were originated by Maximum, according to the complaint.
“Wells fraudulently represented to (investors) that the properties were worth substantially more than their actual fair market values…(and) misrepresented the condition of the properties,” ABN claims.
The appraisers knowingly appraised the properties far in excess of their fair market value, ABN said.
Some of the properties were appraised at as much as eight times their actual value, court records show.
In court documents, the defendants have denied the charges and said ABN made bad decisions in lending the money.
“There was a lack of diligence, reasonable review and investigation on the part of…ABN,” a the lawyer for Chevalier and Allen County Appraisals, said in a court filing. “ABN…made a poor business decision and assumed the risk of making mortgage loans.
“Chevalier and (Allen County Appraisals) followed acceptable procedure according to accepted standards of professional practice in preparing the appraisals in question,” Jordan said in the answer to ABN’s lawsuit.
The Stuckeys and Wells have also denied the allegations.
In a motion to dismiss the case, Wells’ lawyer James P. Fenton said ABN has failed to makes it case.
ABN “fails to state a claim for fraud because the allegations of fraud are not stated with sufficient particularity, and because there are various substantive deficiencies with the fraud claim,” Fenton said in the filing.
He makes a similar claim in saying Wells is not guilty of racketeering, breach of contract, civil conspiracy and other charges made by ABN.
