A former Kansas elected official who is in trouble along with her attorney husband for alleged mortgage fraud highlights the latest edition of Lawyers Gone Wild.
Katheryn Shields, 60, the former Jackson County executive and her husband, attorney Philip Cardarella, 59, have been indicted along with nine other people on federal charges of “conspiracy and wire fraud for their role in a scheme to engage in mortgage fraud,” according to a statement from U.S. Attorney Bradley Schlozman.
“This case represents another tragic example of intelligent individuals — including lawyers and prominent elected officials — thumbing their noses at the law in the pursuit of quick and easy cash,” said Schlozman, the U.S. Attorney for the Western District if Missouri in Kansas City.
The couple could not be reached to comment, but they have maintained their innocence in published reports.
Others indicted were James Elliott Coleman, 58, an accountant and former school board president; Michael Rodd 52, a real estate agent; Monty Kinman, the regional manager and a loan officer with Soldi Financial and appraiser Jeremy Plagman, 29.
According to prosecutors, Shields and Cardarella were selling their home for an asking price of $699,950. They were approached by a group of people who offered to sell the home for $1.4 million.
Schlozman said an inflated appraisal, other phony financial information and straw buyers were part of the scheme. The couple was to receive $707,000 for their part while the rest of the money would go to the group as a “management fee.”
“Shields and Cardarella both knowingly signed false and fraudulent documents relating to the sale of their home,” Schlozman said. “By this time, the FBI was fully cognizant of this mortgage fraud scheme and took efforts to ensure that the loan being sought by the (straw buyers) did not fund.”
In Fairfield, Conn., a real estate lawyer has pleaded guilty of defrauding clients out of more than $1.2 million.
John M. Claydon Jr., 57, pleaded guilty in U.S. District Court to one count of bank fraud “arising from his scheme to defraud a federally insured bank in connection with residential real estate loans,” federal prosecutors said in a statement.
He faces up to 30 years in prison and fines and restitution of more than $1.7 million.
Prosecutors said Claydon handled closing for People’s Bank. He was hired in October 2004 as a closing attorney to handle refinancings on two properties owned by friends.
“At the time Claydon was experiencing substantial financial problems relating to his law practice,” prosecutors said. “When Claydon received checks from the bank as part of the refinancing transactions he converted the money — more than $1.2 million — to his own use.”
After being conformed he repaid about $500,000, but still owes the balance, prosecutors said.
Finally, New Jersey lawyer Joseph Marin received only a reprimand from The New Jersey Disciplinary Review Board for employing his brother, who impersonated him in fraudulent real estate transactions.
Marin’s lawyer, Robert DeGroot, confirmed the reprimand in an interview with MortgageDaily.com.
“He was reprimanded for failing to supervise an employee,” DeGroot said of his client. “There was no fine. They kind of reached the conclusion that he wasn’t the dishonest person that a preliminary review of the file might have indicated.”
Marin and his brother, Drew, were investigated by federal authorities looking into a property flipping scheme. Drew Marin was indicted and pleaded guilty to mortgage fraud charges, but Joseph was not charged, DeGroot said.
While working for his brother Draw Marin created false documents including second mortgages and attorney escrow letters to run his scheme.
