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Guilty Pleas in Mfg Housing Scam

Michael Fortenberry, Glenn Vaught plead guilty

July 27, 2011

By DAVID WREN The Sun News - McClatchy-Tribune Information Services

Guilty pleas have been extracted from a former mortgage broker and the owner of the manufactured housing dealership that collected $2 million in proceeds as a result of the mortgage fraud scam. The broker's wife is scheduled to be arraigned next month.

The former mortgage broker and the owner of the defunct manufactured housing dealership in Conway, S.C., pleaded guilty to felony mortgage fraud charges Tuesday in federal court in Florence, S.C.

Michael Fortenberry, the mortgage broker, and Glenn Vaught, former owner of G&E Home Sales, pleaded guilty to one charge each of conspiracy to commit loan application fraud, which carries a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release.

The two men will remain free on $25,000 unsecured bonds until they are sentenced at a later date.

Meanwhile, Cynthia Fortenberry -- Michael Fortenberry's wife -- was indicted Tuesday on seven felony charges of conspiracy to commit loan application fraud. Cynthia Fortenberry was a mortgage broker who worked with her husband. She is scheduled to be in federal court for an arraignment on Aug. 8.

Michael Fortenberry and Vaught said in plea agreements that they falsified information on loan applications to influence mortgage lenders to make loans that otherwise would not have been approved. The falsified information included appraisals that overvalued the property where the homes were to be located, doctored bank statements that made it appear as if buyers had more money and documents showing down payments that did not exist.

The guilty pleas bring an end to a case The Sun News first investigated in late 2006. The newspaper's investigation showed buyers did not know Michael Fortenberry and Vaught falsified their loan information. The two men obtained mortgages in the buyers' names and had more than $2 million in loan proceeds sent to G&E Home Sales. Michael Fortenberry and Vaught then split the loan proceeds but never provided any homes to their customers.

Joanne Todd, one of the victims, said Tuesday she believes the possible sentences are too light.

"That's all they could get? That is nuts," Todd said. "We lost everything. You can't imagine how painful this has been for us."

Todd and her husband gave Vaught a $1,500 down payment in 2006 for a manufactured home and land package in rural Horry County.

"We had been looking to buy a place and he seemed really nice," Todd said. "The fact that he said he was a Christian was a real bonus for us. We thought this was going to be our dream home because we'll be living in the country where we can have a garden."

Todd said potential closing dates came and went as Vaught promised them he was working to secure their loan. Eventually, Todd said, Vaught stopped taking her phone calls and she resorted to leaving notes on the door of his Conway dealership in attempts to contact him.

"At that point, we lost everything," she said. "We were living in a trailer at the time and that didn't work out so we wound up with no place to go. We were staying in hotels and with friends. If it hadn't been for my cousin having a trailer in North Carolina, we would have really been messed up."

Todd, who now lives near Greensboro, N.C., said creditors still call her trying to collect on a mortgage for a home she never received.

"It's still on our credit report," she said. "I don't know that we'll ever be able to own a home now."

Brenda Myers, another G&E Home Sales victim, said she is happy Michael Fortenberry and Vaught pleaded guilty but is disappointed with their potential sentences.

"I don't think it's near enough," Myers said. "They used a pencil to swindle people out of their money and their dream of a home. To me, that's just as bad as robbing a bank with a gun."

The Sun News' investigation paralleled a civil lawsuit filed by one of the mortgage lenders that lost money on the G&E Home Sales scam. That lawsuit is pending in state court.

Court documents and newspaper interviews documented how Michael Fortenberry and Vaught falsified information that was sent to lenders. For example, a checking account statement submitted with buyer Tracie Dobson's mortgage application showed a $31,306 balance. Dobson told The Sun News she did not have that much money in her account.

In another instance, loan documents submitted by Michael Fortenberry and Vaught showed buyer Gwendolyn Kelley made a $27,926.95 down payment. Kelley did not make the down payment on the home, according to court papers.

Vaught and Michael Fortenberry also altered appraisals to make it appear as if vacant land already had homes on them, according to court records and the newspaper's investigation.

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Copyright (c) 2011, The Sun News, Myrtle Beach, S.C.

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