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Appraiser Sentenced in $14 Million Case

John F. Hochrek Jr. sentenced to 6 months in prison

July 11, 2011

By JOHN DIEDRICH Milwaukee Journal Sentinel - McClatchy-Tribune Information Services

An appraiser in a $14 million mortgage fraud scheme has been sentenced to less than a year behind bars.

The Illinois man was sentenced to six months in federal prison for his role in the scheme involving more than 40 properties.

John F. Hochrek, Jr., 50, of Spring Grove, Ill., pleaded guilty to one count of conspiracy to commit wire fraud.

U.S. District Judge Lynn Adelman also gave Hochrek six months home confinement as part of three years probation. Hochrek also will be required to pay restitution that will be determined later.

Federal sentencing guidelines called for 46 to 57 months in prison for Hochrek. In a sentencing memo, Adelman said he went below that range because Hochrek, as an appraiser in the scheme, did not reap more than his ordinary fee in doing the fraudulent transactions. The judge also said that because of Hochrek's age and otherwise clean record was not a threat to the public.

"This process appeared to have had a significant affect on him, and he indicated that he planned to move into a different field in the future," Adelman wrote in the sentencing memo from June 30.

Hochrek was one of five people from Wisconsin and Illinois who were charged in a 24-count indictment in May 2009.

According to court documents, the fraud scheme was orchestrated by mortgage broker Paul Zaleski, 62, formerly of Twin Lakes, Wis., and Antioch, Ill.

Zaleski was the leader of the "straw-buyer" scheme, arranging to have buyers purchase at least 40 properties. The buyers were told they were part of an investment group.

Zaleski, working as a loan originator at First Security Financial Services in Kenosha, prepared fraudulent loan applications, which had false documents and inflated appraisals, the indictment says.

At least $2 million was funneled to shell companies controlled by Zaleski and others. The loans subsequently went into default and foreclosure.

Besides Zaleski and Hochrek, those also charged were Michael Pembroke of Twin Lakes; Patricia Lynn Kay of Kenosha; and Robert Farrell formerly of Richmond, Ill.

Kay, a straw buyer and partner in one of the shell companies, previously was sentenced to three years of probation conditioned on six months of home confinement. She also was ordered to pay a fine of $3,500.

Zaleski, Pembroke and Farrell are scheduled to be sentenced later this year.

This case was investigated by the IRS and FBI and prosecuted by the U.S. Attorney's Office in Milwaukee.

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