A former branch manager of Bank of America’s one-time subprime lending subsidiary was sentenced for approving loans he knew were fake while at the unit.
In the refinance boom of 1999 and 2000, Georgia mortgage broker Kirt Walker was ringing up the deals. After loans were closed and processed, he was receiving big chunks of cash — $16,600, $10,600, $27,600, $7,500 and more.
All the loans were being run out of the Columbus, Ga., office of EquiCredit Corp., a subprime subsidiary BoA has since shut down.
But, it turns out, the loans were bogus, illegal and at the heart of a $3 million fraud scheme that involved two mortgage companies and 11 people.
All 11 people — including an EquiCredit branch manager and the owner of Integra Mortgage Inc. in Columbus — have been sentenced by a U.S. District judge for their roles in the scam.
Others involved were employees of the mortgage companies, their customers and even some of their family members.
Receiving the most time, 37 months, was Michael Aaron Blount, who at the time managed EquiCredit’s Columbus, Ga., office. He pleaded guilty to bank fraud and in addition to prison time and five years probation following his release was ordered to pay back part of the $3 million he helped steal.
Getting three months for fraud, a $5,000 fine and three years probation was Kenneth Wilson Forsyth, Integra’s owner and chief executive officer.
Court records, including indictments, show that Blount, Forsyth, Walker and others were scamming EquiCredit and Bank of America by processing phony mortgage loans and then keeping the money for themselves.
The scam worked like this, according to court documents.
Walker would submit loan applications to EquiCredit, where his wife, Shari Wells worked for Blount. Some of the borrowers were relatives of Walker and Wells, who has also pleaded guilty for her role in the scheme.
The refinance applications indicated the borrowers had adequate credit histories to receive loans, court documents show.
However, the borrowers did not actually own the property, there was no mortgage in the name of the borrower on the property “and the proceeds of the refinance loan were being used in part to purchase that property for a price that was lower than the reported value on the appraisal report and lower than the amount of the refinance loan,” according to court documents filed by federal prosecutors.
Court papers show Blount was running the same scam with two Integra employees, Jeffrey Edwards, who was a mortgage originator, and Kenna Jo Dixon, who was a loan processor.
In all instances, prosecutors say Blount knew the loan applications were bogus but approved them anyway.
Blount and the others “knowingly and willfully conspired and agreed together…to participate in a scheme and artifice to defraud EquiCredit and Bank of America” and to obtain cash “by means of material false and fraudulent pretenses, representations and promises.”
Edwards and Dixon also pleaded guilty to fraud charges as did Michael Craig Byrd, Terry Lynn Brown, Stewart Wendell Hall, Gregory Hall and Alecia Hendrick Hall, all of whom were charged with submitting false papers to obtain a mortgage loan; and Jeffrey Dwain Edwards, who plead guilty to processing the phony loans while working at Integra.
