Maybe it was the prospect of going to prison for mortgage fraud that caused Kenneth W. Hudson to snap.
Hudson, a one-time Texas insurance broker who had previously been convicted of mail fraud and forgery, was one of 20 people indicted Nov. 9 by a federal grand jury in Austin. They were charged with mortgage fraud and money laundering in scheme that prosecutors allege defrauded lenders of more than $15 million.
Hudson was to turn himself in to federal authorities on Nov. 22. But instead, he apparently committed suicide at his home near Georgetown, Texas, according to Williamson County Sheriff Detective John Foster.
Foster told MortgageDaily.com that Hudson, 61, was found dead in his car. It was parked in the garage at Hudson’s home, Foster said.
Foster confirmed that Hudson was one of the people indicted in the mortgage fraud ring.
The department is investigating and awaiting results of a toxicology report. Foul play is not suspected, Foster said.
“It’s an apparent suicide,” he said.
According to one source, Hudson has been in trouble with the law before.
“Hudson had other problems with law enforcement and was probably going to go back in to the Texas Criminal Justice System,” a source with knowledge of Hudson’s past told MortgageDaily.com. “He decided death was more desirable.”
A 1990 story from the San Antonio Business Express details a litany of legal problems for a Kenneth W. Hudson, who is believed to be the same man who committed suicide.
In 1989 Hudson, who at the time was working in the insurance industry, pleaded guilty in a New Orleans federal court to one count of conspiracy to commit mail fraud. The story said Hudson was facing jail time but it is not clear if he served any time in prison.
In 1990 Hudson accepted a plea agreement with a state court in San Antonio, pleading no contest to one of 23 forgery charges against him. He was accused of bilking customers out of their insurance premiums, the paper reported.
Hudson had also had his insurance licenses revoked by the Texas Board of Insurance, the story said.
Hudson was one of 19 people charged by federal prosecutors in the Austin Mortgage fraud ring. All 20 of the defendants face up to 30 years in prison on federal charges of mortgage fraud and money laundering for their role in a “scheme that defrauded federally insured financial institutions and mortgage lenders of more than $15 million,” according to a statement from the U.S. Attorney’s office in Austin.
“These defendants abused their positions of trust by perpetrating a massive fraud on unsuspecting Texas banks and other innocent victims,” U.S. Attorney Johnny Sutton said in a statement. “The victims in this case were ripped off for millions of dollars.”
According to the indictment, the leader of the ring was Firooz Deljavan, identified as the president and owner of Austin Realtors Network Inc., and mortgage broker Thomas Martin Henry, owner of Guardian Mortgage Services.
Hudson is described as a client of Henry’s company and business associate of Deljavan.
Authorities believe Deljavan and his wife, Rosemary Rios, who is also named in the indictment, have fled the country to avoid prosecution.
There is also another seedy connection. Two people named in the indictment — Michael R. Persinger and Donald C. King — were identified as Guardian clients. They reportedly own an Austin strip club.
The scheme involved property flipping, a common type of mortgage fraud.
Prosecutors said in a statement that the defendants bought up to 50 properties in central Texas “at or near market value, then sold thereafter to normally unqualified buyers at an artificially inflated price.”
For instance, the indictment alleges that Hudson bought a house from Scott B. Ringgenberg, Firooz’ brother-in-law, for $420,000. Ringgenberg, who is also named in the indictment, bought the house just a month earlier for $320,000.
“The defendants collected large sums of cash while fraudulently inducing lenders into funding the real estate loans based upon materially false statements, representations and promises provided by the defendants,” prosecutors said. “The defendants knowingly placed the lenders at risk of financial loss for funding unqualified or untruthful borrowers, thus jeopardizing the lender’s financial investment in an overvalued real estate asset.”
Also indicted were: William Allan Craig III, a lawyer; Mark Douglas Kissner, vice president of Guardian; Stacey L. Leifheit, a Guardian loan processing agent; Mohammad H. Gharbi, a real estate broker; his daughter, Maryam Gharbi, a real estate agent; John Ogilbee, a real estate appraiser trainee; Kato Sherman Jr., president of KSJ&Co., a real estate appraisal firm; Behrouz Deljavan, Firooz’ brother-in-law; Helen Rios Ringgenberg, Rosemary Rios’ sister; Matthew C. Nagy, a Guardian client; Ramin Masoumi, a Guardian client; Majid Rashidi, a Guardian client; and Mehdi Haghshenas, a Guardian client.
