Mortgage Daily

Published On: July 15, 2002
Tennessee Mortgage Broker Pleads Guilty To Defrauding LendersBogus loan packages created on fictitious borrowers

July 15, 2002

By SAM GARCIA

A Tennessee mortgage broker and her employee have pled guilty to defrauding two lenders out of more than $6 million, according to an announcement from the U.S. Attorney’s office. The two were allegedly involved in schemes where they would obtain funding for fictitious or fraudulent loans using bogus loan packages.The case involved Apple Tree Mortgage, Inc., a Kingsport, Tennessee mortgage brokerage owned and operated by Shirley Harwood, 47. According to the 17-count indictment, between July 1998 and December 1999, Harwood devised a scheme where she would use false documentation and signatures to create fictitious loan files.

 


Shirley Harwood
In 1998, Harwood opened a $3 million warehouse line of credit with Union Planters Bank, according to the indictment. By creating fake loan documents, Harwood, who also owned and operated Fidelity Title Company, Inc. in Kingsport, was able to obtain more than $2 million in warehouse funds from Union Planters. Once she fraudulently obtained the loan proceeds, Harwood would use domestic and foreign accounts to launder the money.

 

The fake loans ranged in size from $75,000 to $348,750.

A second, 12 count indictment alleged Harwood and former employee and coconspirator Dennis Ray Sutherland Jr., 30, used fraudulent documents to originate a $4.5 million loan through Credit Suisse of Zurich, Switzerland. Currently, more than $4 million of that loan is in default. The Elizabethton Star recently reported that Harwood and Sutherland fraudulently induced Credit Suisse to fund the loan to HelveStar, a Swiss company. That story went on to say the two pretended to be Bank of America authorizing officials so they could vouch for the authenticity of the documents. Harwood reportedly received $200,000 in commissions for brokering the loan, of which she gave Sutherland $10,000.

Harwood pled guilty to eleven counts on June 3, 2002 and is free on bond awaiting an August 5th sentencing date.

Sutherland previously pleaded to the conspiracy charge, according to the Star.

Apple Tree’s website is still active at the following URL:

http://www.AppleTreeMortgageInc.org

MortgageDaily.com           
Other articles about mortgage fraud cases include:

  • Loan originator Brian J. Wilkozek and two loan processors are among fifteen people indicted in a south side Chicago “flipping” scheme
  • Edward Rostami was sentenced to a year in prison for using a fraudulently obtained property title to obtain a $1 million loan
  • Rene Abreu was among 11 people indicted in a case involving The Mortgage Pros, Inc. in Guttenberg, New Jersey
  • David Allan Van Velzer, Jr., was sentenced to more than 8 years in prison for wire fraud and money laundering
  • Kenneth Bradford and Jo Ellen Bryant received 10+ year sentences in a Georgia flipping case
  • Former PinnFund Chief Michael Fanghella pleads guilty
  • Seven indicted in AppOnline.com mortgage fraud scheme
  • Indian authorities apprehended Rajiv C. Shah, one of two brothers that allegedly sold loans with fraudulent documentation to 3 U.S. lenders
  • Loans originated by originated by Chapel Creek Mortgage Banker, Inc. could cost Chase Manhattan Mortgage Corp. between $10 and $20 million
  • Kent E. Baklor was sentenced for defrauding two lenders of over $8.5 million
  • Tamira Smyth was sentenced in a Chicago ‘flipping’ scam involving twenty defendants
  • Former Las Vegas mortgage broker David Ferradino was sentenced to five years’ probation and ordered to pay $4.2 million in restitution to 90 investors
  • Michael Graham received a sentence of more than 12 years in prison and was ordered to pay $515 million in restitution for his role in the failure of The First National Bank of Keystone.
  • Yehuda Shiv was charged by the SEC with overstating the value of his clients’ assets by more than $139 million
  • Cheryl A. Swain pleaded guilty to a charge of mail fraud in connection with her conduct as the VP for Marketing Syndication of MCA
  • Robert B. Herbert, Jr. of Raleigh allegedly “embezzled and misappropriated moneys from Stewart Title.
  • Donald Lukens allegedly defrauded more than 100 investors — including popular sports figures — of at least $12.5 million in a number of schemes, including one involving mortgage backed securities
  • Steven D. Mueffelman and John S. Lombardi charged in a 15-count indictment with mail and wire fraud
  • Raymond T. Jackman, JR. was sentenced to two years’ probation
  • GreatStone Mortgage in Florida is accused of fraud, sexual harassment.
  • The government is pursuing mortgage fraud cases in Charlotte and Cleveland.
  • Miami family allegedly ran a mortgage fraud ring that swindled lenders out of $3.8 million.
  • Maryland is the state with the most instances of possible fraud, according to Affinity Corporation’s ‘Suspected Fraud Activity Index’ for the months of June, July and August.
  • Thomas Eck and Zahra Gilak made as much as $15 million, and defrauded investors of $100 million in sham that included online mortgage brokerage
  • Richard Wood, a Las Vegas mortgage broker accused of bilking millions of dollars from dozens of investors in a nationwide Ponzi scheme, was gunned down outside his home.
  • FBI Investigating Massive Mortgage Fraud Case In Spokane
  • Richard Michael McDowell, who through southern California-based Active Home Loans and M&M Loan Service admittedly swindled an estimated $7 million from about two dozen investors, was sentenced to 27 months in federal prison

Sam Garcia has been in mortgage lending since 1980, and is the Publisher of MortgageDaily.com. He also owns and operates CloseNow.com, a consumer real estate portal site.email: SamGarcia@MortgageDaily.com

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