|A loan officer and two loan processors are among fifteen people indicted in a south side Chicago “flipping” scheme, according to an announcement from the Department of Justice (DOJ). Brian J. Wilkozek, acting as an agent for a lender, and two loan processors, Shah Siddiqui and Neeraj Mody, allegedly used false documentation to secure mortgage loans on second purchasers in the scheme, the DOJ said.The defendants are accused of using false and misleading documentation to verify down payments, credit, employment and financial histories. Illegal profits from each transaction ranged from around $20,000 to as much as $70,000.
The case centers around Share Development Company, Inc., which the indictment says was in the business of buying, developing and selling real estate. The company was owned and operated by defendant Theresa L. Holt, 55, who also took loan applications as a paid independent contractor for Challenge Mortgage, a mortgage brokerage.
Wilkozek, the loan officer, worked for JVS Financial, Inc., a Chicago area mortgage loan originating and brokering company. One processor worked for Challenge Mortgage and the other worked for Share Development.
The indictment said around June 1996, Holt, the owner of Share Development, devised a scheme where she would purchase up to 200 Chicago properties directly, or through Share Development, from one individual (or entities related to him) for $25,000 each. During 1997, Holt purchased 99 of these properties. After the agreement ran out, another unnamed company purchased 12 properties from the same seller, which in turn were purchased by Holt for $30,000 to $37,000 each.
Holt, whose whereabouts are currently unknown, then sought out buyers for the properties, offering transactions with no down payments and cash back at closing. Sales of the homes at inflated prices occurred beginning in 1997. While the transactions were typically cash, the properties were usually resold in a flip transaction on the same day they were purchased. Holt allegedly paid the purchaser-defendants each between $3,000 and $4,000, undisclosed to the lenders.
In all, 111 properties were involved, with $5.7 million in mortgage loans made that would not have been approved with accurate and true documentation. Second mortgages carried by Holt as the seller in the amount of 10% to 15% of the purchase price were typically used, with an alleged verbal agreement between Holt and the buyers that she never had any intention of enforcing repayment.
Duped lenders, whose losses were estimated at more than $2.5 million, include:
Defendants in the case will be ordered to appear at a later date for arraignment. Each faces up to 5 years in prison for each count of mail and wire fraud, and up to 20 years for each count of money laundering. Not all defendants are listed in each of the 79 counts. Holt was charged with 57 counts of money laundering.
|Other articles about mortgage fraud cases include:
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
So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...