DIRTY MORTGAGE BROKER & PHONY APPRAISERS GUILTY OF $100 MILLION FRAUD

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Education & Training with (retired) TN LIC# 290452

Federal Jury Finds Mortgage Broker Guilty in $100 Million Fraudulent Loans Scheme

U.S. Attorney’s Office January 29, 2013
  • Western District of Pennsylvania (412) 644-3500
 

PITTSBURGH—After deliberating for three hours, a federal jury of five men and seven women found Lewis Whoolery guilty of wire fraud conspiracy, United States Attorney David J. Hickton announced today.

Whoolery, 44, currently of Delray Beach, Florida, and formerly of Port Vue, Pennsylvania, was tried before United States District Judge Joy Flowers Conti in Pittsburgh.

According to Assistant United States Attorney Brendan T. Conway, who prosecuted the case, the evidence presented at trial established that Whoolery operated a mortgage broker business called First Capital Home Equity (“First Capital”).

In 2003,Whoolery recruited an unlicensed appraiser named Kenneth Cowden to prepare fraudulent appraisals for First Capital.

Between 2003 and 2005, Cowden prepared more than $67 million in fraudulent appraisals for Whoolery and First Capital.

The appraisals were fraudulent not only because they falsely represented that a licensed appraiser prepared the appraisals but also because the appraisals overstated the values of the properties serving as collateral for the loans.

In addition, Cowden altered the pictures of the properties being appraised to make it look like the properties were in better condition than they really were, and in some cases, he substituted pictures of completely different properties than the properties subject to the appraisals.

Also in 2003, Whoolery recruited Jeannette Gray, who was a licensed appraiser from the Philadelphia area, and Whoolery’s sister, Kimberly Baldwin, to join the conspiracy.

Gray, for $4,000 a month, agreed to allow Baldwin to prepare appraisals for First Capital and to sign Gray’s name to the appraisals as if Gray prepared the appraisals.

The appraisals, however, were not just fraudulent because they falsely represented that a licensed appraiser prepared the appraisals but also because the appraisals overstated the values of the properties serving as collateral for the loans.

Baldwin, like Cowden, also substituted pictures of properties.

In 2004, Gray stopped authorizing First Capital’s use of her license.

At that point, Whoolery recruited Jason Sheraw, a licensed appraiser from Irwin, Pennsylvania, to join the conspiracy.

Similar to Gray, Sheraw, in exchange for $4,000 per month, agreed to allow Baldwin to prepare appraisals under his license as if he were actually preparing the appraisals.

Baldwin then began to prepare her fraudulent appraisals for First Capital under Sheraw’s name.

Between 2003 and 2007, Baldwin prepared hundreds of fraudulent appraisals for First Capital, resulting in the funding of tens of millions of dollars of fraudulent loans.

Whoolerly supervised loan officers who submitted loans using the fraudulent appraisals, including Lawrence Kraynak, Daniel O’Connor, Mark Hipsley, John Polosky, Daniel Gillen, Shawn Cupp, Elizabeth Drake, and others.

The submissions to the lenders, however, were not just fraudulent because of the appraisals.

Rather, the submissions to the lenders also often included representations that overstated the borrowers’ financial conditions, including their incomes and assets.

Whoolery and the loan officers also often submitted fake documents in support of those false representations, including fake paystubs and bank statements.

Cowden, Kraynak, O’Connor, Hipsley, Polosky, Gillen, Cupp, Drake, Gray, Sheraw, and Baldwin have all been convicted of mortgage fraud related offenses.

In total, the government estimates that the fraudulent submissions related to this scheme led to the funding of more than $100 million in fraudulent loans, making this case the largest mortgage fraud case ever to go to trial in the Western District of Pennsylvania.

The law provides for a total sentence of 20 years in prison, a fine of $250,000, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based on the seriousness of the offense and the criminal history, if any, of the defendant.

The Mortgage Fraud Task Force conducted the investigation that led to the prosecution of Whoolery and the other individuals referred to above. The Mortgage Fraud Task Force is comprised of investigators from federal, state, and local law enforcement agencies and others involved in the mortgage industry. Federal law enforcement agencies participating in the Mortgage Task Force include the Federal Bureau of Investigation; the Internal Revenue Service-Criminal Investigation; the United States Department of Housing and Urban Development, Office of Inspector General; the United States Postal Inspection Service; and the United States Secret Service. Other Mortgage Fraud Task Force members include the Allegheny County Sheriff’s Office; the Pennsylvania Attorney General’s Office, Bureau of Consumer Protection; the Pennsylvania Department of Banking; the Pennsylvania Department of State, Bureau of Enforcement and Investigation; and the United States Trustee’s Office.

source: FBI
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David Saks



Time&Temp Memphis

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