Five charged in local mortgage fraud case
Several lenders lost at least $3.5 million in scheme, IRS says
Wednesday, May 19, 2010
Five former employees of a Vancouver mortgage company were arraigned Wednesday on federal charges in an alleged federal mortgage fraud scheme that resulted in at least $3.5 million in losses to lenders.
Joel Rosabal, 31, Chadwick Amsden, 31, Timothy Hills, 30, Misti Wallis aka Misti Cowart, 32, and Gerald Wallis, 41, appeared at the federal courthouse in Portland to hear the charges resulting from their work at Crown Point Enterprises, which was doing business as Lighthouse Financial Group in early 2006 through mid 2007. A sixth former employee, Jo Schermerhorn, 50, is set to be indicted June 3.
U.S. Attorney Dwight Holton has accused the employees of defrauding lenders by recruiting home buyers to apply for loans at an inflated price and then pocketing a portion of that money, according to the indictment. The charges come as the result of an investigation by the Internal Revenue Service and the United States Postal Inspection Service.
Amount could go up
Affected lenders included First Franklin Corp., Decision One Mortgage, Hyperion Capital, Millennium Funding and Ace Mortgage to the tune of $3.5 million in losses, an amount the U.S. Attorney expects to increase as some homes remain in various stages of foreclosure.
“Deceit, kickbacks, and greed are the currency of mortgage fraud,” Holton said in a statement. “As we know all too well now, the stability of our economy depends on restoring integrity to the mortgage lending business — and that means rooting out this corruption wherever we find it.”
Lighthouse Financial Group and its president, Sheldon Harmon, were banned from doing business in Oregon last July. The company listed its headquarters at 4001 Main St. in Vancouver.
At the time, the Oregon Division of Finance and Corporate Securities said that Lighthouse violated the state’s mortgage lender law by opening unlicensed branches, failing to notify the state of new hires, hiring brokers with criminal records or unlicensed brokers, keeping shoddy client records and providing fraudulent information on mortgage applications.
The indictments indicate the company’s employees might have been knowingly involved in executing those schemes.
Defendants Rosabal and Amsden were charged in a 21-count indictment including attempt and conspiracy, mail fraud, wire fraud and money laundering. They allegedly recruited potential borrowers to Lighthouse and lied on their loan documents to secure funding in exchange for a kickback.
For example, Lighthouse submitted loan applications for a borrower on multiple homes in Oregon, stating that each would be the buyer’s primary residence when, in fact, they were rental properties. In one case, the documents listed the borrower’s income as $27,000 per month when the defendants allegedly knew the real amount was $5,000 per month.
The documents also inflated the purchase price of the homes to provide kickbacks of more than $50,000 in some cases.
Amsden, Hills, Cowart, Wallis and Schermerhorn were charged in a separate four-count indictment alleging, among other things, attempt and conspiracy, wire fraud, money laundering and false statements to banks.
If convicted, the defendants face a maximum sentence of 20 years in prison for each count of attempt and conspiracy, wire fraud and mail fraud. Money laundering carries a maximum sentence of up to 10 years in prison and false statements to a bank carries a maximum sentence of up to 30 years in prison and a $1 million fine.
The trial is set for June 20.