Ten Defendants Indicted in Alleged $14.5 Million Mortgage Fraud Scheme That Resulted in $8 Million Loss to Lenders
| U.S. Attorney’s Office September 25, 2013 |
CHICAGO―Ten defendants, including five licensed loan originators, were indicted for allegedly participating in a scheme to fraudulently obtain approximately 52 residential mortgage loans totaling at least $14.5 million from various lenders. The indictment alleges that the mortgages were obtained to finance the purchase of various properties, primarily on the west and south sides of Chicago, by straw buyers who were fraudulently qualified for loans while the defendants allegedly profited. As a result, various lenders and their successors incurred losses of at least $8 million because the mortgages were not fully recovered through subsequent sale or foreclosure.
An 11th defendant who worked as a closing agent for a title company in suburban Westchester was indicted separately as part of the same investigation.
Both indictments were returned yesterday by a federal grand jury and announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Barry McLaughlin, Special Agent in Charge of the U.S. Department of Housing and Urban Development Office of Inspector General.
Keith Austin, 41, of Broadview, who controlled companies called Icy Investments Inc. and Kesha & Icy Investments Inc., allegedly directed the fraud scheme. He was charged with six counts of wire fraud, three counts of bank fraud, one count of aggravated identity theft, and one count of obstruction of justice.
The obstruction of justice count alleges that Austin and co-defendants Cesar Marin, 30, of Schaumburg, and Mark Pettis, 57, of Chicago, both licensed loan originators, prepared and provided false documents in response to federal grand jury subpoenas issued last year. Marin was also charged with three counts of wire fraud, while Pettis was also charged with one count of bank fraud.
Three other licensed loan originators indicted were Joseph Bateast, 40, of Bolingbrook, one count of bank fraud; Robert Brown, 37, address unknown, one count of wire fraud; and Constance Paek, 34, of Glenview, one count of wire fraud. Also charged were Wilson Titus, 64, of Broadview, three counts of wire fraud and two counts of bank fraud; Clyde Banks, also known as “Charles Barksdale,” 36, address unknown, one count of wire fraud; Steven Gawlik, 41, of Chicago, one count of wire fraud; and Michael Thill, 54, of Park Ridge, one count of wire fraud.
The indictment also seeks forfeiture of more than $8 million from Austin, Marin, Titus, Banks, and Bateast, as well as $6,800 seized from Austin’s home during the execution of a search warrant in October 2012 and Austin’s 2007 Lexus LS460, which was seized today.
Brandie Roberts, 34, of Brookfield, formerly a closing agent for a title company in Westchester, was indicted separately on two counts of wire fraud, and her indictment seeks forfeiture of at least $68,366.
All 11 defendants will be arraigned on dates yet to be determined in U.S. District Court.
According to the Austin indictment, between August 2004 and October 2012, the defendants schemed to obtain the fraudulent mortgages by making false representations in loan applications, real estate contracts, and HUD-1 settlement statements, including information about the buyers’ income, employment, financial condition, source of down payments, intention to occupy, and sale price of the property.
Austin, Titus, Paek, Pettis, and Thill allegedly recruited property owners to sell their homes, knowing they intended to falsely inflate the sales price so they and others could obtain the proceeds of the mortgage. Austin, Titus, Banks, and Paek allegedly recruited individuals to act as straw buyers by promising that they would not have to use any of their own money, would be paid to attend closings, and would not have to make any subsequent mortgage payments.
The indictment alleges that Austin, Marin, Titus, Brown, and Paek received the proceeds of the fraudulent loans and used the funds to enrich themselves.
The government is being represented by Assistant U.S. Attorneys Yasmin N. Best and Kenneth E. Yeadon.
Each count of wire fraud affecting a financial institution and bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. The court may impose an alternate fine totaling twice the loss or twice the gain, whichever is greater. The aggravated identity theft count against Austin carries a mandatory consecutive sentence of two years in prison, and the obstruction of justice count carries a maximum of 20 years in prison. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Since 2008, more than 200 defendants have been charged in federal court in Chicago and Rockford with engaging in various mortgage fraud schemes involving more than 1,000 properties and approximately $300 million in potential losses, signifying the high priority that federal law enforcement officials give mortgage fraud in an effort to deter others from engaging in crimes relating to residential and commercial real estate.
Today’s announcement is part of efforts by the Financial Fraud Enforcement Task Force (FFETF), which wages an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force facilitates increased investigation and prosecution of financial crimes; enhanced coordination and cooperation among federal, state, and local authorities; addresses discrimination in the lending and financial markets; and conducts outreach to the public, victims, and financial institutions. For more information on the task force, visit www.stopfraud.gov.
An 11th defendant who worked as a closing agent for a title company in suburban Westchester was indicted separately as part of the same investigation.
Both indictments were returned yesterday by a federal grand jury and announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois; Robert J. Shields, Jr., Acting Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; and Barry McLaughlin, Special Agent in Charge of the U.S. Department of Housing and Urban Development Office of Inspector General.
Keith Austin, 41, of Broadview, who controlled companies called Icy Investments Inc. and Kesha & Icy Investments Inc., allegedly directed the fraud scheme. He was charged with six counts of wire fraud, three counts of bank fraud, one count of aggravated identity theft, and one count of obstruction of justice.
The obstruction of justice count alleges that Austin and co-defendants Cesar Marin, 30, of Schaumburg, and Mark Pettis, 57, of Chicago, both licensed loan originators, prepared and provided false documents in response to federal grand jury subpoenas issued last year. Marin was also charged with three counts of wire fraud, while Pettis was also charged with one count of bank fraud.
Three other licensed loan originators indicted were Joseph Bateast, 40, of Bolingbrook, one count of bank fraud; Robert Brown, 37, address unknown, one count of wire fraud; and Constance Paek, 34, of Glenview, one count of wire fraud. Also charged were Wilson Titus, 64, of Broadview, three counts of wire fraud and two counts of bank fraud; Clyde Banks, also known as “Charles Barksdale,” 36, address unknown, one count of wire fraud; Steven Gawlik, 41, of Chicago, one count of wire fraud; and Michael Thill, 54, of Park Ridge, one count of wire fraud.
The indictment also seeks forfeiture of more than $8 million from Austin, Marin, Titus, Banks, and Bateast, as well as $6,800 seized from Austin’s home during the execution of a search warrant in October 2012 and Austin’s 2007 Lexus LS460, which was seized today.
Brandie Roberts, 34, of Brookfield, formerly a closing agent for a title company in Westchester, was indicted separately on two counts of wire fraud, and her indictment seeks forfeiture of at least $68,366.
All 11 defendants will be arraigned on dates yet to be determined in U.S. District Court.
According to the Austin indictment, between August 2004 and October 2012, the defendants schemed to obtain the fraudulent mortgages by making false representations in loan applications, real estate contracts, and HUD-1 settlement statements, including information about the buyers’ income, employment, financial condition, source of down payments, intention to occupy, and sale price of the property.
Austin, Titus, Paek, Pettis, and Thill allegedly recruited property owners to sell their homes, knowing they intended to falsely inflate the sales price so they and others could obtain the proceeds of the mortgage. Austin, Titus, Banks, and Paek allegedly recruited individuals to act as straw buyers by promising that they would not have to use any of their own money, would be paid to attend closings, and would not have to make any subsequent mortgage payments.
The indictment alleges that Austin, Marin, Titus, Brown, and Paek received the proceeds of the fraudulent loans and used the funds to enrich themselves.
The government is being represented by Assistant U.S. Attorneys Yasmin N. Best and Kenneth E. Yeadon.
Each count of wire fraud affecting a financial institution and bank fraud carries a maximum penalty of 30 years in prison and a $1 million fine, and restitution is mandatory. The court may impose an alternate fine totaling twice the loss or twice the gain, whichever is greater. The aggravated identity theft count against Austin carries a mandatory consecutive sentence of two years in prison, and the obstruction of justice count carries a maximum of 20 years in prison. If convicted, the court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Since 2008, more than 200 defendants have been charged in federal court in Chicago and Rockford with engaging in various mortgage fraud schemes involving more than 1,000 properties and approximately $300 million in potential losses, signifying the high priority that federal law enforcement officials give mortgage fraud in an effort to deter others from engaging in crimes relating to residential and commercial real estate.
Today’s announcement is part of efforts by the Financial Fraud Enforcement Task Force (FFETF), which wages an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force facilitates increased investigation and prosecution of financial crimes; enhanced coordination and cooperation among federal, state, and local authorities; addresses discrimination in the lending and financial markets; and conducts outreach to the public, victims, and financial institutions. For more information on the task force, visit www.stopfraud.gov.
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