DOJ mortgage fraud

BC-DOJ-mortgage-fraud

To: NATIONAL EDITORS

Contact: Patrick Crosby, +1-404-581-6016

Fraudsters Profited from FHA-Insured "Reverse" Loans Intended to Benefit

Seniors

ATLANTA, April 8 /PRNewswire-USNewswire/ -- Kelsey Torrey Hull, 38, and

Jonathan Alfred Kimpson, 27, both of Lithonia, Ga., pleaded guilty today in

federal district court to a conspiracy to defraud reverse mortgage lenders and

the Federal Housing Administration (FHA) insurer of the loans. Hull pleaded

guilty to an additional bank fraud charge involving mortgage fraud, and

Kimpson pleaded to an additional identity theft charge.

U.S. Attorney Sally Quillian Yates said, "These defendants plead to

profiting from the corruption of a FHA-insured program designed to assist

seniors with either cash for equity in their home or with funds toward the

purchase of a home. These defendants changed real estate records and used

other fake documents to place seniors in houses worth only a fraction of the

amounts represented, and divert loan proceeds to themselves. With these

prosecutions, we have taken a significant step to stop this type of crime."

Inspector General Kenneth Donahue, U.S. Department of Housing and Urban

Development (HUD) said, "HUD's Home Equity Conversion Mortgage Program was

created to help senior citizens find greater financial security through

FHA-insured reverse mortgage loans. The HUD Office of Inspector General will

aggressively investigate those who would prey on America's senior citizens

through reverse mortgage fraud, and encourages anyone having knowledge of such

schemes to contact our HUD Hotline at 1-800-347-3735."

According to U.S. Attorney Yates, the charges and other information

presented in court: Reverse mortgages were designed to assist with the

financial security of seniors, ages 62 or older. There are two types of

reverse mortgages. In a "refi-reverse," the senior homeowner receives money

from the lender for a portion of the equity in the home they own. In a

"purchase money reverse," the senior receives money from the lender toward the

purchase of a new home. Under both types of reverse mortgages, the senior does

not have to repay the lender for as long as the senior lives in the home.

However, refi-reverse mortgages fund only a percentage of the property value,

requiring significant equity to remain in the property, and purchase money

reverse mortgages require a significant down payment from the senior borrowers

to establish equity in the property. The equity must remain in the home to

cover loan principal, interest, insurance and servicing costs upon FHA sale of

the property when no longer occupied by the senior.

Hull and Kimpson took advantage of the system by faking the required

seniors' down payments needed to qualify for the FHA-insured purchase money

reverses. The defendants did this through bogus "gift" letters from

"relatives" in amounts between $50,000 and $105,000. They also used fake

"HUD-1" Settlement Statements purporting to document the sale of the senior's

non-existent assets. All down payments were actually supplied by the

defendants, not the senior citizens, to be returned to the defendants upon the

reverse loan closings, along with profits substantially in excess of the true

sales prices of the properties. The return of funds to the defendants were

disguised as either seller proceeds or lien payoffs. All such fraudulently

obtained reverse mortgages included inflated appraisals.

Kimpson's plea to aggravated identity theft relates to his use of the

stolen identity of realtors and their password to falsify Georgia Multiple

Listing Service (MLS) records to create fake property listings and sales at

inflated amounts in support many of the fraudulent appraisals.

Hull also committed refi-reverse fraud by transferring properties into

seniors' names to obtain refi-reverse mortgages at fraudulently inflated

amounts. He thereby avoided the down payment requirement for purchase money

reverses, and was able to divert loan proceeds to his shell companies,

disguised as lien payoffs.

Hull was charged by a criminal information on Feb. 25, 2010. Hull could

receive a maximum sentence of up to 30 years in prison and a fine of up to

$1,000,000 on each of the conspiracy and bank fraud counts. Kimpson was

indicted on Feb. 24, 2010. Kimpson could receive a maximum sentence of up to

30 years in prison and a fine of up to $1,000,000 on the conspiracy count, as

well as a mandatory consecutive sentence of 2 years in prison and a fine of up

to $250,000 on the aggravated identity theft charge. In determining the actual

sentence upon any convictions in these cases, the court will consider the U.S.

Sentencing Guidelines, which are not binding but provide appropriate

sentencing ranges for most offenders.

Sentencings for both Hull and Kimpson are scheduled for July 16, 2010,

beginning at 2 p.m., before U.S. District Judge Julie E. Carnes.

These mortgage fraud cases are prosecuted federally as part of President

Barack Obama's Financial Fraud Enforcement Task Force. President Obama

established the interagency Financial Fraud Enforcement Task Force to wage an

aggressive, coordinated and proactive effort to investigate and prosecute

financial crimes. The task force includes representatives from a broad range

of federal agencies, regulatory authorities, inspectors general, and state and

local law enforcement who, working together, bring to bear a powerful array of

criminal and civil enforcement resources. The task force is working to improve

efforts across the federal executive branch, and with state and local

partners, to investigate and prosecute significant financial crimes, ensure

just and effective punishment for those who perpetrate financial crimes,

combat discrimination in the lending and financial markets, and recover

proceeds for victims of financial crimes.

These cases are being investigated by Special Agents of the HUD-Office of

Inspector General and the Federal Bureau of Investigation (FBI). Assistance in

this case is being provided by the U.S. Department of Treasury Financial

Crimes Enforcement Network (FINCEN) and the Georgia Multiple Listing Service.

Assistant U.S. Attorney Gale McKenzie is prosecuting the cases.

For further information please contact Sally Q. Yates, U.S. Attorney, or

Charysse L. Alexander, Executive Assistant United States Attorney, through

Patrick Crosby, Public Affairs Officer, U.S. Attorney's Office, at (404)

581-6016. The Internet address for the home page for the U.S. Attorney's

Office for the Northern District of Georgia is http://www.usdoj.gov/usao/gan.

SOURCE U.S. Department of Justice

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