A Utah man was sentenced to two years and three months in federal prison
on charges connected to a multi-million-dollar mortgage fraud scheme involving
properties at a Hurricane, West Virginia subdivision, announced U.S. Attorney
Booth Goodwin. Michael S. Hurd, 37, of Salt Lake City, Utah, previously pleaded
guilty in November 2011 to conspiracy to commit wire fraud and bank fraud. The
defendant also previously pleaded guilty to mail fraud arising out of his
involvement in a similar fraud scheme in Modesto, California.
Hurd admitted that during the early and mid-2000s, he operated a company
called “The Gift Program,” which he described as a “seller-funded down payment
assistance program” used to provide home buyers’ money to make the down payment
and initial mortgage payments on real estate purchases. Hurd further admitted
that he used The Gift Program to create an elaborate scheme to defraud lenders
by concealing the transfer of loan funds to the borrower from the lender. In
essence, through the use of The Gift Program, lenders unwittingly funded their
own down payment and made the initial mortgage payments.
Hurd admitted that in 2006 he became involved with Deborah and Todd Joyce of
Hurricane, West Virginia, in the “flipping” of homes in the Stonegate
subdivision in Hurricane. Deborah Joyce obtained inflated appraisals from two
local appraisers, James Thornton and Mark Greenlee, and subsequently sent the
appraisals on to another co-conspirator Raymond Morris in Salt Lake City,
Utah.
Morris admitted that he identified investors to purchase those properties at
fraudulently inflated prices. Morris then got those investors in contact with
Hurd, who then used The Gift Program to conceal the transfer of a portion of the
loan proceeds to the investor from the lender. Hurd admitted that he paid Morris
an undisclosed “commission” for this referral.
Hurd also admitted that during the scheme, he wired additional loan funds to
the investor to make initial mortgage payments. Once those funds ran out, the
investors defaulted on the loans, and the properties went into foreclosure. All
told, Hurd, Joyce, and Morris illegally flipped six properties in the Stonegate
subdivision. The respective lender losses total almost $2 million.
At the same time, Morris and Hurd orchestrated a similar investment-type
scheme in Modesto, California. Hurd acknowledged that he was involved in
illegally flipping 20 properties with losses in excess of $5.5 million. As part
of his plea agreement, Hurd agreed to transfer those charges from the Eastern
District of California to the Southern District of West Virginia so the matters
could be disposed of jointly.
During the sentencing, Judge Johnston noted that “this is the sort of
activity that contributed to the financial collapse.” Further, the judge stated
that “hopefully a prosecution like this will serve to deter others.” In
rendering the 27 month sentence, the court noted that Hurd faced significantly
more time in prison but received a reduction at the government’s request as a
result of his early and expansive cooperation against Morris and others, which
has ultimately led to further prosecutions in West Virginia, California and
Utah.
Morris, 51, of South Weber, Utah, previously pleaded guilty in July to wire
fraud and bank fraud as part of his involvement in the multi-million-dollar
mortgage fraud scheme. Morris faces up to 30 years in prison and a $1 million
fine when he is sentenced on October 29, 2012, by United States District Judge
Thomas E. Johnston.
James R. Thornton, 48, of Wilmington, NC, previously pleaded guilty to aiding
and abetting wire for his involvement in the scheme. Thornton received a reduced
sentence earlier this week of five-years’ probation as a result of his early
cooperation in the federal investigation.
Deborah L. Joyce was sentenced in April 2011 to three years and 10 months in
prison and five years of supervised release for her involvement in the Stonegate
subdivision mortgage fraud scheme. Joyce’s husband, Todd Joyce, 38, of
Hurricane, Putnam County, West Virginia, was also sentenced in April 2011 to one
year and six months in prison on mortgage fraud and tax evasion charges.
This case is being investigated by the Federal Bureau of Investigation and
the Internal Revenue Service-Criminal Investigative Division. Assistant United
States Attorney Thomas Ryan is in charge of the prosecution. The sentence was
imposed by United States District Judge Thomas E. Johnston.
This case was prosecuted as part of President Obama’s 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.
No comments:
Post a Comment