Medill News Service
CHICAGO -- Twenty people, including mortgage brokers, real estate agents,
appraisers and an attorney, were indicted Tuesday in what federal prosecutors
called a "vertical real estate fraud consortium."
The three-year scheme, which began in 1995, was devised to obtain $10 million
in fraudulent mortgages on at least 80 Chicago properties, according to the
The defendants, who represent all aspects of residential real estate sales,
were named in a 16-count indictment on charges of wire and mail fraud and
making false statements in connection with fraudulent residential mortgage
loans. A South Holland real estate agent, Marlon Jackson, 39, was among those
The indictment also alleges the scheme defrauded the U.S. Department of Housing
and Urban Development, which insured more than $3 million in mortgages.
"Housing fraud is very costly to taxpayers and also leaves abandoned buildings
that blight our neighborhoods," said Kathleen McChesney, special
agent-in-charge of the Chicago Field Division of the FBI, at a press conference.
The indictment charges that the defendants made a $4.4 million profit from the
illegal mortgage scheme. Prosecutors contend they would look for property
priced low enough to make a profit. Immediately after buying it, and sometimes
before, a second buyer would be recruited to buy the same property at
fraudulently inflated prices, according to the charges.
Prosecutors said attorney Robert Voltl of Inverness and paralegals Keith Sloan
and Sandra Lesniewski, both of Lake in the Hills, would represent both the
buyer and the seller at the closing, often making sure that the second sale
closed before the first.
The funds from the mortgage on the second sale would then be used to pay cash
for the first sale, in effect, selling the property before it had been bought,
the indictment charges.
Prosecutors contend the defendants made a profit on the "spread," the
difference between the initial price and the resale price. By the end of the
scheme, the spreads were exceeding $100,000 per property, which prosecutors
said the defendants used to pay off participants who provided false property
appraisals, credit histories and even fake driver's licenses to facilitate the
"Many of these mortgages have gone bad, more than the majority," said First
Assistant U.S. Attorney Gary Shapiro in announcing the indictments. "Some of
these second buyers got into this because they wanted to own their own homes.
Now some of them are on the streets."
The case is being investigated as part of Operation Rogue Mortgages, a joint
investigation by HUD and the FBI targeting fraud in six metropolitan areas.
"Because there are so many people involved and so much fraud, these are
extraordinarily difficult cases," Shapiro said.
The indictment also names real estate agent Allison McGowan, 35, of Chicago;
and mortgage brokers Tamira Smyth, 36, of Chicago, and Nancy Zimmerman, 41, of
Real estate investors Darryl Lattimore, 31, of Broadview; Curtis Jackson Jr.,
29, of Buffalo Grove; and Brian Parr, 34, of Minneapolis, were also charged.
Appraisers Melva Crittenden-Wynn, 35, of University Park, and Reginald Owens,
46, of Chicago, and loan processor Nicole Williams, 27, of Chicago, were also
named in the indictment.
Two Minneapolis men, Roderick A. Martens and Jerry Williams, who prosecutors
say recruited second buyers, and second buyers Brenda Wince, 40, of Homewood;
Albert Gray, 58, of Chicago; Valarae Washington, 26, of Robbins; Edward Scott
Ellis, 39, of Charlotte, N.C.; and Andre Somerset, 40, of Frisco, Colo., were
Efforts to reach the defendants were unsuccessful.
If convicted, each count of mail and wire fraud carries up to five years in
prison and a $250,000 fine. Making a false statement to HUD carries a maximum
prison term of two years and a maximum fine of $250,000.
No date has been set for the arraignments.