U.S. Attorney John M. Bales announced that 40 individuals have been arrested and charged in connection with a major mortgage fraud scheme in the Eastern District of Texas. The 16-count indictment was returned by a federal grand jury on March 10, 2010, and includes one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, and three counts of money laundering. All 40 defendants, from Texas, Florida, Massachusetts, Tennessee, and Georgia, are charged with one count of conspiracy to commit mail and wire fraud. Many of the defendants are also charged with various counts of mail fraud and money laundering.
According to the indictment, beginning in 2004, John Barry of Windemere, Fla., owned and operated, TKI Group Inc. and JAB Consulting, businesses out of Florida through which he solicited real estate agents, property finders, mortgage brokers, title company attorneys or escrow officers, property appraisers, and straw buyers to facilitate this scheme. The purpose of the scheme was to defraud lending institutions by convincing them to approve mortgage loans for residential properties for which the property values had been fraudulently inflated.
The indictment specifically lists 114 residential properties located in the Texas cities of Allen, Arlington, Cedar Hill, Coppell, Corinth, Cypress, Dallas, Flower Mound, Fort Worth, Frisco, Granbury, Heath, Highland Village, Houston, Keller, Lantana, Lewisville, Little Elm, Lubbock, Magnolia, McKinney, Plano, Roanoke, Southlake, Spring, The Woodlands, and Willis.
In announcing the indictment, U.S. Attorney Bales specifically noted the breadth of the financial scheme, “This indictment brings to light a criminal scheme that is quite breathtaking in its scope and beyond disturbing as far as the boldness of the fraud. The agents have done a remarkable job putting together this investigation and we look forward to presenting all of the evidence in court. Hopefully, others involved in mortgage fraud will be taking notice—we will be relentless in discovering, exposing and holding accountable those who have committed similar crimes.”
If convicted, the defendants face up to 20 years in federal prison for the conspiracy charge, up to 20 years in federal prison for each count of mail fraud charge, and up to 10 years in federal prison for each count of money laundering.
“Mortgage fraud creates so much harm to individuals, businesses and our economy, but today's indictment is a strong reminder how serious our system considers this criminal activity,” said Erick Martinez, Assistant Special Agent in Charge, IRS-Criminal Investigation, Dallas Field office. “Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable.”
“Evidence collected by the FBI to support today's indictments proves that financial crime conspiracies, particularly mortgage fraud, still threaten our economic stability,” said Robert E. Casey Jr., Special Agent in Charge of the FBI Office in Dallas. “This investigation illustrates the North Texas law enforcement community's commitment to root out those who perpetrate mortgage fraud. Although increased prosecutions alone will not solve the mortgage crisis, we hope these prosecutions will help deter future fraud.”
This case is being investigated by the FBI and the Internal Revenue Service and is being prosecuted by Assistant U.S. Attorney Shamoil Shipchandler.
This law enforcement action is 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.
For more information, visit dallas.fbi.gov.