A mortgage fraud trial that began in mid-February before U.S. District Judge Sam A. Lindsay, has concluded as the jury found all eight defendants guilty of various offenses related to their role in a mortgage fraud scheme they operated in the Dallas area from March 2002 to January 2006, announced U.S. Attorney James T. Jacks of the Northern District of Texas.
The lead defendant in the case, Eric Rulack Farrington Jr. of Irving, Texas, was the president of Eric Farrington Seminars Inc. and Prestige Capital Corporation, which did business as Farrington Mortgage Group. He was a manager of EFC Investments LLC, which did business as EFC Management Company. All were located in Dallas. The jury convicted Farrington on all 32 counts of the superseding indictment, including: One count of conspiracy to commit wire fraud; one count of bank fraud and aiding and abetting; 15 counts of wire fraud and aiding and abetting; 10 counts of money laundering and aiding and abetting; and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting
Other defendants, their roles, and counts on which they were convicted are:
►Janice Little Shepherd of Irving, Texas, Farrington's former fiance, was a mortgage broker who did business as EFC Capital Mortgage Company, in Dallas. She was convicted on: One count of conspiracy to commit wire fraud; 11 counts of wire fraud and aiding and abetting; and four counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.
►Regis Lamont Williams of Dallas, was a Texas-certified real estate appraiser who did business as Executive Certified Appraisal. He was convicted on: One count of conspiracy to commit wire fraud; one count of bank fraud and aiding and abetting; nine counts of wire fraud and aiding and abetting; and five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.
►Kevin Ray Sanderson of Irving, Texas, was a business associate of Farrington and the vice president of Farco Construction Inc., Dallas, which also did business as Farrington Mortgage Group. He was convicted on: one count of conspiracy to commit wire fraud; one count of bank fraud; four counts of wire fraud and aiding and abetting; and one count of money laundering.
►James Edward Jones of Dallas, was a real estate agent. He was convicted on: One count of conspiracy to commit wire fraud and two counts of wire fraud and aiding and abetting.
►Edwin Terrence Bell of Fort Worth, Texas, was in the real estate management business and was the president of Togetherness Inc. Bell also did business as The Togetherness Group and TTG Inc. He was convicted on: one count of conspiracy to commit wire fraud; five counts of wire fraud and aiding and abetting; and two counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.
►Micheal Lewis Andrews of Plano, Texas, was chief executive officer of Second Chance Mortgage Inc. and did business as 2nd Chance Mortgage. He was convicted on two counts of wire fraud and aiding and abetting.
►Robert John Mason of Oak Leaf, Texas, was an employee of Prestige Capital Corporation. He was convicted of two counts of wire fraud and aiding and abetting.
Prior to trial, Marcus Allen Parker of Rowlett, Texas, who was an associate of defendant Kevin Ray Sanderson, pleaded guilty to one count of conspiracy to commit wire fraud. In addition, prior to trial, charges were dismissed against Tony Earl Anderson of Dallas and Christopher N. Williams of Flower Mound, Texas. All three testified as government witnesses.
The statutory maximum penalties for conspiracy to commit wire fraud and wire fraud is 20 years in prison and a $250,000 fine, per count. The maximum statutory penalty for bank fraud is 30 years in prison and a $1 million fine, per count. The statutory maximum penalty for money laundering is 20 years in prison and a $500,000 fine, per count. The maximum statutory penalty for engaging in a monetary transaction with criminally derived property is 10 years in prison and a $250,000 fine, per count.
The government presented evidence at trial that Farrington, a motivational speaker who had authored a real estate book and had an infomercial on making money in real estate that ran on late night television, largely orchestrated the scheme. The defendants located single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price with the seller. They created surplus loan proceeds by inflating the sales price to an arbitrary amount substantially more than the fair market value of the residence, many times using inflated appraisals. In some cases, they would create a bogus outstanding mortgage lien to be discharged. They recruited individuals with high credit scores to act as borrowers and falsely represented to them that the property would be managed by the defendants and rented by a suitable tenant; that the mortgage, interest, taxes, insurance and property maintenance would be paid from the rental income; and the purchasers/borrowers would have no expenses. The borrowers had no intention to live in the property and did not have sufficient income to repay the loans. They said they relied on Farrington.
Further evidence presented by the government showed that the defendants prepared and submitted fraudulent loan documents showing inflated incomes in the names of the borrowers and obtained loans in inflated amounts based on these fraudulent loan documents. Then they used the fraudulently obtained surplus loan proceeds to pay the sellers kickbacks, to conceal the fraud, and distributed the bulk of the proceeds among themselves. They would then allow the loan to go into foreclosure after a few payments were made on the loan.
Following a conviction on count one, the conspiracy, the criminal forfeiture allegation requires the defendants to forfeit $4,500,070 to the U.S. The forfeiture allegation also requires the defendants, upon conviction of any of counts two through 17, to forfeit various sums of money, totaling nearly $4 million, as listed in the superseding indictment.
For more information, visit www.justice.gov.
