Michael S. Hurd of Salt Lake City has pleaded guilty in federal court before United States District Judge Thomas E. Johnston to charges connected to a multi-million-dollar mortgage fraud scheme involving properties at a Hurricane, W. Va ., subdivision. Hurd is charged with conspiracy to commit wire fraud and bank fraud. The defendant also pleaded guilty to mail fraud arising out of his involvement in a similar scheme in Modesto, Calif.
Hurd admitted that during the early and mid-2000s, he operated a company called “The Gift Program,” which he described as a “seller-funded downpayment assistance program” used to provide homebuyers money to make the downpayment 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. Through the use of The Gift Program, lenders unwittingly funded their own downpayment and made the initial mortgage payments.
Hurd admitted that, in 2006, he became involved with Deborah and Todd Joyce of Hurricane in the “flipping” of homes in the Stonegate subdivision in that town. 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. Morris 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, Calif.
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.
Hurd faces up to 60 years in prison and a $2 million fine when he is sentenced on Feb. 29, 2012.
