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Georgia Property Flipping Scheme Results in Near $6 Million in Losses

NationalMortgageProfessional.com
Dec 23, 2015

Chiedu “George” Chukwuka of Stone Mountain, Ga. has been sentenced in connection with his lead role in a mortgage fraud ring that spanned five years and caused millions in losses. Chukwuka, along with his co-defendants and other co-conspirators, engaged in a massive property-flipping scheme resulting in over $5.8 million in actual losses to financial institutions between 2006 and 2011.

“At the height of the recent mortgage fraud crisis, this property-flipping scheme caused scores of homes to fall into foreclosure, costing financial institutions millions of dollars in losses,” said U.S. Attorney John Horn. “Many communities in our district have been decimated by mortgage fraud during the last 15 years and even now struggle to recover from the effects of these schemes.”

According to Horn, the charges and other information presented in court: Chukwuka, along with his co-defendants and co-conspirators, recruited straw buyers to purchase homes at a discounted price, typically a bank-owned or distressed property. The group then recruited a second straw buyer to purchase the same home at a dramatically inflated price.

In turn, Chukwuka, his co-defendants and co-conspirators applied for an acquisition loan for the second straw buyer, supporting the loan application with false income, fake employment, and fraudulent net worth data. The group profited from their scheme by pocketing the acquisition loan proceeds paid by the victim bank to the straw seller (who was the straw purchaser in the first transaction). The amount of profit was the difference between the price paid by the straw purchaser in the first transaction and the price paid by the straw purchaser in the second transaction, less transaction costs. Since none of the straw purchasers made any significant loan payments, the targeted properties usually went into foreclosure, resulting in over $5.8 million in actual losses to financial institutions between 2006 and 2011.

"Mr. Chukwuka, considered by law enforcement and prosecution to be head of this enterprise, caused extensive damage with high loss amounts to those victim banks involved. The FBI is pleased with the role it played in bringing about this sentencing to federal prison of Mr Chukwuka as well as the previous sentencings of his co-defendants in this matter,” said J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office. 

Chukwuka was sentenced by U.S. District Court Judge Timothy C Batten, Sr. to serve nine years in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $5,868,243.80. Chukwuka was convicted of conspiracy to commit wire fraud on Aug. 10, 2015, after he pleaded guilty. The following five defendants also pleaded guilty for their roles in the scheme, and were previously sentenced by U.S. District Court Judge Timothy C. Batten, Sr as follows: Shelly Gee, a/k/a Shelly Baker of Atlanta was sentenced on Nov. 10, 2015, to one year, six months in prison, to be followed by three years of supervised release, and ordered to pay restitution in the amount of $2,243,909.99. Gee was convicted after pleading guilty on June 17, 2015.

Sandra Petgrave of Stone Mountain, Ga. was sentenced Dec. 4, 2015, to one year, six months in prison, to be followed by three years of supervised release, and ordered to pay restitution in the amount of $1,051,970.77. Petgrave was convicted after pleading guilty on Aug. 18, 2015. Kennedy Simmonds of Snellville, Ga. was sentenced Dec. 17, 2015, to three years, 10 months in prison, to be followed by three years of supervised release, and ordered to pay restitution in the amount of $5,868,243.80. Simmonds was convicted after pleading guilty on July 6, 2015.

Marcelle Welch of Stone Mountain, Ga. was sentenced Dec. 17, 2015, to two years, three months in prison, followed by three years of supervised release, and ordered to pay restitution in the amount of $2,554,189.25. Welch was convicted after pleading guilty on July 29, 2015. Leah Freeman of Atlanta as sentenced on Dec. 17, 2015, to two years in prison, to be followed by three years of supervised release, and ordered to pay restitution in the amount of $1,828.532.94. Freeman was convicted after pleading guilty on June 19, 2015.

In a related case, Chinedum Oli of Snellville, Ga. was sentenced on Feb. 19, 2013, by Senior U.S. District Court Judge Marvin H. Shoob to five years in prison, followed by five years of supervised release, and ordered to pay restitution in the amount of $4,373,281.63. Oli was convicted after pleading guilty on Oct. 9, 2012.

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