2 Sentenced for Phony Mortgage Scheme
Timothy Scott Brooks, 40, Lynchburg, Va., and Adam Nash Spruill, 33, Forest, Va., who pleaded guilty in June 2010 to charges they committed various frauds in relation to a scheme to obtain phony mortgages on properties located near Smith Mountain Lake, were sentenced in the United States District Court for the Western District of Virginia.
The defendants previously waived their rights to be indicted and pleaded guilty to one count of conspiracy to commit bank fraud, mail fraud, wire fraud, fraud by false statements on loan and credit applications and conspiracy to commit laundering of monetary instruments.
Spruill and Brooks were each sentenced to 36 months in federal prison and two years of supervised release thereafter. In addition, they were ordered to pay joint and several restitution to PNC Bank in the amount of $6,860,946; to FDIC in the amount of $2,792,336; to GMAC/RFC in the amount of $738,493; to HSBC in the amount of $497,314; and to Flagstar Bank in the amount of $252,604.
Brooks and Spruill have admitted to participating in a scheme to find straw buyers for homes in a Moneta, Virginia area scheme used to enrich themselves, and others, through fraudulent means. The defendants admitted to causing loses of between $7 million and $20 million to various financial institutions.
Brooks owned and operated SB Mortgage Consultants LLC and Spruill was a mortgage broker working for SB Mortgage Consultants, the firm used for a large number of the straw purchases.
The defendants, and others, found straw buyers with acceptable credit scores to apply for property loans. Loans applications were falsified in order to obtain loans to purchase lots and secure construction loans. The defendants admitted lying on loan applications by overstating the income of straw buyers by as much as $10,000 and falsely claiming the property being purchased would be a primary residence.
The straw buyers were promised and received "good faith" payments of $5,000 and were promised 10 percent of the proceeds from any subsequent proceeds when the home was sold. These straw buyers were not required to make down payments or pay the monthly loan payments, which were paid by the defendants, and others. The monies exchanged between parties operating this scheme traveled either by mail or wire transaction.
The investigation of the case was conducted by the Federal Bureau of Investigation, the United States Postal Inspection Service and the Internal Revenue Service. Assistant United States Attorneys Charlene R. Day and C. Patrick Hogeboom III prosecuted the case for the United States.
"Mr. Brooks and Mr. Spruill devised and perpetuated a mortgage fraud scheme in which they deceived banks into providing loans to undeserving individuals." United States Attorney Timothy J. Heaphy said. "While their deception provided Mr. Brooks and Mr. Spruill with generous and undeserved profits, it caused substantial damage to both homeowners and financial institutions. Schemes like this motivate the Department of Justice's commitment to fighting mortgage fraud."
Courtesy Mortgage Fraud Blog