Maryland Woman Found Guilty in Mortgage Fraud Scheme That Cost Lenders More Than $900,000
She and Others Used Straw Buyers to Generate Fraudulent Loans; Actions Led to Evictions of Some Tenants
|U.S. Attorney’s Office March 28, 2013|
WASHINGTON—LaFrances Dudley O’Neal, 49, of Clinton, Maryland, has been found guilty by a jury for her part in a mortgage fraud scheme that cost lenders more than $900,000.
The verdict was announced today by U.S. Attorney Ronald C. Machen, Jr.; Gary R. Barksdale, Inspector in Charge, Washington Division, U.S. Postal Inspection Service; Joseph W. Clarke, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Housing and Urban Development; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; and William P. White, Commissioner of the District of Columbia Department of Insurance, Securities and Banking.
O’Neal was found guilty by the jury on March 27, 2013, of four felony charges, including conspiracy and bank fraud, after a two-week trial in the U.S. District Court for the District of Columbia. The Honorable Reggie B. Walton scheduled sentencing for June 20, 2013.
According to the government’s evidence at trial, O’Neal and others identified District of Columbia area homes and straw buyers to obtain mortgages through false loan applications, forged documents, and fraudulent settlements. Co-conspirators acted as a mortgage broker, title, and escrow agent, and other professionals to assist O’Neal with tricking the mortgage lenders and banks into lending $2.6 million in mortgage loans on the belief that the straw buyers had the means and the willingness to pay the mortgages.
Every one of the mortgages fell into default, and the lenders were forced to foreclosure with an aggregate loss to the lenders in excess of over $900,000.
According to the government’s evidence, the title and escrow companies paid O’Neal from the fraudulently obtained loan proceeds, at times using fraudulent “invoices” that falsely stated that renovation work had recently been completed and that money was due at settlement. As a result of these false invoices and inaccurate settlement statements, title and escrow agents turned over more than $400,000 of fraudulent loan proceeds to O’Neal.
In spite of promising the straw buyers that she would pay the mortgage and in spite of receiving rental income from the D.C. Housing Authority and their client tenants, O’Neal failed to pay the mortgages on all of these properties, and the lenders foreclosed on the houses with the result being the tenants were evicted.
Two other defendants earlier pled guilty to charges related to the scheme and are awaiting sentencing. Donald M. Ramsey, 45, a mortgage broker from Alexandria, Virginia, and Tania Firmani, 46, a title and escrow agent from Chesapeake Beach, Maryland, each pled guilty to a charge of conspiracy to commit bank and mail fraud.
“Mortgage fraud is a significant law enforcement priority for our office that has serious repercussions to our economy beyond the losses suffered by the financial institutions,” said U.S. Attorney Machen. “LaFrances Dudley O’Neal’s scheme not only cost lenders more than $900,000 but also led to foreclosures and evictions. This prosecution shows our resolve to bring to justice those who would seek to commit mortgage fraud for personal gain.”
“Ms. O’Neal took advantage of mortgage lenders and banks by falsely leading them to believe that they were supporting homeownership in the District of Columbia; instead, she bilked them out of hundreds of thousands of dollars,” said Assistant Director in Charge Parlave. “There is no safe harbor for criminals in this business, and the FBI will continue to work with our federal, state, and local partners to eradicate fraud within the real estate and mortgage industries.”
In announcing the verdict, U.S. Attorney Machen, Inspector in Charge Barksdale, Special Agent in Charge Clarke, Assistant Director in Charge Parlave and Commissioner White praised those who worked on the case from the U.S. Postal Inspection Service, U.S. Department of Housing and Urban Development-Office of Inspector General; the FBI’s Washington Field Office; the District of Columbia Department of Insurance, Securities, and Banking; and the Metropolitan Police Department. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including: Financial Analyst Crystal Boodoo; Paralegal Specialists Donna Galindo, Corrine Laxman, Diane Hayes, Lenisse Edloe, Shanna Hays, Nicole Wattelet; former Paralegal Specialist Sarah Reis; Litigation Services Specialist Kimberly Smith; Law Interns Nicole Audet and Jason Navia; and Assistant U.S. Attorney Diane Lucas of the Asset Forfeiture and Money Laundering Section. Finally, they acknowledged the work of Assistant U.S. Attorney Virginia Cheatham, who prosecuted the case.