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WASHINGTON, (November 13, 2007) -- Federal agents
this morning arrested four officers with a now-defunct Inland Empire mortgage lender on charges of defrauding the United States Department of Housing and
Urban Development and private lenders by fraudulently obtaining federally insured loans and selling those notes to private lenders.
The defendants arrested today are:
Richard Elroy Giddens, 67, of Riverside;
John Richard Varner, 54, of Hesperia;
Stephen Ray Harper, 50, of Ontario; and
Katherine Ann Kilmer, 52, of Hesperia.
A seven-count indictment unsealed today charges the four arrestees and two others with conspiracy, bank fraud and tax violations. The scheme, which ran
from 1997 until 2002, was run out the Mortgage One Corporation, which was based in Hesperia, and M-1 Capital Corporation, which was based in Riverside and
Rancho Cucamonga. The two companies were in the business of approving, funding and then selling home mortgage loans, typically obtaining mortgage insurance
of the loans from the Federal Housing Administration, which is an agency within HUD.
The indictment alleges that the defendants engaged in a conspiracy to defraud HUD by submitting fraudulent loan application documents in order to qualify
the loans for FHA insurance. The indictment further alleges that Mortgage One and M-1 Capital sold the funded loans to banks using the same fraudulent
documents. HUD has identified more than 850 FHA-insured loans approved by Mortgage One and M-1 Capital that went into foreclosure and made insurance claims
to HUD. Investigators estimate that the losses suffered by the government and the private lenders are at least $10 million.
Three of the defendants arrested this morning are expected to make their initial appearances this afternoon before a United States Magistrate Judge in
Riverside. Giddens is expected to make his initial appearance tomorrow afternoon before a United States Magistrate Judge in Los Angeles.
Two more defendants charged in the case - Ricardo Bonilla, 46, of Fontana, and Abraham Julian Rezex, 59, of Downey - are expected to self-surrender later
this month.
All six defendants are charged with conspiracy and bank fraud. Giddens and Varner are charged with subscribing to a false tax return. Harper is charged
with willful failure to file a tax return.
The maximum penalty for the conspiracy charge is five years in federal prison. The maximum penalty for the bank fraud charge is 30 years in prison. The
maximum penalties for the tax charges range from one to three years in prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
This case is the result of an investigation by the Federal Bureau of Investigation, HUD's Office of Inspector General, and IRS-Criminal Investigation. The
investigation received assistance from the Social Security Administration's Office of Inspector General.
SOURCE: Media-Newswire
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