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PRESS RELEASE


New Construction Kickback Scheme

Each Defendant Faces up to Five Years, No Parole


 
KANSAS CITY, Mo. – (March 4, 2009) Matt J. Whitworth, Acting United States Attorney for the Western District of Missouri, announced today that a former Lee’s Summit, Mo., mortgage loan officer and two Kansas men have pleaded guilty in federal court to their roles in a $12.6 million mortgage fraud scheme that involved 25 residential properties in Lee’s Summit and Raymore, Mo.

Stefan M. Guerra, 30, of Lee’s Summit, and Daryle A. Edwards, 37, and Leon T. Jones, 42, both of Olathe, Kan., pleaded guilty in separate appearances before U.S. Chief District Judge Fernando J. Gaitan on Tuesday, March 3, 2009, to the charge contained in an Oct. 29, 2008, federal indictment.

Each of the defendants admitted that he participated in a conspiracy to defraud mortgage lenders from June 2005 to May 2007. They are among more than a dozen conspirators who were involved in buying and selling new homes in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Buyers purchased the homes at inflated prices, obtaining mortgage loans by providing false information to mortgage lenders, then kept the extra proceeds. Buyers created shell companies for the purpose of receiving those kickbacks from the builder, with kickbacks ranging up to $125,000 on each house.

In total during the course of the conspiracy, mortgage lenders approved 25 loans totaling more than $12.6 million. From that total, buyers received approximately $2.3 million without the lenders’ knowledge.

Guerra, a former mortgage loan officer at Midwest Equity Mortgage, admitted that he was involved in the purchase of one property and acted as a broker on 11 other properties involved in the conspiracy. The loans on the 12 properties totaled more than $5 million.

Jones admitted that he purchased a property in Lee’s Summit as part of the conspiracy, a purchase that involved Guerra. Jones also admitted that he made material misrepresentations upon which the lender relied in making the mortgage loans totaling $509,000. From the purchase of this property, unbeknownst to the lender, Jones received approximately $50,000.

Edwards also admitted that he purchased a property in Lee’s Summit as part of the conspiracy, and that he made material misrepresentations upon which the lender relied in making the mortgage loans totaling $410,000. Edwards used a false Social Security number, a false address and false employment, and falsely claimed that he would occupy the property. Edwards also admitted that he made false representations regarding the use of loan proceeds; Edwards received a $76,600 check payable to DAECO Construction, Inc., a company owned by Edwards, which was not disclosed to the mortgage lender or to the title company.

Co-defendant Ronald E. Brown, Jr., 39, of Gladstone, pleaded guilty on Jan. 8, 2009, to his role in the conspiracy. Brown, a self-employed insurance agent doing business as The Brown Insurance Agency in Kansas City, Kan., obtained insurance for the properties that were purchased. After purchasing two false Social Security numbers for $10,000, Brown used the false Social Security number to purchase three properties in Lee’s Summit. In each case, Brown made material misrepresentations upon which the lenders relied in making the mortgage loans, which totaled $1,339,700. From the purchase of these properties, unbeknownst to the lenders, Brown received a total of $279,426.

Under federal statutes, Guerra, Jones and Edwards are each subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the Federal Bureau of Investigation and IRS-Criminal Investigation.



SOURCE: United State Department of Justice -- Western District of Missouri

 
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