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Man Sentenced for Mortgage Investment Scam

Jeffrey Tyler Wine gets 5 years in prison

KANSAS CITY, Mo. (May 9, 2007) -- John F. Wood, United States Attorney for the Western District of Missouri (http://www.usdoj.gov/usao/mow/index.html), announced that a Kansas City, Mo., business owner was sentenced in federal court today for a $17.5 million mortgage fraud scheme that involved 280 residential properties.

Jeffrey Tyler Wine, 28, of Kansas City, was sentenced by U.S. District Judge Dean Whipple this morning to five years in federal prison without parole. The court also ordered Wine to pay $4,946,748 in restitution.

"Investigating and prosecuting financial fraud is one of our highest priorities," Wood said. " Dozens of financial institutions were victimized by this mortgage fraud scheme, which in turn erodes the area's real estate market and negatively impacts the local economy. Wine will not be allowed to profit from his deception; in addition to a lengthy prison term, virtually all of his assets will be used for restitution for his victims."

On July, 2006, Wine pleaded guilty to mortgage fraud conspiracy and money laundering. Wine admitted that, from November 2001 to May 2005, he conspired with others to defraud mortgage lenders by inducing them to loan victim-investors $17,558,440 to purchase 280 residential properties. Wine was in the business of purchasing, rehabilitating, managing and selling residential properties in the metropolitan area through various business entities that he created and operated, including Sunrise Equities, Inc.; Sunrise Assets, LLC; Sunrise Investments Holdings, LLC; Brooklyn Properties, LLC; Arsenal Investments, LLC; Sunrise St. Louis, LLC; Woodland Properties and Larch Investments.

Wine acquired residential properties at reduced rates at foreclosure sales, tax sales and bankruptcy sales. After rehabbing the properties ( which at times, Wine admitted, was done in a shoddy manner doing poor quality work ), they were advertised for sale as investment properties with no money down. Victim-investors were told that Sunrise Equities would provide the down payment and closing costs for the sale, secure renters for the property and manage the properties for the first year after purchase, including all maintenance costs and tenant contracts. Victim-investors were also told that Sunrise Equities would ensure that mortgage payments were paid even if the properties were not rented, and that a positive cash flow from the properties was guaranteed.

Co-conspirators, who included mortgage brokers, prepared false and fraudulent loan applications and supporting documents to submit to mortgage lenders in the names of victim-investors. Sometimes Wine and co-conspirators provided money to the victim-investors to deposit into their bank accounts to mislead the lenders regarding the buyers' assets. They also furnished money for the victim-investors to take to closing to pay the buyers' closing costs.

While Wine and co-conspirators managed the rental properties, they submitted false monthly reports to victim-investors of rent received, expenses incurred, and income earned, and paid to the victim-investors the amount of income reflected. This induced victim-investors to purchase additional properties.

Wine also pleaded guilty to money laundering, admitting that he engaged in a monetary transaction involving criminally-derived property, by drawing upon the funds obtained by fraud to purchase a 400-ounce gold bar for $177,000 on May 24, 2005.

This case was prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the Federal Bureau of Investigation, IRS-Criminal Investigation and HUD, Office of Inspector General.

SOURCE: U.S. Department of Justice

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