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
